The case involved Hyalgan, a pharmaceutical used to relieve knee pain due to osteoarthritis. Hyalgan is injected directly into the knee joint to restore the cushioning and lubricating properties of normal joint fluid. It is prescribed for individuals whose pain cannot be managed with simple painkillers, exercise or physical therapy.
The government alleged that Sanofi US sales representatives entered into illegal sampling arrangements with physicians, using free units of Hyalgan as kickbacks and promising to provide more free “samples” in order to lower Hyalgan’s effective price. According to the government, Sanofi US provided its sales representatives with thousands of free “sample” Hyalgan units and trained its sales representatives to market the “value add” of these units to physicians.
The government provided the following examples of what it contended were illegal kickbacks:
- A Sanofi US sales representative allegedly provided 25 Hyalgan “samples” to a physician practice for every 100 Hyalgan units purchased, and supplemented these kickbacks by treating the entire practice group to lavish dinners at Sanofi US’s expense and with Sanofi US’s approval.
- A Sanofi US sales representative allegedly provided 12 Hyalgan samples to a physician practice for every 50 Hyalgan units purchased, and his manager supplemented these kickbacks by treating the practice, along with friends and family members, to a lavish dinner at Sanofi US’s expense and with Sanofi US’s approval.
- A Sanofi US sales representative allegedly promised a physician practice 125 free Hyalgan syringes in exchange for a purchase of 500 Hyalgan units and was lauded by his Sanofi US sales team for “[u]tiliz[ing] samples to provide value for the office.”
Offering physicians anything of value to induce them to purchase or prescribe your product violates the Anti-Kickback Statute. Any claims for reimbursement submitted to Medicare or Medicaid for those products then become "false claims" in violation of the False Claims Act.
According to the government, Sanofi US chose not to compete by lowering the actual invoiced price of Hyalgan for fear of setting off a price war with its competitor that would lead to a “downward spiral” in prices and reimbursements.
The $109 million settlement also resolves allegations that Sanofi US submitted false average sales price (ASP) reports for Hyalgan. The ASP reports were false, the government contends, because they did not account for the free units that were distributed to physicians based on their purchases.
ASP reports submitted by pharmaceutical companies are used to set reimbursement rates for government healthcare programs such as Medicare and Medicaid. The government alleged that the false ASP reports submitted by Sanofi caused government programs to pay inflated amounts for Hyalgan and the competing product.
This case may never have been brought except for one pharmaceutical sales representative, Mark Giddarie, who consulted with a False Claims Act attorney. Under the False Claims Act, an individual who has knowledge of false or fraudulent claims may commence a qui tam lawsuit on behalf of the U.S. Government. The individual who commences the lawsuit is called a “relator.”
The qui tam lawsuit is filed under seal (in secret) while the government investigates the allegations and decides whether to pursue the case. If the government recovers money from the defendant, the relator is entitled to a reward of between 15% and 30% of the amount the government recovers from the defendant.
If you have information that a pharmaceutical company is offering kickbacks in the form of cash, free samples conditioned on purchases, or lavish gifts, dinners, speaking fees or other benefits, then you should consult with an experienced False Claims Act attorney immediately. No attorneys’ fees are charged unless your case is successful.
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John Howley, Esq.
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