Life Science Compliance Update

September 27, 2017

Taking Center Stage - Washington State’s Medicaid Fraud Control Unit, the False Claims Act and Celgene

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On July 26, 2017, the Washington State Attorney General (“AG”) Bob Ferguson (“Ferguson”) announced one of the State’s largest recoveries against the Pharmaceutical Company Celgene (“Celgene”) for allegations involving violations of the Medicaid False Claims Act, in particulars claims related to the company’s off-label marketing, fraudulent billing and providing kickbacks to doctors. The Washington State AG recovery represents a pivotal point in life science compliance, where State AGs similar to Seattle, are actively seeking recoveries against companies that violate state and federal Medicare programs.

The pharmaceutical company Celgene, headquartered in Summit, New Jersey, describes itself as an “integrated global biopharmaceutical company engaged primarily in the discovery, development and commercialization of innovative therapies for the treatment of cancer and inflammatory diseases through next-generation solutions in protein homeostasis, immuno-oncology, epigenetics, immunology and neuroinflammation.”

In a significant settlement involving twenty-eight states, including Washington, Celgene agreed to pay $280 million to settle a variety of claims including off-label promotion, fraudulent billing and the provision of kickbacks to doctors. The case involved two products: Revlimid and Thalomid.

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September 25, 2017

Fresenius to the U.S. Government: When It Comes to the FCA, You Snooze You Lose

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In a nearly decade long lawsuit involving the dialysis company Fresenius, and allegations that the company violated the False Claims Act by conducting and then billing the government for medically unnecessary hepatitis B tests, Fresenius is now seeking to challenge that the government is time-barred because the government took too long to intervene in this case. Although the Court has yet to decide the challenge by Fresenius, the outcome of that decision will likely have a significant impact on future government decisions to intervene in False Claim Act cases.

Everyone who has ever been involved with a government investigation or case knows that time somehow runs differently in those situations. Investigations take a long time to bear fruit and when they do, securing indictments and trial dates take even more time. However, even with that perspective, the case of United States ex rel. Christopher Drennen v. Fresenius Medical Care Holdings is one for the record books, and it is still not over.

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September 20, 2017

False Claims Act Mid-Year Review: Significant Life Science Settlements, Post-Escobar Developments & Industry Round Up

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Several significant False Claims Act settlements and judgments in the first six months of 2017 suggest this year will result in the eighth year of over $3 billion in FCA recoveries. Additionally, recent judicial decisions in FCA suits have further refined the test outlined in the Supreme Court’s 2016 Escobar decision, statistical sampling has resulted in significant FCA judgments, and the government continues to explore new frontiers for FCA liability.

The False Claims Act (“FCA”) continues to be a powerful tool for the government (and relators) to curb fraudulent conduct. FCA settlements and judgments to date in 2017 have surpassed $1.5 billion in recoveries. This rate suggests that for an eighth consecutive year the government is on track to collect more than $3 billion total from FCA cases.

As in the past, several significant FCA settlements and judgments this year have targeted the life science industry. Additionally, several decisions in the first half of 2017 helped refine the Supreme Court’s consequential Escobar decision, demonstrated willingness by the government to apply statistical sampling to calculate recoveries, and further refined the heightened pleading standards required for FCA suits. Finally, government scrutiny of pharmaceutical manufacturers related to donations to charitable patient assistance programs (“PAPs”) signals the possibility of burgeoning FCA risk and underscores the importance of compliance.

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