Health Law Daily No FCA causation element shown in manufacturer’s preceptorship program
Tuesday, November 17, 2020

No FCA causation element shown in manufacturer’s preceptorship program

By Jeffrey H. Brochin, J.D.

A relator was able to show a genuine issue of material fact for various alleged promotional schemes practiced by a drug manufacturer, but not as part of the preceptorship program.

A federal district court in Pennsylvania has denied the motions for summary judgment filed by Sanofi U.S. Services, Inc. (Sanofi) over claims regarding various allegations related to schemes for promoting the cancer drug Taxotene®, except regarding Sanofi’s preceptorship arrangement with doctors for which the relator failed to establish the requisite element of causation. The other alleged schemes presented genuine issues of material fact for whether the manufacturer’s stipends to doctors for advisory boards, speaker programs, and education grants constituted violation of the anti-kickback statute (AKS) (U.S. ex rel Gohil v. Sanofi U.S. Services, Inc., November 12, 2020, Brody, A.).

Act Two of PACT AKS claims. In what was characterized by the court as "Act Two" of motions for summary judgment proceedings, the relator contended that his former employer violated the False Claims Act (FCA) (31 U.S.C. §3729 et seq.), by engaging in a nationwide marketing scheme between 1996 and 2004 involving a variety of kickbacks that induced doctors to prescribe Taxotere. These prescriptions involved submissions to government health programs for reimbursement. The court first addressed the summary judgment motions on March 4, 2020, when it denied cross-motions for summary judgment that specifically addressed the relator’s claims that the manufacturer’s so-called reimbursement-assistance program—the "Providing Access to Cancer Therapy Program" (PACT Program) violated the FCA. In the latest round of motions for summary judgement, the court reviewed the remaining PACT promotional schemes.

Five schemes alleged. The relator alleged that the manufacturer undertook several programs by which it tendered remuneration to doctors, including a program of advisory boards, speaker program, educational grants, preceptorships, and ad hoc kickbacks. Doctors who served on the advisory boards were paid to attend advisory boards in desirable locations and offered valuable entertainment. Attendees received honoraria (around $1000) and all-expenses paid trips to locations such as Rome and New York City, and were treated to golf outings and Broadway shows.

The speaker’s bureau consisted of a registry of 300–500 national and regionally recognized experts in the field of Medical Oncology that provided physicians with training on the latest Taxotere data during seminars given 4 times each year. Although according to company policy, the speaker arrangements could not be based on the speaker’s volume of business or favorable opinion of Taxotere, and required that speakers be compensated at fair market value, in practice, they targeted doctors from key accounts because "developing [doctors] as speakers and advocates had a positive impact on sales in the surrounding community territories." Other promotional schemes similarly were framed as above board by the manufacturer, but described as AKS violations by the relator.

Two types of falsity. The court began its discussion by noting that relators bringing FCA claims must satisfy four elements: (1) falsity; (2) causation; (3) knowledge; and (4) materiality. The falsity element can consist of either "factual falsity," characterized by a misrepresentation as to what goods or services are being provided to the government, or "legal falsity," which occurs when a claimant lies about its compliance with a statutory, regulatory, or contractual requirement. The relator advanced only a legal falsity theory, arguing that PACT’s services were kickbacks that violated the AKS. Claims tainted by AKS violations are automatically false under the FCA.

Evidentiary burdens on the relator. To establish an AKS violations, the relator had to satisfy three elements: (1) that the PACT Program was remuneration; (2) that at least one purpose of PACT was to induce doctors to prescribe more Taxotere; and (3) that the manufacturer behaved knowingly and willfully. The court reviewed each of the PACT promotional programs with respect to these elements, and determined that as to the advisory board, speaker program, and educational grant schemes, each party presented sufficient evidence to raise genuine issues of material fact as to whether the schemes consisted of all of the requisite elements for an AKS violation.

Preceptorship program singled out. Under the preceptorship program, sales representatives shadowed doctors ostensibly to learn in the field from oncology experts. However, the relator alleged that the manufacturer scheduled preceptorships with low-prescribing doctors to convince doctors to increase their Taxotere usage. Conversely, the manufacturer claimed that it conducted preceptorships in accordance with internal compliance guidelines—which prohibited promotional activity during preceptorships—and that its preceptorships conformed with industry standards.

The court concluded that the relator could not survive summary judgment on the preceptorships scheme because he did not create a genuine dispute of material fact as to each element of the FCA. To establish an FCA violation, he needed to show (1) falsity based on an AKS violation; (2) causation; (3) scienter; and (4) materiality. The evidence—even when viewed in the light most favorable to the relator, did not show causation, because he failed to show that the manufacturer caused at least one claim to be submitted to the federal government that sought reimbursement for medical care that was provided in violation of the AKS, which would make the claim false.

The case is No.: 2:02-cv-02964-AB.

Attorneys: Alan M. Freeman (Blank Rome LLP) for U.S. ex Rel. Yoash Gohil. Patrick L. Oot, Jr. (Shook Hardy & Bacon LLP) for Aventis, Inc. and Sanofi U.S. Services Inc.

Companies: Aventis, Inc.; Sanofi US Services Inc.

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