CareFusion Settles False Claims, Kickback Charges

CareFusion will pay $40.1 million under a settlement agreement with the United States and 31 individual states to resolve a whistleblower lawsuit alleging violations of state and federal False Claims Acts and anti-kickback laws to help promote off-label use of one of its products, according to a Jan. 9 announcement by the Department of Justice (DOJ). According to the 106-page second amended complaint filed in the case, qui tam relator Cynthia Kirk, M.D., a former vice president of regulatory affairs for CareFusion in its infection prevention unit, alleges that she informed senior executives on several occasions of her belief that the company was violating both federal and state laws through its marketing and off-label promotion of the product ChloraPrep but was rebuffed and ultimately terminated when she would not relent. The defendants in the case are CareFusion Corp., based in San Diego, Calif. and Cardinal Health Inc., based in Dublin, Ohio. CareFusion was spun off from Cardinal Health in 2009. According to the complaint, Kirk is identified as the original source of the facts and information concerning the activities of the defendants. The allegations in the complaint are “based entirely on her direct, independent knowledge, personal observations and documents in her possession and also on information and belief.” The settlement between CareFusion and the government resolves these allegations with no admission of liability by CareFusion. The original complaint was filed in September 2010, followed by an amended complaint in October 2010 and a second amended complaint filed July 5, 2011. Kirk’s allegations, as detailed in the complaints, provide a glimpse of a compliance professional working within her company to try to resolve what she perceived as compliance problems and actual violations of federal and state laws. Kirk carefully recorded dates, locations, and names of individuals involved in meetings and conversations with other executives at CareFusion, all of which provide support for her allegations in the whistleblower complaint. According to the documents, Kirk alleges that within one week of her employment as the vice president of regulatory affairs, she began raising concerns to executives of the company about off-label marketing and promotion of ChloraPrep for the prevention of infections, a use for which it was not approved by the Food and Drug Administration (FDA). She also raised concerns over the use a study known as the “ChloraPrep Study” because she believed it did not meet requirements for a valid study and because it promoted the off-label use of ChloraPrep. The study was a key element used by the sales and marketing department to boost the sales of ChloraPrep. ChloraPrep is an antiseptic product used to clean the skin of a patient before surgery or an injection. According to a DOJ announcement about the settlement agreement between CareFusion and the government, CareFusion marketed the product for the use of prevention and reduction of infections. According to the government, it also marketed ChloraPrep for other uses for which there was no FDA approval and made unsubstantiated claims about the appropriate use of ChloraPrep. The DOJ says the settlement agreement also resolves allegations that one of CareFusion’s predecessors paid $11.6 million in kickbacks to Charles Denham, M.D., for the purpose of inducing him to recommend, promote, and arrange for the purchase of ChloraPrep by health care providers. Denham was the co-chair of the Safe Practices Committee at the National Quality Forum, a nonprofit organization that reviews, endorses, and recommends standardized health care performance measures and practices. Documentation of the Allegations In the complaints, Kirk details meetings and conversations with her supervisor and other executives of the company where she was allegedly told that regulatory functions are a service and that there isn’t a regulatory problem until the business unit says there is. After raising concerns about the continued aggressive off-label promotion practices at CareFusion, Kirk was told that “competitor off-label promotional activities justified the way ChloraPrep had been promoted historically and the way CareFusion should continue to promote ChloraPrep in the future.” A senior vice president told Kirk “the risk of FDA action was ‘extremely minimal’ based on the regulatory history of ChloraPrep’s product category.” She allegedly was told that the off-label practices were too profitable to abandon. The ChloraPrep Study In 2009, CareFusion paid millions of dollars to sponsor an investigational study to demonstrate the safety and effectiveness of ChloraPrep in reducing and preventing infections. Known as the ChloraPrep Study, the results of the study were used by CareFusion to promote off-label use of the product. According to the court documents, the study was not valid because “Defendant CareFusion failed to meet statutory obligations of a sponsor in all respects in the conduct of the study.” CareFusion allegedly also did not secure required contracts with the investigator, Rabih Darouiche. The study’s authors included Cindy Crosby, vice president of medical affairs, who has no advanced degrees and also performs sales functions for CareFusion. Seven patients died during the study, but the deaths were not reported by the investigator Darouiche to the sponsor and not reported by the sponsor to the FDA as required by regulation (21 CFR 312.64). According to the court documents, the compliance officer never reviewed or evaluated grants or contracts for the fair market value of the payments to Darouiche. Lessons for Labs Laboratory compliance officers sometimes find themselves in a similar situation where they may be perceived as a hindrance to business concerns at their laboratory. This case can provide some guidance for them because the relator in the case exhausted all internal avenues to try to resolve the issues and get the company to correct actions she believed were in violations of laws and regulations, even in the face of resistance by senior executives. All compliance officers can learn from Kirk’s experience. Takeaway: Compliance professionals need to be persistent when they believe laws are being violated and they may face the risk of being terminated as a result and should carefully document all meetings and conversations concerning the issue at hand.