In a ruling released earlier this week, a federal district judge decreed that the U.S. Department of Justice (DOJ) has presented sufficient evidence of a company-wide kickback scheme at Novartis AG (“Novartis”) to move the case forward to trial and to deny Novartis an early out through summary judgment. Of particular interest to those in the pharmaceutical industry, the judge held that DOJ may proceed with allegations that Novartis “Lunch-n-Learn” and other activities and interactions with doctors that are alleged to have served an educational purpose are part of the “fraudulent program” that ultimately led to the alleged violations of the False Claims Act at Novartis.

The complaint against Novartis, originally filed as a whistleblower suit by a former Novartis sales representative before the government intervened, alleged that a number of so-called educational events, including “Lunch-nLearns,” were in fact nothing more than sham events meant to induce doctors to prescribe Novartis drugs. Along with stories of purportedly educational activities at wineries, golf clubs, sporting venues and interestingly, 75 events at Hooters, the complaint also includes the allegation that one physician was paid to speak at his own office eight times. 

While the Novartis case makes its way toward trial, those in the pharmaceutical and health care industries should adduce a few lessons regarding compliance and “educational activities.” Events such as “lunch-n-learns” must actually have an educational component and providers of such activities should be able to provide proof of such. Items such as Power Point presentations, sign-in sheets, and printed materials should be provided to attendees and kept on file as proof of compliance. In addition, “canned” and recycled materials that are used over and over again without any change or update over long periods of time are to be avoided. In other words, the “education” portion of the event has to actually be demonstrably “educational.” 

Companies that engage in “Lunch-n-Learn” or similar educational activities, together with the more typical meals and entertainments, should undertake regular audits of these programs to ensure and maintain compliance with the requirements of the Anti-Kickback Statute and False Claims Act. For questions regarding the subject matter of this alert, or to request assistance with a compliance audit, please contact any of the FisherBroyles Pharmacy and Health Care Law team.