US WorldMeds Settlement and Corporate Integrity Agreement to Resolve FCA Allegations

On April 30, 2019, US WorldMeds LLC (“USWM”) agreed to pay $17.4 million to resolve Department of Justice (“DOJ”) allegations that it violated the False claims Act (“FCA”) by paying kickbacks to induce the use of two of its drugs, Apokyn and Myobloc. USWM, headquartered in Louisville, Kentucky, is a specialty pharmaceutical company that develops products to treat challenging conditions and patients with unmet medical needs. Apokyn is used to treat mobility issues associated with advanced Parkinson’s disease, while Myobloc is a purified botulinum toxin intended to treat cervical dystonia, a condition involving involuntary muscle contractions in the neck.

According to the DOJ, in or around January 2012, USWM “substantially increased” the price of Apokyn. As a result, there was a corresponding substantial increase in patient copays, which in many cases exceeded $5,000 per year. The DOJ further alleged that, from January 2012 through June 30, 2013, USWM paid Medicare patients’ copays through a third-party patient assistance program (“PAP”).  As we have previously discussed, the Department of Health and Human Services (“HHS”) has concerns relating to PAPs with respect to Medicare and other Federal health care programs. Specifically, HHS notes that the availability of copay assistance could induce a patient to use a specific prescription drug, the cost of which would then be reimbursed by Medicare. This constitutes an illegal kickback under the FCA. We also previously reported that HHS has provided two guidance documents – one in 2005, the second in 2014 – that address how beneficiaries of Federal health care programs can lawfully receive assistance from PAPs. In this case, the DOJ alleges that USWM’s copay payments violated HHS’ guidance in that USWM was the only donor to the PAP’s Parkinson’s Disease fund, and virtually all of the fund’s donations were spent on Medicare Apokyn patients. Thus, the DOJ alleged that these payments represented illegal inducements to patients in violation of the Anti-Kickback Statute (“AKS”) and the FCA.

The DOJ also alleges that USWM paid kickbacks to two physicians to induce them to write prescriptions of Apokyn and Myobloc. Specifically, the DOJ alleged that USWM paid the physicians “excessive speaking and consulting fees,” as well as “ lavish meals, private plane rides, and all-expense paid trips with their spouses.” One such trip was to the Kentucky Derby. This alleged behavior not only constitutes an FCA violation, but it is also a clear violation of the PhRMA Code on Interactions with Healthcare Professionals which requires that interactions with healthcare providers focus on “education and informational exchange” and avoid impropriety. To that end, companies “should not provide any entertainment or recreational items, such as tickets to … sporting events.”

As part of the settlement, USWM also agreed to a five-year Corporate Integrity Agreement (“CIA”) in which USWM is required to implement compliance measures to ensure that its promotional activities and interactions with PAPs comply with the law. The CIA also requires an independent review organization to conduct compliance reviews, company executives and Board members to provide compliance-related certifications, and the implementation of risk assessment and mitigation processes. USWM did not admit wrongdoing. This is sixth PAP case in three weeks, a clear signal that DOJ is stepping-up enforcement actions relating to PAPs.