Sanofi-Aventis is the latest pharmaceutical company to settle with the United States Department of Justice in an Average Sales Price Fraud case, but will almost certainly not be the last.
Sanofi-Aventis U.S. Inc. and Sanofi-Aventis U.S. LLC, United States subsidiaries of the French drug manufacturer Sanofi, are the latest pharmaceutical companies to reach a settlement agreement with the United States Department of Justice in an Average Sales Price Fraud (“ASP”) Case. Sanofi recently agreed to pay $109 million to the United States government in order to resolve allegations that the American subsidiaries provided illegal kickbacks to physicians and reported false pricing information to Medicare, in violation of the False Claims Act. The company also expects to enter into a corporate integrity agreement with the Office of the Inspector General of the United States Department of Health and Human Services.
The ASP Fraud Case against Sanofi
The United States alleged that Sanofi trained its sales representatives to entice physicians to prescribe and order Hyalgan, a knee injection medication, by providing the doctors with thousands of free samples of the product. Facing supposed pressure from a lower-priced competitor, Sanofi additionally trained their sales representatives to market the “value add” of these free units to physicians, using them as kickbacks and promising to provide negotiated numbers of them in order to lower Hyalgan’s effective price.
Some specific examples of illegal kickbacks included the following:
- A Sanofi sales representative from Southern Californiawho allegedly provided 25 Hyalgan samples to a physician office in return for every 100 Hyalgan units purchased. The representative also supplemented the kickbacks by regularly treating the entire medical practice to lavish dinners at Sanofi’s expense and with Sanofi’s approval.
- A New York Sanofi sales representative who allegedly provided 12 Hyalgan samples to a physician practice in return for every 50 Hyalgan units purchased. The representative’s manager agreed to supplement the kickbacks by treating the entire practice, along with friends and family members, to a lavish dinner inManhattanat Sanofi’s expense and with Sanofi’s approval.
- A Central Texas Sanofi sales representative allegedly promised a medical practice 125 free Hyalgan syringes in exchange for a purchase of 500 Hyalgan units. Sanofi’sTexassales team then praised the representative for “[u]tiliz[ing] samples to provide value for the office.”
Additional Fraud and ASP Fraud Outlook
In addition to the illegal kickback arrangements, the government alleges that Sanofi’s American subsidiaries submitted false average sales prices (“ASPs”) for Hyalgan to Medicare. These false ASPs failed to account for the price reductions that resulted from Sanofi’s provision of free units to physicians that hinged upon new orders. As a way to set their reimbursement rates, Medicare generally uses ASP as reported by the drug manufacturer. Consequently, the false ASP data caused Medicare to over-reimburse for Hyalgan.
According to whistleblower lawyer, Daniel R. Miller, Esq. of the law offices of Berger & Montague, P.C., this case is only the beginning of an ASP trend.
“This is just the tip of the iceberg. The era of Average Sales Price fraud (ASP) is well underway. We expect to see more cases similar to the allegations against Sanofi in the months and years to come,”says Miller.
Whistleblower to Make $18.5 Million
The settlement resolves a lawsuit originally filed by former Sanofi sales representative, Mark Giddarie under the qui tam, or whistleblower provisions, of the False Claims Act. He will receive $18.5 million as his share of the government’s recovery.
Giddarie filed an action under the qui tam (whistleblower) provisions of the False Claims Act, which allow a private cause of action for individuals who have knowledge of fraud perpetrated against the government. After a whistleblower files a qui tam complaint, the allegations are disclosed to the government, who has a sixty-day period to investigate the complaint and determine whether to intervene. The government has come to rely heavily on qui tam suits in efforts to combat fraud and abuse in government health care programs.