http://www.nytimes.com/2002/05/13/business/13DRUG.html

Subpoenas Issued in Drug Inquiry

By MILT FREUDENHEIM

he United States Attorney's office in Boston has widened its five-year investigation into the sales practices of prescription-drug companies, subpoenaing records involving the distribution of a best-selling drug, Prevacid, made by TAP Pharmaceuticals.

TAP, a joint venture of Abbott Laboratories and Takeda Chemical Industries of Japan, and two managed care drug distributors, Caremark Rx and Express Scripts, said that they had received subpoenas in the last 10 days.

Caremark and Express Scripts said the subpoenas requested records for Prevacid, an ulcer treatment that had $3 billion in 2001 sales, as well as for Lupon, a prostate cancer treatment also made by TAP, that had sales of $800 million.

All three companies said that federal investigators had told them they were not targets of the current phase of the investigation.

Last year, two other pharmaceutical companies, Bristol-Myers Squibb and Schering-Plough said they were being investigated by the same federal officials in Boston. They said then they had done nothing wrong.

Prevacid competes directly with Prilosec and Nexium, both made by AstraZeneca. Prilosec, which had $6 billion in worldwide sales in 2000, is losing patent protection.

Phillip Nalbone, a health-care analyst at Salomon Smith Barney, said he had heard speculation that the investigation had been broadened to examine patient-assistance programs, the free samples that most of the 50 or so drug manufacturers provide to doctors.

Last October, TAP paid $875 million to settle criminal and civil charges that the company had defrauded Medicare and Medicaid, the government insurance programs for elderly, disabled and low-income people. As part of that settlement, TAP admitted that its sales people had helped doctors charge the government for free samples of Lupon. The agreement was the largest health-care fraud settlement.

At that time, Charles S. Prouty, special agent in charge of the F.B.I. in New England, which worked on the TAP investigation, said that other cases were proceeding and would also result in big settlements.

Four doctors have pleaded guilty to charges that they conspired with TAP to receive excessive Medicare payments. A fifth doctor was indicted last fall.

Mr. Nalbone said that the first subpoenas were issued to TAP five years ago, so the company, based in Lake Forest, Ill., has had ample time to correct any questionable activities. He noted that Abbott, which is based in Abbott Park outside Chicago, had also been working under a Food and Drug Administration consent decree involving regulatory issues at a factory that makes several diagnostic products. Abbott has been "tenaciously cleaning up all of these issues," he said.

The United States Attorney's office in Philadelphia has also been conducting a long-running investigation of the marketing practices of drugmakers and managed care drug distributors. Earlier this month, the Cigna Corporation, one of the country's largest health insurers, said it had received subpoenas from federal officials in Philadelphia in a drug pricing investigation.