Sales Gatherings Disguised as Advisory Board Meetings May Run Afoul of AKS; United States District Court for the Eastern District of Pennsylvania No. 17-3523, Chris Purcell et al. v Gilead Services Inc.


The district court denied a motion to dismiss a qui tam complaint alleging violations of the Anti-Kickback Statute and False Claims Act. The court found the relators sufficiently alleged that a pharmaceutical manufacturer made sham payments to physicians on their advisory boards to induce them to stop prescribing a drug for which generic versions were available and instead prescribe a newly-released drug still under patent. The relators alleged that physicians were selected for advisory boards based on their prescription writing habits and that the advisory board meetings were perfunctory. While the defendants argued the relators did not show that sales increased due to this arrangement, the court explained the relators did not have to make such a showing, but only demonstrate that claims were tainted by improper inducement.

Relators Chris Purcell and Kimberly Groom alleged their former employer Gilead Sciences Inc. committed fraud by marketing certain drugs for “off-label” use, in turn causing the submission of false claims to federal healthcare programs. The defendants moved to dismiss.

According to the complaint, the relators learned of their allegations while employed as regional sales directors for Gilead. The relators alleged the company provided healthcare providers with thousands of dollars in speaker and advisor payments, travel, and other remuneration to induce them to prescribe Gilead’s Hepatitis B Virus drugs Viread and Vemlidy. Gilead’s “Opinion Leadership Program” involved speakers’ programs and advisory boards targeted to the larger prescribers, and the relators alleged that the payments made through this program violated the anti-kickback statute and tainted reimbursements under the False Claims Act.

The relators asserted the scheme began after Viread went off-patent and other, less expensive generic drugs began to compete in the market. According to the relators, Gilead had developed a replacement drug, Vemlidy, before Viread went off-patent, but held the drug back so it could offer it as a replacement. The relators alleged that Gilead targeted their top Viread prescribers to encourage them to drop Viread in favor of the on-patent and therefore more costly Vemlidy. The scheme allegedly involved Gilead denigrating the efficacy of Viread and offering monetary benefits to providers who began prescribing Vemlidy.

The relators alleged Gilead violated the anti-kickback statute by offering excessive cumulative payments to healthcare providers to participate in “sham” speaker programs and advisory board meetings offering little educational value. Second, they alleged Gilead’s sales and marketing team selected paid invitees based on data about prescription writing volume and habits.

While such programs can be legitimate educational programs for the medical community and the pharmaceutical companies, the relators alleged Gilead’s HBV speaker programs and advisory boards lacked educational merit and were instead conducted to confer payments and other benefits to providers prescribing their products. According to the complaint, Gilead maintained 18 advisory boards with 450 paid advisors. Many of those advisors belonged to more than one board. For a typical board meeting, members were paid a $3,000 honorarium, provided hotel accommodations and meals for a full weekend, and were asked to attend a four-hour presentation. During the meetings, Gilead sales staff did most of the speaking, generally touting the benefits of a Gilead prescription drug over a generic. The relators questioned how the board members could provide advice and insight to Gilead, given the brevity of the meetings and the amount of time Gilead sales representatives were allowed to talk.

The relators suggested the monetary benefits to the board members could be significant. In 2014, Gilead paid some of the top Viread prescribers between $37,386 and $119,529 each for participating in Gilead programs. In 2017, Gilead paid the top Vemlidy prescribers between $9,605 and $182,464 each. According to the relators, Gilead made such payments to each of the top ten Vemlidy writers; sixty-two percent of the top fifty Vemlidy writers; and, approximately 175 of the highest volume prescribers. The relators alleged board members were selected specifically on the basis of their prescribing habits, and that board members knew their habits were collected and used to make decisions about board membership. The relators also alleged physicians requested special treatment, such as invitations to specific meetings that coincided with personal travel plans.

The relators alleged these violations of the Anti-Kickback Statute tainted requests for reimbursement to the government under the False Claims Act. They identified providers who prescribed Viread and Vemlidy multiple times for Medicare and Medicaid beneficiaries, and claimed that the resulting requests for payment ran afoul of the FCA.

Gilead moved to dismiss, arguing that the relators failed to plead a False Claims Act claim with particularity; (2) presented redundant False Claims Act claims; and, (3) did not adequately plead claims under state False Claims Act laws.

First, the court considered Gilead’s argument that the relators failed to sufficiently plead false claims actually submitted to the government. Specifically, the defendants argued the relators failed to allege a provider prescribed more Gilead products after serving as Gilead speakers or advisors. However, the court found this argument unavailing, finding that the relators pled the details of the scheme along with reliable indicia showing a strong inference that false claims were submitted. The court found the relators described the “Opinion Leadership Program” in significant detail and adequately connected the program with the submission of claims for reimbursement for related Gilead drugs. The court explained that the relators did not have to show that sales increased due to the scheme, only to plead fact that plausibly implied false claims were submitted. The court found the relators met this standard.

Next, Gilead argued the relators failed to allege facts to establish that the claims were false under the FCA. However, the court explained that if the relators sufficiently alleged anti-kickback statute violations, then they sufficiently pled Gilead caused false claims to be submitted in violation of the False Claims Act.

Gilead argued that its payments were routine pharmaceutical marketing practices for a new product launch. The court noted that Gilead might prove this to be true at trial, but for the purposes of a motion to dismiss, the relators plausibly alleged Gilead’s behavior fell outside of the regulatory safe harbor. For example, the relators alleged that Gilead selected physician advisors and speakers based on their prescription writing habits and detailed how that information was tracked and provided. They also showed a relationship between a provider’s involvement in speaker and advisor programs and the number of prescriptions written by them. The court found the relators plausibly showed that one purpose of the “Opinion Leadership Program” payments was to induce federal healthcare purchases of Gilead HBV prescription drugs.

The relators also pled facts demonstrating that the advisory board meetings were sham events that involved a complimentary weekend trip for physicians who were required to attend only a brief sales meeting. According to the court, if programs are conducted as shams, and participating providers are paid even if failing to offer benefits consistent with their fair market values, the programs may violate the anti-kickback statute.

Gilead also argued the relators failed to plead its knowledge of the alleged illegal kickback scheme, but the court explained that the relators were only required to allege scienter generally, and the anti-kickback statute does not require a specific intent. The relators submitted evidence that Gilead had a policy against selecting advisory board members based on prescription sales and another stating that advisory board meetings should not be used as sales opportunities. Therefore, the relators reasoned that Gilead knew the alleged conduct was wrong. The board found the relators sufficiently pled scienter to survive a motion to dismiss.

Finally, Gilead argued that the relators’ claim of reverse false claims was redundant. The relators argued that Gilead was liable under a reverse false claims theory because it failed to reimburse the government for improper payments, but the court agreed this claim was redundant. The court explained that the relators did not plead that Gilead owed an obligation to the United States but rather that Gilead caused the United States to pay false claims. The court dismissed this count of the complaint.

Gilead also asked the court to dismiss claims alleging it violated state analogues of the False Claims Act in California, Illinois, New Jersey, New York, and Texas, using the same arguments in favor of dismissing the federal FCA claims. However, as the court found the federal claims were sufficiently pled, it could find no reason to dismiss the state claims.