* Ista said to offer kickbacks to doctors over cataract drug
* Xibrom drug said to be marketed for unapproved uses
* Settlement announced amid Bausch & Lomb merger talks
By Jonathan Stempel
May 24 Ista Pharmaceuticals Inc
pleaded guilty on Friday to charges it used kickbacks and
improper marketing to boost sales of a drug meant to treat eye
pain and agreed to pay $33.5 million to settle criminal and
civil liability, the U.S. Department of Justice said.
The unit of eye care company Bausch & Lomb pleaded guilty to
conspiracy to offer kickbacks to induce physicians to prescribe
Xibrom, a drug meant to treat pain after cataract surgery, and
conspiracy to promote that drug for unapproved uses, including
after Lasik and glaucoma surgeries.
Ista agreed as part of a criminal settlement to a $16.63
million fine and an $1.85 million asset forfeiture. It also
agreed to a $15 million civil settlement to resolve allegations
that its marketing of Xibrom caused false claims to be submitted
to government health care programs.
As part of the settlement, Ista will be barred from
participating in Medicare and Medicaid, and Bausch & Lomb agreed
to strengthen its compliance and ethics procedures.
"The fact that Ista offered doctors illegal inducements -
such as a wine tasting, golf outings, and payments to attend
what were in essence marketing sessions - makes the company's
illegal conduct particularly deserving of the hefty penalty Ista
has agreed to pay," U.S. Attorney William Hochul in Buffalo, New
York said in a statement.
Ista pleaded guilty before U.S. District Judge Richard
Arcara in Buffalo.
Bausch & Lomb, which is based in Rochester, New York, said
it was pleased to settle the matter, which involved conduct
between January 2006 and March 2011, and that it knew of the
government probe well before it purchased Ista.
That purchase closed in June 2012 and Bausch and Lomb plans
to wind down the Ista corporate entity by year end.
The civil settlement resolves claims filed under the False
Claims Act, which lets private parties known as whistleblowers
sue on the U.S. government's behalf and share in recoveries.
Keith Schenker, a whistleblower who had been an Ista sales
representative in Brooklyn and Queens counties in New York, will
receive $2.5 million of the settlement amount, according to the
Justice Department and court papers.
Canada's Valeant Pharmaceuticals International Inc
is nearing an agreement to buy Bausch & Lomb from Warburg Pincus
LLC for about $9 billion, a person familiar with the matter said
on Friday. News about that transaction surfaced
at about the same time that the settlement was announced.
The criminal case is U.S. v. Ista Pharmaceuticals Inc, U.S.
District Court, Western District of New York, No. 13-cr-00099.
The whistleblower case, which was unsealed on Friday, is U.S. ex
rel. Schenker v. Ista Pharmaceuticals in the same court, No.