A recent decision from the Southern District of New York denying defendants’ motion for summary judgment identified a number of characteristics of a pharmaceutical company’s promotional speakers program that may raise concerns under the Anti-Kickback Statute. The opinion highlights the features of the promotional speaker program at issue that persuaded the court that it ran afoul of the AKS.

In United States ex rel. Arnstein v. Teva Pharmaceuticals USA, Inc. et al., former sales representatives of Teva Neuroscience, Inc. filed a qui tam alleging that Teva’s promotional speaker program was little more than a “conduit through which prescribers were bribed with speaker fees, expensive meals, and alcohol” in exchange for prescribing Teva drugs. The government declined to intervene in the case and after Teva’s motion to dismiss was denied, Relators proceeded to discovery.

Teva eventually moved for summary judgment, arguing (1) that there was no genuine issue of material fact that Teva’s speakers program violated the AKS, (2) that Relators failed to link any AKS violation to prescription reimbursement claims, and (3) that Relators failed to offer evidence that Teva’s misrepresentations about AKS compliance were material to government payors’ decisions to reimburse prescription claims. The court rejected all three arguments, and denied Teva’s motion for summary judgment.

First, the court held that Relators had established a material issue of fact as to whether at least one purpose of Teva’s speakers program was to induce referrals, in violation of the AKS. The court noted that inducing referrals “need not be the primary purpose” in order to establish an AKS violation, and rejected Teva’s argument that Relators were required to show a quid pro quo relationship. Rather, because Relators “proffered several indicia of an unlawful relationship between Teva and its speakers,” the court held that evidence of a quid pro quo was not required to establish unlawful intent. The court’s holding that an AKS violation can be found in the absence of a quid pro quo reflects a significant departure from rulings by other courts (see, e.g., prior posts discussing a quid pro quo requirement here and here).

The relevant indicia of an improper relationship cited by the Teva court included evidence that Teva tracked the extent to which speakers prescribed Teva products. Relators also pointed to evidence that that speakers’ compensation was not fair market value. While Teva pointed to its policies requiring that speakers be paid fair market value, Relators offered evidence that Teva regularly provided its speakers with expensive dinners and alcohol in connection with speakers programs. Relators also argued that honoraria payments were made to speakers in connection with “sham” speakers programs, such as programs with few appropriate attendees or programs attended by attendees who had attended multiple presentations on the same topic in a short period of time. From these facts, the court held that a reasonable jury could conclude that Teva’s speakers programs were a sham, rendering any payment to the speakers in excess of fair market value.

In addition, Relators offered evidence that speakers were chosen not based on their qualifications to serve as effective speakers, but rather based on the number of prescriptions they wrote. The court observed that nominations for speakers came from the company’s sales and marketing departments, as opposed to medical affairs or compliance. The court also cited documents in the record indicating that sales representatives and other Teva employees focused on sales volume to the exclusion of other criteria in the identification of potential speakers.

Relators also contended that Teva’s speakers programs were structured in a way that “stripped [them] of any legitimate educational value.” Relators pointed to evidence that speakers programs were held in restaurants, expensive meals and alcohol were served, and attendees often included individuals who could not benefit from the educational purpose of the program, including sales representatives and family members of health care providers. Relators’ expert opined that Teva’s materials were not modified to take into account the given audience, the materials were too simplistic to benefit practicing health care professionals, and contained outdated information. Based on all of these factors, the court held that Relators had created a disputed issue of fact regarding whether the Teva speakers program ran afoul of the AKS.

Second, the court rejected Teva’s argument that Relators failed to meet their burden of proof to establish that the alleged AKS violations resulted in specific claims for reimbursement. Relying upon a recent Third Circuit opinion, the court held that Relators were not required to show that a kickback was the “but for” cause of a prescription. U.S. ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89, 97 (3d Cir. 2018) (discussed here and here). Rather, Relators were required to demonstrate a “link” between the kickback and a claim for reimbursement, but this showing required less than proving that a specific kickback succeeded in producing a specific prescription. The court held that Relators satisfied this requirement by identifying prescriptions written by Teva speakers that were submitted to federal payors for reimbursement within six months after the speaker received a payment from Teva in connection with a speakers program that bore indicia of being a “sham”.

Finally, the court rejected Teva’s argument that Relators failed to establish that certifying compliance with the AKS was material to the federal payors’ decision to reimburse prescriptions for Teva pharmaceuticals. The court quickly disposed of this argument with respect to post-2010 claims, given the 2010 amendment to the AKS providing that a claim for services resulting from a violation of the AKS “constitutes a false or fraudulent claim for purposes” of the FCA. The court also concluded that Relators had offered sufficient evidence that compliance with the AKS was material to the payment of the pre-2010 claims, based on evidence that the government routinely pursued cases against pharmaceutical companies based on similar AKS violations. While the 2010 amendment has been in place for nearly a decade now, the pre- and post-2010 distinction remains relevant in light of the potential that a 10-year statute of limitations may apply to FCA claims (discussed here).

The Teva opinion highlights a number of potential concerns that can arise in the context of a pharmaceutical company speakers program. While such program can be a valuable promotional tool, absent sufficient controls AKS concerns may quickly arise.

A copy of the opinion can be found here.