Not All Discounts Are Equal: Evaluating When Discounts May Be Construed as Unlawful

By Thomas Sullivan Last updated May 5, 2018

Discounts within the health care industry are historically viewed as not being subject to the U.S. Federal Anti-Kick Back Statutes (“AKS”). Recently, the U.S. Department of Justice (“DOJ”) and U.S. Courts have sought to clarify, refine, and otherwise limit the scope of the discount “safe harbor” provision, putting the life sciences and health industry on notice that not all discounts are necessarily immune from AKS violations. As a result, companies are no longer blindly able to rely on “safe harbor” protections and need to re-evaluate their discount programs.

The life sciences industry widely acknowledges that the federal anti-kickback statute (“AKS”) makes doing business with customers more challenging than for other sectors. This challenge is due in part to the fact that the law makes it illegal to “exchange (or offer to exchange), anything of value, in an effort to induce (or reward) the referral of federal health care program business.”