Sanofi-Aventis U.S. Inc. and Sanofi-
Aventis U.S. LLC, subsidiaries of international drug
manufacturer Sanofi (collectively, Sanofi US), have agreed to
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 government alleges 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.
The United States contends 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.”
The United States contends 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. According to the government's allegations, 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.
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