Psychiatrist Accused in Alleged Prescription Kickback Scandal

In what federal prosecutors say is the largest prescription fraud case in Chicago's history, a psychiatrist is accused of submitting at least 140,000 false claims to Medicare and Medicaid for clozapine prescriptions that involved illegal kickbacks from a string of manufacturers of the antipsychotic drug.

The federal lawsuit, filed last month by the US Attorney for the Northern District of Illinois, alleges that, in addition to the claims linked to kickbacks, Michael J. Reinstein, MD, submitted at least 50,000 claims to Medicare and Medicaid, falsely stating that he provided "pharmacologic management" for his patients at more than 30 area nursing homes and long-term care facilities.

According to the complaint, Dr. Reinstein based his prescriptions to mentally ill patients not on evaluations and assessments of their psychiatric needs but in exchange for compensation agreements, first with Novartis and then with IVAX Pharmaceuticals and Teva Pharmaceuticals.

Dr. Reinstein, who has practiced in the Chicago area since 1973, has been based since 1999 in Chicago's Uptown neighborhood, which is said to have the densest population of mentally ill nursing home residents in Illinois.

Prosecutors allege that the kickbacks go at least as far back as the 1990s, when Dr. Reinstein was paid by Novartis to promote Clozaril, its version of clozapine at the time. As a result of the arrangement, the psychiatrist often had more than 1000 patients receiving the drug at any given time.

Clozapine is typically used only as a last resort in treatment-resistant patients, owing to its well-known risks for side effects, including agranulocytosis; the drug is considered of particular risk to the elderly.

Guidelines state that white blood cell monitoring is mandatory with such patients, and, as described in a recent Medscape Medical News story, some experts are calling for additional monitoring for other conditions, including diabetic ketoacidosis and gastrohypomotility.

Largest Prescriber

When Novartis' patent for Clozaril expired in 1998, Dr. Reinstein, who was allegedly still receiving payments from the company, allegedly refused pharmacy and drug company efforts to switch his many patients to the generic form of the drug, and he continued to be the largest prescriber of Clozaril to Medicaid recipients in the United States.

It was not until 2003, when Novartis finally informed Dr. Reinstein that it was withdrawing its support for Clozaril and ending its payments to the doctor, that the psychiatrist agreed to switch his patients to generic clozapine, but that switch involved an entirely new kickback deal, this time with Miami-based IVAX Corporation, maker of a generic clozapine, according to the complaint.

Prosecutors allege that IVAX, aware of Dr. Reinstein's heavy psychiatric patient load, reached out to the psychiatrist to persuade him to switch his patients to the company's generic version of clozapine.

Dr. Reinstein allegedly agreed to do so under the condition that IVAX pay the psychiatrist $50,000 for a 1-year "consulting agreement"; that they pay Dr. Reinstein's nurse to speak on behalf of clozapine; and that they fund a clozapine research study by a Reinstein-affiliated entity known as Uptown Research Institute.

IVAX agreed, and Dr. Reinstein quickly became the largest prescriber of generic clozapine in the United States, with more than 50% of his patients prescribed IVAX's clozapine.

Whereas only 4% of schizophrenia patients were typically prescribed the drug, at one nursing home, Dr. Reinstein had 75% of the 400 residents receiving clozapine, the lawsuit states.

Consulting Agreement

Between 2003 and 2006, Dr. Reinstein was allegedly well compensated by IVAX, receiving, in addition to annual renewals of his $50,000 consulting agreement, benefits for himself and an entourage of associates, including an all-expense-paid trip to Miami, a fishing trip, a boat cruise, tickets to sporting events, and free medication for Dr. Reinstein's personal use.

When IVAX became a subsidiary of Israel-based Teva Pharmaceuticals Industries Ltd, in 2006, Dr. Reinstein strategically moved large numbers of patients to a form of clozapine manufactured by a competitor of IVAX/Teva, prosecutors claim.

Teva, like IVAX before them, allegedly reached out to Dr. Reinstein, seeking to persuade him to prescribe more clozapine, again flying the psychiatrist and his entourage to Miami and footing the bill for a $2300 boat cruise and at least 2 lavish dinners costing more than $1700 each, according to the lawsuit.

As a result, Dr. Reinstein put several hundred patients back on Teva's clozapine, and he entered into annual speaker agreements in which Teva paid him more than $100,000 between 2007 and 2009.

A 2009 investigation of Dr. Reinstein's practices by the Chicago Tribune and ProPublica reported that autopsy and court records showed that by 2009, at least 3 of Dr. Reinstein's patients had died of clozapine intoxication, including a 50-year-old man who had 5 times the toxic level of clozapine in his blood when he died.

The investigation is ongoing, but all told, federal prosecutors allege that Medicaid paid more than 100,000 false claims from pharmacies for clozapine prescriptions written by Dr. Reinstein as the result of the illegal kickbacks.

The lawsuit seeks triple damages under the False Claims Act, in addition to civil penalties of $5500 to $11,000 for each alleged false claim. According to US District Attorney Eric S. Pruitt, who is leading the federal prosecution, this is standard in a case of this nature.

"The False Claims Act statute entitles us to seek triple damages in these types of cases, so that's what we always seek," Pruitt told Medscape Medical News.

"In addition are the penalties, up to $11,000 for each claim, and the grand total was 190,000 false claims," he said.

Pruitt said the damages and penalties being sought reflect the gravity of the allegations.

"The complaint and the allegations certainly underscore the extraordinary volume of drugs that Dr. Reinstein was prescribing and how he related to other providers across the country."

Pruitt was unable to comment on whether the pharmaceutical companies involved in the case will face charges relating to antikickback laws.

Accused Expects to Be Cleared

In response to the allegations, Dr. Reinstein defended his use of clozapine to Medscape Medical News and said he expects to be cleared of wrongdoing.

"I strongly feel that clozapine is the best drug for chronic schizophrenia and treatment-refractory patients," he said.

"Our practice specializes in this drug, and I stand by it as the most effective drug," he said. "We've had many, many patients who have responded to clozapine but not to other drugs."

"In terms of other issues [in the complaint], I feel I'm innocent and will be vindicated. I strongly believe in clozapine, and it bothers me that [there has been] such negative print about clozapine."

According to legal psychiatry expert Paul S. Appelbaum, MD, Dr. Reinstein is not necessarily alone in his support of clozapine, but the circumstances and extent of prescribing the drug raise serious questions.

"For treatment-resistant patients who continue to have significant levels of symptoms, clozapine is not perfect, but certainly not an unreasonable thing to try, and a lot of people involved in psychiatric treatment think clozapine is underutilized," said Dr. Appelbaum, chair of the American Psychiatric Association's Committee on Judicial Action and director of the Division of Law, Ethics, and Psychiatry at Columbia University in New York City.

"But the risks of clozapine and the need for ongoing monitoring make it a more dangerous drug than many of the other choices," he told Medscape Medical News.

"I guess the question, in part, will come down to whether the large proportion of patients this psychiatrist was actually seeing — apparently more than 50% — fall into that category," he said.

Remaining partial amidst the nearly nonstop offers of perks and benefits large and small from pharmaceutical companies is something most physicians learn to live with and responsibly resist, but the case suggests an extreme example of complicity on both sides of the table in the blatant prescribing of a drug in exchange for compensation.

"We can't be naive about the reality that all pharmaceutical marketing efforts involving many benefits they offer have as their aim increasing prescription of the company's products, and that in itself is problematic," Dr. Appelbaum said.

"However, what is alleged here would appear to go well beyond usual practice both on the part of companies alleged to have made payments explicitly in exchange for prescribing activity and for the physician who is alleged to have sought out the payments," he explained.

Efforts to deter drug company influence on physicians and to crack down on prescription fraud have accelerated on a host of fronts in recent years, ranging from tough new National Institutes of Health (NIH) and Centers for Medicare and Medicaid Services (CMS) rules to the American Medical Student Association's PharmFree Scorecard, which rates medical schools on the basis of their anticonflict of interest policies.

One of the most prominent new policies, the Physician Payments Sunshine provision, an important part of President Barack Obama's Affordable Care Act, has yet to be implemented, but once it goes into effect, the provision will require pharmaceutical companies and medical product manufacturers or their subsidiaries to report to Health and Human Services (HHS) payments made to physicians and teaching hospitals.

Patients will then be able to access information online on relationships their doctors have with drug companies.

Need for Greater Transparency

According to Daniel Carlat, MD, director of the Pew Charitable Trust's Pew Prescription Project, in Washington, DC, the provision should help prevent abuses such as those alleged in Dr. Reinstein's case.

"Cases like these highlight the need for transparency of payments to physicians," Dr. Carlat told Medscape Medical News.

"We all have the right to know if a physician is receiving payments from a company, especially if the doctor is prescribing treatments made by that company."

"I believe that this transparency will force potential drug company speakers to think twice before participating in these kinds of relationships."

Dr. Appelbaum agreed that the Sunshine provision should help shed light on physician relationships with pharmaceutical companies and improve Medicare and Medicaid fraud investigations, but he cautioned that most laws and rules are not necessarily designed to address offenses as serious as those alleged in Dr. Reinstein's case.

"One thing to remember is most rules are designed to deter relatively inadvertent or low-level kinds of problematic behavior," he noted.

"Egregious, deliberate efforts to solicit money from drug companies such as are alleged here may be harder to deter."

"There will always be people who will try to break the law in order to advance their own interest, no matter how good your legal system is, so I think it would be overly optimistic to say now that we have those Sunshine rules in place, we'll never see this kind of thing again, but the rules will at least make this kind of behavior harder to get away with."

Dr. Appelbaum and Dr. Carlat have disclosed no relevant financial relationships.

US Federal District Court filing, United States of America v Michael J. Reinstein