The United States Court of Appeals for the Second Circuit recently revived a whistleblower lawsuit against Novartis, marking a development in the enforcement of the Anti-Kickback Statute (AKS). This decision broadened the scope of what constitutes a violation under the AKS, specifically impacting how pharmaceutical companies conduct speaker programs.
In this case, United States ex rel. Camburn v. Novartis Pharmaceuticals Corp., whistleblower Steven Camburn brought allegations against Novartis, accusing the pharmaceutical company of using its speaker programs as a façade to provide kickbacks to physicians. Camburn claimed that Novartis organized peer-to-peer speaker events that ostensibly aimed to educate healthcare professionals about Gilenya, a drug prescribed for multiple sclerosis. The United States Food and Drug Administration (FDA) imposed a first-dose observation requirement for new patients taking Gilenya, requiring that the patient be monitored by a doctor while attached to an electrocardiogram machine for six hours. Of course, that first-dose observation requirement is burdensome for medical providers and Novartis attempted to market Gilenya through the aforementioned peer-to-peer speaker programs in which physicians could share insights about Gilenya with other healthcare professionals.
However, Camburn contended that these events often had few or no legitimate attendees, were often social in nature, and speakers were sometimes paid for events that were cancelled—practices he argued were designed to unduly influence physicians’ prescribing habits. Camburn alleged that Novartis paid remuneration to physicians involved in the speaker events in exchange for prescribing Gilenya to patients.
The Second Circuit’s holding of the “at-least-one-purpose” rule, states that “in relator-initiated actions, a defendant violates the AKS when at least one (rather than the primary or sole) purpose of the remuneration she provides is to induce purchase of a federally reimbursable healthcare product.” This ruling departs from other interpretations that require that the inducement be the primary or sole purpose of the remuneration but, the Court notes, the ruling is in line with seven other circuit courts.
The Second Circuit also noted that if a plaintiff is pleading an AKS violation as a predicate to a False Claims Act claim, they do not need to allege a quid pro quo exchange. In determining whether pleadings are sufficient, the Second Circuit emphasized that it is “context-specific” and in the case at issue, Camburn did plead factual claims with requisite particularity to allow an inference that one of the purposes of Novartis’s conduct was to induce physicians to prescribe Gilenya at a higher volume, thereby allowing the case against Novartis to move forward.
Implications for Speaker Programs
This broader interpretation means that pharmaceutical companies must exercise greater caution and stricter compliance in their speaker program operations. Companies must ensure that these programs are legitimate educational events with proper attendance and that any compensation is commensurate with the services provided. The Second Circuit decision emphasizes the need for companies to implement robust compliance measures to monitor and control the content and conduct of such programs to prevent AKS violations.
Going a step further, the implications of this ruling extend beyond just legal compliance. They also touch on corporate ethics and the broader responsibility of pharmaceutical companies to maintain integrity and transparency in their interactions with healthcare providers. As this ruling aligns with similar decisions in other circuits across the United States, it is likely to influence how speaker programs are structured and monitored industry-wide, potentially leading to more conservative approaches in the ways companies engage healthcare professionals.
For healthcare and pharmaceutical compliance professionals, this decision serves as a reminder of the importance of maintaining rigorous oversight of promotional activities. It underscores the necessity of clear policies and training regarding the distinction between educational content and promotional activities in speaker events.
For further details on the ruling and its full legal implications, the court’s decision can be read here.