Biogen agrees to pay $900 million in largest FCA Settlement Ever Secured without Government’s Intervention

On September 26, 2022, Biogen Inc. agreed to pay $900 million to the United States and various states to settle a False Claims Act (FCA) lawsuit.  This lawsuit was brought to the U.S. district court of Massachusetts by former employee and whistleblower Michael Bawduniak in April 2012 as a qui tam action. See United States ex rel. Bawduniak v. Biogen Idec, Inc., No. 12-cv-10601-IT (D. Mass.). Mr. Bawduniak alleged that, between 2009 and 2014, Biogen paid illegal kickbacks to its largest prescribers to induce them to prescribe the company’s multiple sclerosis drugs, Avonex, Tysabri and Tecfidera, and discourage them from prescribing newer competitor products. This settlement is the largest ever FCA settlement secured without the intervention of the United States.

Biogen first disclosed this tentative agreement in a quarterly earnings report in July of this year. In a statement, the company denied all allegations raised in the case, saying that it believed its intent and conduct to be at all times lawful and appropriate. The company did not accept any admission of liability as part of the settlement.

For several years now, the U.S. Department of Health and Human Services (HHS) and the Department of Justice (DOJ) have aggressively pursued antikickback cases in the healthcare industry. As many of our readers know, the federal antikickback statute prohibits offering or paying healthcare professionals (HCPs) anything of value as an inducement or reward for ordering or prescribing an item or service reimbursable by federal health care programs. See 42 U.S.C. § 1320a-7b(b). HHS noticed an increasing trend of illegal kickbacks in connection with speaker programs and in November 2020, the Office of Inspector General issued a Special Fraud Alert on the topic. The Alert described several factors that could potentially violate the antikickback statute. For example, the government closely scrutinizes speaker programs or trainings that involve lavish venues or meals and free alcohol, invite attendees with no legitimate business reason to attend, and present little substantive information to them.  The government also suspects violative conduct if the speakers, attendees, or consultants are selected based on the volume of their past prescriptions of the company’s products or their expected future prescriptions.

Biogen allegedly paid kickbacks in the form of honoraria, speaker training fees, consulting fees, and for meals to HCPs who spoke at or attended Biogen’s speaker programs, speaker trainings, or consulting programs.  The relator claimed that his secretly recorded conversations confirmed that Biogen deliberately compensated some of its most important prescribers “to influence their prescribing and to ensure that they remained loyal Biogen customers.” Mr. Bawduniak claimed that these events were held at “sumptuous resorts and restaurants” and involved “lavish meals and free alcohol.” Biogen supposedly paid doctors for services that had no legitimate business purpose and no demand from doctors, and were unlikely to be conducted. For example, he claimed that Biogen paid “hundreds of customers” and HCPs for consulting advice on topics that the company did not need, never intended to use, could not use, or for which Biogen already had all the information it required. The company also allegedly paid its speakers and consultants above the fair market value for their services by, for example, automatically adding compensation for three hours of travel time even when an HCP did not have to travel to get to a speaking event.

After the OIG Special Fraud Alert, the Pharmaceutical Research and Manufacturers of America (PhRMA) updated its Code on Interactions with Health Care Professionals to offer updated guidance on speaker trainings, speaker programs, meals, and gifts. Today, these two documents are key in navigating speaker programs in the industry.