Watson Receives U.S. Subpoena
Watson Pharmaceuticals Inc., a Corona maker of generic drugs, said Friday that it had received a subpoena from U.S. health-care fraud investigators regarding meetings the company held with doctors to discuss a medicine.
The Department of Health and Human Services’ Office of Inspector General is seeking documents on “feedback meetings” Watson had with doctors about marketing its Ferrlecit anemia treatment, company spokeswoman Patty Eisenhaur said. Watson is cooperating and complies with regulations, she said.
The subpoena appears to be “a relatively standard request for documents related to the way Watson sets up its physician meetings for the marketing of Ferrlecit,” said Ian Sanderson, an analyst with SG Cowen Securities, which recommends buying Watson shares. “It’s not likely to be a big deal.”
The government has established guidelines on drug maker relationships with doctors to discourage companies from compensating physicians for certain consulting services or providing entertainment or travel, if the purpose is to generate business. Companies that violate fraud laws can be barred from doing business with U.S. health-insurance plans such as Medicare.
Shares of Watson rose 72 cents to $45.20 on the New York Stock Exchange. They’ve risen 60% this year.
“Our concern is with the impact [such relationships] may have on Medicare and other federal health-care programs,” said Ben St. John, a spokesman for the inspector general’s office, which he said doesn’t comment on the details of a subpoena. “These could be innocent violations of the law,” he said.
Watson expects Ferrlecit to generate about 10%, or as much as $147 million, of the company’s 2003 annual sales.
The company is one of 26 drug makers that received requests for information in June from a congressional committee investigating prices and billing of the federal and state government-funded Medicaid health-insurance program for the poor.
Watson also is one of 13 generic drug makers being sued by Massachusetts Atty. Gen. Thomas Reilly, who alleges they defrauded that state’s Medicaid program by inflating drug prices.
