Relator Readies for Trial After Court Adopts Broad Definition of Remuneration and FCA Causation

On November 12, 2020, the Eastern District of Pennsylvania ruled on motions for summary judgment filed by defendant drug manufacturer Sanofi U.S. Services, Inc. (Sanofi) in a case that has been pending in the federal courts since 2002 concerning Sanofi’s alleged schemes for promoting the cancer drug Taxotene® from 1996 through 2004. U.S. ex rel. Gohil v. Sanofi U.S. Servs. Inc., No. 02-cv-02964 (E.D. Pa. Nov. 12, 2020).  In its ruling, the district court adopted a broad reading of remuneration and a low bar to satisfy the causation element of False Claims Act (FCA) claims premised on underlying alleged violations of the Anti-Kickback Statute (AKS).  On this basis, the court found that the alleged schemes presented genuine issues of material fact as to whether the Sanofi’s stipends to doctors for advisory boards, speaker programs, educational grants, and meals and gift baskets constituted violations of the AKS.  Conversely, the district court granted summary judgment to Sanofi on allegations related to its preceptorship arrangement with physicians for which the relator failed to establish the requisite element of causation.

In determining whether prohibited remuneration was provided to physicians, the court focused on whether Sanofi’s payments varied based on the volume or value of referrals, relying heavily on OIG’s 1994 Special Fraud Alert: Prescription Drug Marketing Schemes guidance warning that any “prize, gift or cash payment, coupon or bonus….[is] particularly suspect if based on value or volume of business generated for the drug company.” Off. of the Inspector Gen., Dep’t of Health & Hum. Servs., Special Fraud Alert: Prescription Drug Marketing Schemes (1994), reprinted in HHS-OIG Special Fraud Alerts, 59 Fed. Reg. 65,372 (Dec. 19, 1994).  The court concluded that the relator had put forth sufficient evidence to establish a question of material fact as to whether prohibited remuneration was provided, citing evidence that Sanofi’s employees viewed educational grants as a “thank you” for sales and that Sanofi offered various opportunities to physicians, such as paid trips to desirable locations and valuable entertainment, based on factors including the volume of prescriptions they generated for Sanofi-manufactured drugs.

Addressing the element of causation, the court held that evidence Sanofi paid physicians alleged kickbacks and that those physicians then prescribed Sanofi’s drugs to patients during the two years following their receipt of the alleged kickbacks sufficiently created a genuine dispute of material fact.  The court based the two year window on an expert report citing empirical literature suggesting that kickbacks from a drug manufacturer could influence a physician’s prescribing behavior for up to two years.  In reaching this conclusion, the court relied on the causation standard set forth in United States ex rel. Greenfield v. Medco Health Solutions, Inc., 880 F.3d 89, 94 (3d Cir. 2018) that requires a relator to present evidence of a claim that was “exposed” to an unlawful kickback scheme.  Under the Greenfield causation standard, “temporal proximity” between a kickback scheme and the submission of claims for government reimbursement alone is insufficient to establish causation.

The Gohil court distinguished the facts in Greenfield, notably a lack of evidence that patients had been exposed to the illegal recommendation of “preferred” vendors listed on a patient-facing website, from those in the case before it.  The court found that, unlike in Greenfield, the relator put forth “ample evidence” that patients were exposed to the physicians’ recommendations—the Taxotere prescriptions—and used the drug during the period in which Sanofi paid the alleged kickbacks and the physicians who received those alleged kickbacks submitted federal claims for the Taxotere prescriptions, creating a genuine dispute of material fact as to causation.

Although the court found that the relator sufficiently established a genuine issue of fact as to causation for purposes of claims relating to alleged kickbacks, the court nevertheless found that the relator failed to establish causation with respect to Sanofi’s preceptorship program.  Under this program, Sanofi sales representatives shadowed physicians for field training.  The relator alleged that Sanofi scheduled preceptorships with low-prescribing physicians to convince physicians to increase their Taxotere usage.  Conversely, Sanofi claimed that it conducted preceptorships in accordance with internal compliance guidelines—which prohibited promotional activity during preceptorships—and that its preceptorships aligned with industry standards.  The court found that the relator produced no evidence that any physicians submitted claims within two years of a preceptorship.  The relator only offered evidence of claims submitted outside the two-year window and put forth no evidence that a kickback affects prescribing behavior for more than two years.  As a result, the relator failed to show that Sanofi caused at least one claim to be submitted to the federal government seeking reimbursement for care provided in violation of the AKS.

With respect to the scienter element of the underlying AKS violation, the court noted numerous instances in which Sanofi ignored its own internal compliance guidelines and failed to discipline employees meaningfully for violations of those guidelines.  The court concluded that, based on Sanofi’s actions, a reasonable jury could find that Sanofi possessed AKS scienter, i.e., that it knowingly and willfully violated the law.

The court’s decision is also pertinent for its timing.  Four days after the Gohil court adopted the broad definition of remuneration and causation in relation to speaker programs, among other alleged kickbacks, the OIG issued a Special Fraud Alert: Speaker Programs (“Alert”), highlighting what it considered the fraud and abuse risks associated with speaker programs sponsored by pharmaceutical companies.  The Gohil decision and the Alert underscore the importance of reviewing compliance guidelines and ensuring meaningful and documented disciplinary actions against employees who fail to comply with those guidelines.

A copy of the court’s opinion can be found here.

For more information, contact Rebekah N. Plowman or Mary Grace Griffin.