Sanofi-Aventis U.S. Inc. and Sanofi-Aventis U.S. LLC, subsidiaries of international drug manufacturer Sanofi will pay $109 million to resolve allegations that Sanofi US violated the False Claims Act by giving physicians free units of Hyalgan, a knee injection, in violation of the Anti-Kickback Statute, to induce them to purchase and prescribe the product.
The settlement also resolves allegations that Sanofi US submitted false average sales price (ASP) reports for Hyalgan that failed to account for free units distributed contingent on Hyalgan purchases.
The settlement with the France-based pharmaceutical manufacturer resolves a lawsuit filed by former sales representative Mark Giddarie under the qui tam, or whistleblower provisions, of the False Claims Act.
Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery.
Giddarie will receive $18.5 million as his share of the government’s recovery.
The government alleged that the false ASP reports, which were used to set reimbursement rates, caused government programs to pay inflated amounts for Hyalgan and a competing product.
Federal officials alleged that, facing pressure from a lower-priced competitor, Sanofi US provided its sales representatives with thousands of free “sample” Hyalgan units and trained its sales representatives to market the “value add” of these units to physicians.
In practice, the United States alleges, Sanofi US sales representatives often entered into illegal sampling arrangements with physicians, using the free units as kickbacks and promising to provide negotiated numbers of them in order to lower Hyalgan’s effective price.
The government contends that there were numerous such arrangements, including:
* A Southern California-based Sanofi US sales representative who allegedly provided 25 Hyalgan samples to a physician practice for every 100 Hyalgan units purchased, and who supplemented these kickbacks by regularly treating the entire practice to lavish dinners at Sanofi US’s expense and with Sanofi US’s approval.
* A New York-based Sanofi US sales representative who allegedly provided 12 Hyalgan samples to a physician practice for every 50 Hyalgan units purchased, and whose manager supplemented these kickbacks by treating the practice, along with friends and family members, to a lavish dinner in Manhattan at Sanofi US’s expense and with Sanofi US’s approval.
* A Central Texas-based Sanofi US sales representative who allegedly promised a physician practice 125 free Hyalgan syringes in exchange for a purchase of 500 Hyalgan units and was lauded by Sanofi US’s Texas sales team for “[u]tiliz[ing] samples to provide value for the office.”
Federal officials alleged that the price was important to physicians because Hyalgan and its direct competitor were reimbursed at the same, fixed rate by Medicare and other insurers. Thus, the less expensive option afforded a greater reimbursement “spread,” or profit, to physicians’’ practices.
Sanofi US chose not to compete by lowering the actual invoiced price of Hyalgan, for fear of setting off a price war with its competitor that would lead to a “downward spiral” in prices and reimbursements.
Instead, the government alleges, Sanofi US surreptitiously lowered the effective price of Hyalgan by promising the free units to doctors who agreed to purchase the product. The government alleges that Medicare and other federal health care programs paid millions of dollars in kickback-tainted claims for Hyalgan.