Chicago psychiatrist fraud case implicates Teva

A lawsuit against a Chicago psychiatrist allegedly reveals bribes paid to him for years by Ivax and then by Teva, after it acquired the company.

A lawsuit filed by the United States with the US Federal Court for the Northern District of Illinois against a Chicago psychiatrist suspected of defrauding the authorities allegedly reveals bribes paid to him for years by Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA). Dr. Michael Reinstein is accused of filing $190,000 in false claims to Medicare and Medicaid for medications and treatments given to patients.

The statement of claim describes how Reinstein received bribes from Ivax, and that this practice continued after Teva acquired the company in 2006. Ivax wanted to persuade the psychiatrist to prescribe for patients a generic drug for the treatment of schizophrenia, clozapine, which it manufactures, instead of the brand drug made by Novartis.

Until 2003, Reinstein refused, but when Novartis notified Reinstein that it would be withdrawing its support for him, he was persuaded to switch to clozapine.

According to the statement of claim, Dr. Reinstein agreed to switch to generic clozapine, after Ivax agreed to his conditions, including an annual fee of $50,000 for a consulting agreement.

Teva is not named as a defendant in the case; only Dr. Reinstein.

Half of patients received the drug

The statement of claim states that Dr. Reinstein became the largest prescriber of generic clozapine in the US, in contrast to his colleagues who did not prescribe the drug. More than 50% of Dr. Reinstein's patients received clozapine, compared with its general market share of 4%.

According to the statement of claim, Dr. Reinstein was not satisfied with an annual payment, and asked for, and received, additional benefits. In 2004, he was flown, at Ivax's expense, to the company's Miami headquarters, and was fully reimbursed for expenses for himself, his wife, and other associates. During this trip, Ivax paid for Reinstein and his party to go on a fishing trip, and also picked up the check for at least one dinner costing more than $1,000.

The same thing happened in 2005, when Ivax paid for a boat cruise, a golf outing, and at least two dinners, according to the statement of claim.

The statement of claim says that, shortly before Teva acquired Ivax, Dr. Reinstein greatly reduced the number of clozapine prescriptions he issued, and that this concerned Teva. In April 2006, Teva paid for a trip to Miami by Dr. Reinstein and his associates, including a $2,300 boat cruise and expensive dinners.

The statement of claim states that Dr. Reinstein pressed Teva to hire an associate. When Teva did so, Dr. Reinstein put several hundred patients back on Teva's clozapine.

The contract between Teva and Dr. Reinstein was only terminated after "The Chicago Tribune" published an article in 2009 questioning the appropriateness of Reinsteins use of clozapine. Shortly after this article appeared, Reinstein contacted Teva and asked that it should no longer pay him pursuant to the speaker agreement.

Teva said in response, "Teva has no comment on the allegations against Dr. Reinstein. Teva has been cooperating with the governments investigation conducted in the US regarding this matter, and will continue to do so. Clozapine (which is not sold in Israel) is an important medicine approved for treatment of severe schizophrenia in patients who fail standard therapy. Although clozapine has proven to be effective for this indication, there are potential serious side effects that require careful medical supervision. Teva US maintains a Clozapine Patient Registry to assist heath care professionals in the monitoring of patients taking Teva US clozapine."

Published by Globes [online], Israel business news - www.globes-online.com - on November 19, 2012

Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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