Government Resolves False Claims Act Allegations with Sanofi for $109 Million

The United States government entered a $109 million settlement with Sanofi-Aventis U.S. Inc. and Sanofi-Aventis U.S. LLC (Sanofi US), subsidiaries of the international drug manufacturer Sanofi that resolved allegations that Sanofi US violated the False Claims Act by providing kickbacks to physicians to induce them to prescribe Sanofi US’s drug Hyalgan and by providing false average sales price (ASP) reports that were used by government health care programs to set reimbursement rates for Hyalgan, and which resulted in those government programs paying inflated prices for the drug.

The United States alleged that Sanofi US provided it sales force with thousands of free samples of Hyalgan to give to doctors.  Hyalgan is a treatment for osteoarthritis which is injected directly into the knee joint. Sanofi allegedly trained its sales representatives to market the “value add” of the free samples to the physicians which translated in practice to giving the doctors free samples and promises of negotiated lower pricing on Hyalgan in exchange for increased prescriptions from each physician.

In the Department of Justice’s announcement on December 19, 2012, the government provided examples of the alleged kickbacks such as a Southern California based sales representative who allegedly gave a doctor twenty-five free samples for every 100 units purchased.  This sales representative sweetened the deal by regularly treating the entire practice to lavish dinners approved and paid for by Sanofi.  A Central Texas-based Sanofi US representative allegedly promised a physician 125 free Hyalgan syringes in exchange for a purchase of 500 Hyalgan units and received praise from Sanofi for ‘utilizing samples to provide value for the office.’

The government health care programs such as Medicare provide the same reimbursement rate for Hyalgan and its direct competitor.  By lowering the prices of Hyalgan in exchange for increased prescriptions, Sanofi US also offered the physicians a greater “spread” or profit margin with the lower prices as the government reimbursement remained the same fixed rate.  Sanofi US also manipulated the ASP reimbursement rates because the company did not take into account the free drugs as a discount when reporting the price paid for the drug.  Thus Sanofi continued to receive a higher reimbursement rate as well.

Because of Sanofi’s actions the government alleged that Medicare and other federal health care programs paid millions of dollars in kickback-tainted claims for Hyalgan. The settlement of this case also resolved the pending qui tam lawsuit filed by Mark Giddarie under the False Claims Act.  By blowing the whistle on Sanofi’s alleged fraudulent behavior and under the provisions of the False Claims Act, Giddarie will receive $18.5 million from the government’s recovery.

Posted in Anti-Kickback Statute, Best Price, False Claims, Federal False Claims Act, Healthcare Fraud, Qui Tam, SettlementsNo Comments


Leave a Reply

This blog is designed to provide general information only. This information is not and should not be construed to be legal advice. The transmission of the information found on this blog also does not result in the formation of a lawyer-client relationship.

Copyright 2014 Berg & Androphy.