Court Finds That Qui Tam Relator Cannot Enforce 340B Program Statute
A recent decision from the Central District of California held that a qui tam relator cannot bring a False Claims Act (FCA) case against pharmaceutical manufacturers to enforce the 340B Drug Pricing Program’s (“340B Program”) statutory requirements. See United States ex rel. Adventist Health System/West v. AbbVie, No. 21-cv-04249 (C.D. Cal. Mar. 18, 2024). The 340B Program is a federal program that requires pharmaceutical manufacturers to offer discounted prices, called a “ceiling price,” on applicable drugs to certain hospitals and clinics, referred to as 340B “covered entities.” The relator, Adventist Health System/West, a covered entity under the 340B Program, alleged that the defendant pharmaceutical manufacturers failed to comply with the 340B Program’s requirements related to the “penny pricing” policy, which requires manufacturers to offer drugs at a penny if the ceiling price calculation results in a number at or less than a penny.
FY 2023 Saw the Most FCA Settlements and Judgments Ever in a Single Year, with the Majority of Recovered Funds Paid by the Healthcare Industry
On February 22, 2024, Acting Associate Attorney General Benjamin C. Mizer and Civil Division Principal Deputy Assistant Attorney General Brian M. Boynton announced that settlements and judgments under the FCA exceeded $2.68 billion in fiscal year (“FY”) 2023. DOJ and whistleblowers, further, were party to 543 FCA settlements and judgments, the most ever in a single year. Detailed statistics on FCA recoveries from 1986 through FY 2023 are available here.
DOJ Reaches Settlement with Laboratory Over Commission-Based Compensation Arrangements with Independent Contractors, Medical Necessity
Earlier this month, the U.S. Department of Justice (“DOJ”) announced a $5.9 million FCA settlement resolving allegations that Genotox Laboratories Ltd., a toxicology and pharmacogenetics testing laboratory: 1) violated the Anti-Kickback Statute (“AKS”), and thereby caused the submission of false claims, through commission-based compensation arrangements with its independent contractors, and 2) submitted claims to federal healthcare programs for unnecessary drug tests. In parallel proceedings, the U.S. Attorney’s Office for the Western District of Texas and Genotox entered into an eighteen-month Deferred Prosecution Agreement to resolve a criminal investigation into the same conduct. The settlement highlights DOJ’s ongoing interest in pursuing independent contractor arrangements that do not fit within a safe harbor to the AKS, where such relationships are also accompanied by conduct that traditionally attracts enforcement scrutiny, such as submission of claims for medically unnecessary services.
