Biogen Inc., a global biotechnology company, denies that it violated the federal Anti-Kickback Statute and False Claims Act by paying healthcare professionals for fraudulent speaking engagements in order to incentivize them to prescribe the company’s drugs, among other allegations stemming from a whistleblower suit. The settlement is in line with the government’s ongoing enforcement efforts with respect to suspect speaker programs.
Counsel for the case’s original whistleblower, Michael Bawduniak, announced on July 20, 2022, that Biogen had agreed to pay $900 million to resolve alleged violations of the federal Anti-Kickback Statute (AKS) and False Claims Act (FCA) relating to allegations that Biogen provided illegal kickbacks to loyal prescribers of its products, including through remuneration tied to sham speaker programs. Following a decade of negotiations, the parties agreed to settle a few days before a jury trial was set to begin on July 26.
Biogen acknowledged the settlement in principle in its quarterly financial results for the second quarter of 2022, noting that it does not include any admission of liability and remains subject to negotiation of a final settlement agreement. The settlement agreement will also require approval by the US Department of Justice (DOJ).
Counsel for Mr. Bawduniak believe the Biogen settlement is “the largest recovery in the over 150 years of [FCA] cases to be secured by a whistleblower without the intervention or participation of the United States.” This settlement adds to a growing list of enforcement actions tied to speaker programs (i.e., healthcare company–sponsored events at which physicians or other healthcare providers will give a presentation to other providers, generally regarding a drug, device, or disease state) that are allegedly used as a conduit for illegal kickbacks.
Given this enforcement backdrop, pharmaceutical and medical device companies and other providers are well advised to ensure compliance with available regulatory guidance in developing speaker programs.
In 2012, Mr. Bawduniak, who worked as a Biogen sales representative from 2004 to 2012, filed a qui tam suit in the US District Court for the District of Massachusetts, alleging that Biogen was providing illegal kickbacks to healthcare providers in order to incentivize them to prescribe its multiple sclerosis drugs, Avonex, Tysabri, and Tecfidera, over competitor products. The Federal Bureau of Investigation (FBI) requested that Mr. Bawduniak record conversations with other Biogen employees in order to substantiate his claims. According to Mr. Bawduniak’s counsel, the recordings obtained by Mr. Bawduniak showed that Biogen provided substantial monetary and nonmonetary remuneration to loyal prescribers.
Specifically, Biogen allegedly paid prescribers to consult on topics for which it did not actually need such advisement, or to engage in speaker programs about Biogen products when there was no demand for such presentations. With respect to speaker programs, Biogen allegedly left speaker selection largely to its salesforce as a “tactic to drive [provider] prescribing and to meet sales goals,” with no regard for speaker expertise or public speaking abilities.
The suit alleged that Biogen hosted thousands of speaker programs, for which it paid speakers substantial fees and provided expensive meals and alcohol, typically at high-end restaurants and venues, including resorts, casinos, and country clubs. The suit also alleged that nearly 200 providers who were treated to an all-expenses-paid weekend training event did not ultimately give a presentation on Biogen products.
Biogen’s speaker programs were characterized as “primarily social gatherings.” Many programs were allegedly held without using any slide deck on Biogen drugs, and when slide decks were utilized, the content was alleged to be repetitive of earlier trainings. Also, Biogen allegedly inflated its poorly attended events by inviting individuals with no legitimate business need to attend or with repeat attendees. Finally, Biogen allegedly rejected a valuation advisors’ fair market value (FMV) rate proposals and provided significant travel compensation to speakers even when events were held within walking distance of their offices.
According to the relator’s complaint, “the programs were created to provide an opportunity to direct payments to important customers who spoke at them, and to provide valuable benefits like meals and social experiences to the attendees. Remuneration, not education, was at least one purpose of these programs.”
All in all, the suit alleged that Biogen submitted hundreds of millions of dollars in false claims to government healthcare programs, including Medicare and Medicaid, in violation of the FCA and 11 state false claims acts.
Speaker programs can implicate the AKS when the program sponsor gives something of value (e.g., speaker fees, access to the educational programming itself, free food and drink, travel costs to attend such programs) to healthcare provider attendees in a position to refer Federal health care program business to the program’s sponsor. While speaker programs can be a great resource for providers hoping to stay current on their craft, these training events may also be viewed to provide prohibited remuneration to referral sources and steer patients and Federal health care program business in violation of the AKS—and by extension, the FCA.
The DOJ and the US Department of Health and Human Services Office of Inspector General (OIG) have expressed skepticism about the educational value of such events, particularly where providers can obtain similar information about drugs, devices, and disease states from online resources, product packaging, third-party educational conferences, and medical journals.
In November 2020, OIG released a Special Fraud Alert on the risks associated with pharmaceutical and medical device company sponsored speaker programs. In this guidance, OIG highlighted its investigations demonstrating that healthcare providers often receive significant fees to give speaker program presentations under circumstances that are not conducive to learning or to an audience of individuals with no legitimate reason for attending the presentation—suggesting that in such cases at least one reason remuneration is furnished to speakers and attendees is to induce or reward referrals. OIG added that such remuneration may skew clinical decision making, leading providers to prescribe or refer based on their own financial interests—and those of the speaker program sponsor—rather than their patients’ best interests.
Notably, OIG’s analysis in its recent Advisory Opinion No. 22-14 confirms that the suspect characteristics identified in its Special Fraud Alert for pharmaceutical and medical device companies are also relevant in assessing continuing education and other speaker programs sponsored by other healthcare providers, including physician practices.
The DOJ has also historically taken an interest in enforcement cases involving speaker programs. For example, the DOJ entered into a $225 million settlement with Insys Therapeutics in June 2019. In that case, Insys Therapeutics agreed to a global resolution of separate criminal and civil investigations regarding allegations that the company paid illegal kickbacks in connection with marketing Subsys, a spray-form opioid painkiller. Insys allegedly developed a sham speaker program series, which the company stated was designed to increase brand awareness through peer-to-peer educational programming, but which provided kickbacks to targeted healthcare providers in exchange for increased Subsys prescriptions to patients and upping the dosage for such prescriptions.
The DOJ’s and OIG’s interest in this area is certain to continue, and companies should expect that any speaker programs will be subjected to ongoing scrutiny.
Pharmaceutical and medical device companies, along with other healthcare providers developing speaker programs (including directly hosted events or financially sponsored programs), should take proper steps to ensure compliance with available regulatory guidance, including the OIG Special Fraud Alert.
Each speaker program arrangement should be assessed carefully based on its particulars, and any related marketing and business development policies and procedures on hosting or sponsoring speaker programs should also be thoroughly evaluated in order to assess any potential AKS and FCA fraud and abuse risks. If not appropriately structured, such programs could be ripe for government enforcement action given the DOJ’s and OIG’s increased scrutiny in this area.
Assessment of speaker programs and related policies and procedures should include careful consideration of the following factors:
Morgan Lewis has experience in healthcare regulatory compliance and white collar litigation and government investigation matters. If you have any questions or would like more information on the issues discussed in this LawFlash, please contact the authors, B. Scott McBride or Felicia M. Alexander, or any of the following:
Meredith S. Auten
Andrew T. Budreika
John C. Dodds
Lisa C. Dykstra
Rebecca J. Hillyer
Ryan P. McCarthy
Zane David Memeger
John J. Pease, III
Amy E. Schuh
Eric W. Sitarchuk
Benjamin W. Stango