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LAST UPDATE: Tuesday February 10, 2015 01:10PM EST
- May 06, 2002
- Vol. 57
- No. 17
Douglas Durand Blew the Whistle on Hi Drug Firm—and Got $79 Million
And had been for a while. Three and a half years earlier, Doug Durand had turned on his then employer, TAP Pharmaceutical Products Inc. For seven tense months Durand—still working as vice president of sales at TAP's headquarters near Chicago—secretly compiled a cache of incriminating company documents and prepared the case he would eventually turn over to government prosecutors. Durand also filed a lawsuit charging that the company had "explicitly encouraged" urologists to prescribe its prostate cancer drug Lupron by offering kickback arrangements and free drug samples that doctors could then fraudulently bill to Medicare and private health insurers.
Durand's actions triggered a five-year investigation by federal prosecutors, which culminated late last year when TAP, jointly owned by Abbott Laboratories and Japan's Takeda Chemical Industries, agreed to pay the federal government $560 million to settle civil claims and an additional criminal fine of $290 million—the largest of its kind in a U.S. health-care-fraud case. "TAP essentially used the Medicare program as a checkbook to pay doctors to use their product," says Assistant U.S. Attorney Susan Winkler, who helped prosecute the case. "The pharmaceutical industry needs to clean up its house."
Not only did Durand get even, he got rich, collecting nearly 14 percent of TAP's civil settlement—a staggering $79 million (including interest)—according to the guidelines of the federal law under which he sued. Durand says he knew he might one day collect a cash reward, but the Lotto-like haul stunned him. "I didn't in a million years expect that," he says. But watchdogs like James Moorman, president of the Washington, D.C., public interest group Taxpayers Against Fraud, say Durand, 50, earned every penny. "He took a courageous step by coming forward," says Moorman, who points out that ordinary citizens, through government-financed programs like Medicare, end up footing the bill for millions of dollars of medical fraud every year. "Not only did Durand help uncover a major fraud, he touched an industry that thought it couldn't be touched."
Historically, corporate informants haven't been so lucky. Wigand, 59, saw his reputation sullied and his life savings spent on lawyers after he charged that his former employer, cigarette maker Brown & Williamson, had lied about the dangers of nicotine. But unlike Wigand, who took his company's secrets to the media, Durand hired a savvy lawyer and filed suit against TAP under the federal False Claims Act, a Civil War-era law that was revamped in 1986 to protect potential whistleblowers. Over the years some 3,600 whistleblower suits have helped the government collect $5 billion from lawbreakers and hand out $745 million in rewards. "The way people cheat today is highly complicated, and the government might miss something," says Jack Meyer, a Washington, D.C., health-care-policy analyst. "It takes someone on the inside who knows how the game is played to detect the fraud."
Durand was an ideal candidate. Raised in a blue-collar neighborhood of Pawtucket, R.I., he was one of eight children of retired construction superintendent Frank Durand, now 85, and homemaker Jeannette, 81, who enforced a strict moral code. "I was raised to do the right thing," says Durand. "You don't lie. You don't cheat. You don't steal. And you tell the truth." Still in high school when he landed his first job, at a mom-and-pop drugstore, Durand studied pharmacology at the University of Rhode Island, graduating in 1974. He enjoyed interacting with patients and doctors. "At the time, doctors were starting to rely on pharmacists to assist in therapeutic decisions," Durand recalls. "It was more than just counting pills." He and college sweetheart Liz, now 50 and a homemaker, married that same year and have two daughters—Hollie, 27, a pharmaceuticals sales rep like her dad once was, and Kristen, 25, an elementary school teacher.
For 20 years Durand worked in sales and marketing for the pharmaceutical giant Merck, one of the country's most respected companies, moving up from district manager to senior region director. But when Merck decided in 1994 to close its Pittsburgh office—where Durand had been posted for four years—he began to explore his options. A drug-industry headhunter contacted him about a position at TAP Pharmaceuticals, a small drug-sales firm headquartered in the Chicago suburbs. The job paid $140,000 (he was making about $115,000 at the time) and came with a $20,000 signing bonus. "It seemed," says Durand, "like a great opportunity."
But within weeks of arriving at TAP in January 1995, Durand realized he should have done more homework. He became uneasy about what he calls TAP's "cowboy" mentality that stampeded over ethics: "The focus was on the bottom line: money, money, money." Even by the standards of the drug industry, where gifts and all-expenses-paid trips to resorts are lavished on physicians, TAP's practices crossed the line. Durand was appalled to discover, as he later alleged in his lawsuit, that company sales reps were selling Lupron at one price and encouraging doctors to bill Medicare for reimbursement at a higher price, with the physicians pocketing the difference. (TAP denies the charge.) "At Merck I was taught that you do things the right way," he says. "There was only black and white. There were no gray areas."
Durand says his warnings to colleagues about the alleged improprieties and attempts to change them were greeted with annoyed shrugs. "They said things like, 'Why are you complaining about this stuff? You don't understand TAP culture. You're not at Merck anymore,' " Durand says.
Then, during the first week of August 1995, Durand says he learned of a TAP plan to in effect kick back 2 percent of the amount spent for Lupron, TAP's bestselling prostate cancer drug, to urologists who prescribed it in high quantities, an allegation that he also included in his lawsuit and that TAP has denied. For Durand it was the last straw. He realized the alleged plan could not only land the company in hot water but, "because the sales force was my responsibility," he says, "I could have been the one to get hung out to dry. I didn't trust them."
On the advice of a former colleague, he contacted Philadelphia attorney Elizabeth Ainslie, previously a federal prosecutor. "I knew I wasn't dealing with a crackpot or someone who simply bore a grudge against his employer," Ainslie says. "Here was an intelligent, levelheaded man who was seriously troubled by what he had seen." On Ainslie's direction Durand spent several weeks calmly and methodically combing his files and making copies at the office. He filled a binder with some 200 pages of memos and a list of doctors' names and express-mailed it to Ainslie, who, convinced that Durand had a good case, turned the documents over to prosecutors and filed the suit on his behalf in federal court.
The anxiety, however, didn't leave with the documents. With a contract that made it difficult to quit so soon into his new job, Durand "got to the point where I hated going to work. It was stressful. I kept telling myself that hopefully there's a light at the end of the tunnel, and it's not a train." By then, says Liz, the couple felt like outsiders around other TAP employees. At cocktail parties "they'd smile at us," she recalls. "But they were phony. You had the feeling that they were whispering behind your back."
In February 1996 Durand finally was able to leave TAP and take a lower-paying job with a Merck joint venture in Wayne, Pa. Forbidden to talk about the suit, the couple waited while the government's investigation plodded along—and another two years before TAP pleaded guilty to violating the Prescription Drug Marketing Act with its drug-sample distribution scheme and agreed to pay a total of $885 million including interest. (Four doctors have pleaded guilty to related crimes.) "We regret that some of our employees provided [doctors] with free samples of Lupron with the knowledge that they would seek and receive reimbursement," says TAP spokeswoman Kim Modory. "This behavior does not reflect the company's fundamental values."
Not surprisingly, last Christmas was a good one for the Durands, now retired and living in Florida, where Doug plays golf, cares for his ailing parents and, with Liz, plans to set up a charity. He bought himself a cream-colored Lexus LS430 and surprised Liz with a diamond ring. Otherwise, he says, "we're not going to do anything crazy." Looking back, Durand says of his brave step, "I don't think I had any choice. It was about self-preservation and wanting to do the right thing."
Fannie Weinstein in Florida
- Fannie Weinstein.
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