June 23, 2022
Last month, a federal jury in Florida found two men guilty of kickback related charges involving sham speaker events. These programs violate the anti-kickback statute. The government continues its enforcement efforts against bogus speaker programs. This case shows how pharmaceutical companies can use such programs to funnel payments to doctors in exchange for prescriptions.
One defendant, Daniel Tondre, was a sales representative for Insys Therapeutics, Inc. Insys manufactured and sold Subsys, a form of liquid fentanyl sprayed under the tongue. The other defendant, Steven Chun, was a doctor who owned and operated a pain management practice in Sarasota. Chun prescribed large amounts of Subsys to patients.
According to DOJ’s press release announcing the convictions, Insys held “bogus and sham speaker events” where it paid Chun $2,400 to $3,000 per event. In less than three years, Insys paid him over $278,000. In return, Chum wrote “more and higher dosages of Subsys prescriptions.” These events “were often only attended by Chun’s family and friends or repeat attendees and included many falsified or forged signatures of attendees.”
Prosecutors claimed that these sham speaker programs were simply a vehicle for Insys to funnel kickbacks and bribes to Chun. And that, in exchange, Chun prescribed increasing amounts of Subsys. The jury agreed. It convicted Tondre and Chun of conspiring to pay and receive kickbacks and bribes in the form of speaker fees. In addition, the jury convicted both men on five separate kickback charges. The court has not yet sentenced the defendants.
In 2019, Insys admitted to illegally promoting Subsys, including through sham speaker events. The company also entered into a $225 million dollar global settlement of criminal and civil investigations into its marketing practices. In addition, the United States Attorney’s Office in Boston secured convictions of eight Insys company executives, including its CEO, for crimes involving illegal marketing of Subsys.
According to DOJ’s press release announcing the Insys settlement:
Insys began using “speaker programs” purportedly to increase brand awareness of Subsys through peer-to-peer educational lunches and dinners. However, the programs were actually used as a vehicle to pay bribes and kickbacks to targeted practitioners in exchange for increased Subsys prescriptions to patients and for increased dosage of those prescriptions.
We’ve previously written about a case where whistleblowers alleged that Teva Pharmaceuticals used sham speaker programs to induce physicians to prescribe its drugs. There, the defendants paid $54 million to settle civil claims under the False Claims Act (FCA). The recent Florida case involved criminal convictions under a different statute – the Anti-Kickback Statute (AKS). Both statutes come into play when a company improperly induces doctors to prescribe its drugs.
The Anti-Kickback Statute makes it a crime to knowingly or willingly offer or pay “remuneration” to induce someone to recommend purchasing a drug covered by a “Federal health care program.” 42 U.S.C. § 1320a-7b(b)(2). If you want to learn more about the AKS we have a whole explainer about it.
In the Florida case, the government prosecuted both sides of the kickback transaction. The jury convicted the sales rep who paid the doctor to speak at sham presentations of offering and paying kickbacks. And, it convicted the doctor who received the payments in exchange for writing prescriptions as well. The defendants face 5 years’ imprisonment on the conspiracy count and 10 years on each of the AKS violations.
Doctors who write prescriptions for a drug after receiving kickbacks cause pharmacies to submit claims to the government. Because kickbacks induced those claims, the claims in turn violate the False Claims Act. In the Insys settlement, the company agreed to pay $195 million to settle FCA allegations of illegal marketing practices. The alleged misconduct included sham speaker events. In 2020, another pharmaceutical company, Novartis, paid $678 million for similar misconduct. DOJ’s press release announcing the settlement explained that kickback scheme:
NOVARTIS hosted tens of thousands of speaker programs and related events under the guise of providing educational content, when in fact the events served as nothing more than a means to provide bribes to doctors. NOVARTIS paid physicians honoraria, purportedly as compensation for delivering a lecture regarding a NOVARTIS medication, but, as NOVARTIS knew, many of these programs were nothing more than social events held at expensive restaurants, with little or no discussion about the NOVARTIS drugs. Indeed, some of the so-called speaker events never even took place; the speaker was simply paid a fee in order to induce the speaker to prescribe NOVARTIS drugs.
The Government’s complaint further alleged that NOVARTIS sales representatives, on the instruction of their managers, selected high-volume prescribers to serve as the paid “speakers” at these events with the intent to induce them to write more – or keep writing many – NOVARTIS prescriptions. The sales representatives then pressured the speakers to increase their prescriptions of NOVARTIS drugs, and often dropped doctors from the program if they failed to do so. Further, the Government alleged that this widespread kickback scheme was the result of decisions made by top management at NOVARTIS’s North American headquarters in New Jersey.
Kickbacks, including sham speaker programs, have been the basis for numerous successful cases under the False Claims Act. The Whistleblower Law Collaborative LLC, based in Boston, devotes its practice entirely to representing clients nationwide in bringing actions under the federal and state False Claims Acts and other whistleblower programs. Under the False Claims Act, a private citizen (known as a “relator”) who suspects or knows of fraud against the government can act as a whistleblower and file a sealed complaint on behalf of the government.
For more information, contact the Whistleblower Law Collaborative LLC at 617.366.2800.