Attorney General Roy Cooper

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Victory Pharma Inc., a specialty pharmaceutical company headquartered in San Diego, agreed Thursday to pay $11.4 million to resolve federal civil and criminal liability arising from its marketing of the pharmaceutical products Naprelan, Xodol, Fexmid and Dolgic, the Justice Department said.

Under the agreement, Victory Pharma entered into a deferred prosecution agreement and paid a criminal forfeiture of $1.4 million to resolve federal Anti-Kickback Statute accusations, and paid $9,938,310 to resolve False Claims Act allegations.

The company is accused of engaging in a scheme to promote its drugs by paying kickbacks to doctors to induce them to write prescriptions for Victory’s products, including prescriptions for patients covered by Medicare and other federal health insurance programs.

North Carolina and the other states allege that between January 1, 2007 and December 31, 2009, Victory Pharma sales representatives paid doctors in cash and through gifts such as in-office lunches, dinners, snacks, meals at upscale restaurants, tickets to sporting events, and other forms of entertainment, to induce them to prescribe the company’s drugs. The resulting prescriptions were paid for or reimbursed by Medicaid and other taxpayer-funded health care programs.

“Tax dollars were wasted on what may have been unnecessary prescriptions,” said North Carolina Attorney General Roy Cooper said. “This kind of fraud drives up health costs for all for all of us, and that’s why we’re continuing to crack down on it.”

Under the agreement, Victory Pharma will pay millions to states and the federal government to compensate Medicaid, Medicare, and other taxpayer funded health care programs for its illegal conduct. As part of the settlement, North Carolina will receive $293,891.40 in restitution and other recovery.

The North Carolina settlement agreement was reached by Cooper’s Medicaid Investigations Division and the North Carolina Division of Medical Assistance.

The MID investigates fraud and abuse in the Medicaid program by hospitals, doctors, pharmaceutical companies, medical equipment companies, mental health and personal care providers, ambulance services and others, as well as patient abuse and neglect in Medicaid-funded facilities.

When asked on how the settlement will be distributed in North Carolina, AG spokesperson Noelle Talley indicated that $195,240.20 goes to the federal government for the federal share of Medicaid damages.

“The remaining $98,651.19 will be distributed to the N.C. Medicaid Program and to North Carolina public schools, minus a small amount to cover our costs for investigating the matter,” she said.

Medicaid efforts in NC are jointly funded by the state and federal governments. “North Carolina’s share of the settlement is split between state and federal Medicaid efforts,” said Talley. “Also, under the state Constitution, civil penalties go to the public schools (hence the portion of the settlement that goes to schools).”