Pharmaceutical Company Amgen Sued for Violating Anti-Kickback Laws

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Amgen Inc., of San Francisco CA, is being sued by 15 states alleging the company gave kickbacks to medical providers to help boost sales of the anemia drug Aranesp.

States involved in the lawsuit include California, Delaware, Florida, Hawaii, Illinois, Indiana, Louisiana, Massachusetts, Michigan, Nevada, New Hampshire, New York, Tennessee, and Virginia, along with the District of Columbia.

The lawsuit alleges that Amgen encouraged medical providers to bill third parties, including Medicaid, for Aranesp, which was available to them as a free sample and that the company offered kickbacks to boost prescriptions, including consultancy deals with the International Nephrology Network and ASD Healthcare and all-expense-paid weekend retreats.

Aranesp was approved by the FDA in 2001 and was Amgen’s third biggest drug in 2008, but sales of the drug have fallen 25% for more than a year because of increased safety concerns and stricter safety warnings. In 2006, high doses of the medication were linked to higher rates of heart attack and death in kidney patients.

The anti-kickback statute is a federal law that prohibits individuals or entities from knowing and willfully offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by a federally funded program, such as Medicare or Medicaid. A violation of the law is a felony offense that carries criminal fines of up to $25,000 per violation, imprisonment for up to five years, and exclusion from government health care programs. The government may also levy civil fines of up to $50,000 for each violation of the statute.

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In addition to the federal statute, California, Florida, Georgia, Massachusetts, New Jersey, North Carolina, and Texas also have state laws against remuneration.

Pharmaceutical companies may also face prosecution for false reporting under the Medicaid Rebate Statute which requires each company whose drugs are reimbursed by state Medicaid programs to pay a quarterly rebate that is related to the volume of each drug reimbursed. The miscalculation of these numbers can constitute fraud.

In addition, the Prescription Drug Marketing Act, administered by the Food and Drug Administration, provides standards for drug marketing. Among them is a requirement that drug samples not intended for resale must be labeled as such and that records are maintained regarding the distribution of free samples. It is considered fraud for a physician to claim reimbursement from federal healthcare programs for drugs that have been obtained free of charge.

Pharmaceutical company practices are identified in a set of compliance guidelines issued by the Pharmaceutical Research and Manufacturers Association (PhRMA) in 2002. The Office of the Inspector General (OIG) that governs the anti-kickback statutes indicated that the PhRMA guidelines are in line with their own Compliance Program Guidelines for Pharmaceutical Manufacturers.

Amgen says it is limited in its remarks because of the litigation, but it has a "solid" compliance program. "We believe that the allegations are without merit, and we look forward to the opportunity to examine these matters with the states before the Court," a spokesperson said in a statement.

Sources include: The Office of the Inspector General, Compliance Institute, and the Health Law Reporter

Denise Reynolds, RD LDN

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