U.S. Probes Drugmakers Over Free Services -- Update

By Peter Loftus 

Federal prosecutors are probing whether big drugmakers including Sanofi SA, Gilead Sciences Inc. and Biogen Inc. potentially violated laws by providing free services to doctors and patients, according to a Wall Street Journal review of securities filings.

Drug companies say the services, such as nurses and reimbursement assistance, help doctors and patients. But the practices, which have become more prevalent as drugmakers have introduced more complex and expensive drugs, are drawing scrutiny over whether they serve an illegal commercial purpose: inducing sales.

Amgen Inc., Bayer AG and Eli Lilly & Co. face whistleblower lawsuits alleging the services are illegal kickbacks. Meanwhile, California's insurance commissioner this week sued AbbVie Inc., accusing the company of providing kickbacks in the form of nursing support and insurance assistance to prompt doctors to write prescriptions for its arthritis drug Humira.

Altogether, the federal investigations, whistleblower lawsuits and California case suggest that the drug industry's growing provision of free services is starting to draw the same kind of attention that had been trained on once-common company sales practices such as lavishing high-prescribing doctors with fancy dinners and trips.

AbbVie's share price has declined about 3% since the lawsuit was filed. The North Chicago, Ill., company said the California allegations, as well as a previous whistleblower lawsuit, are without merit, and that it complies with state and federal laws. It said it provides services for patients once they are prescribed Humira.

Bayer and Lilly said the whistleblower lawsuits against them have no merit, and Amgen declined to comment.

The lawsuit against AbbVie could have broader implications for the industry because the practices it describes "are similar to what other biopharma companies have also used to help patients start and stay on medications that their doctor prescribes," Credit Suisse analysts said in a research note.

Drugmakers are drawing scrutiny for an ever-widening array of practices that they say help patients, from defraying copay costs to providing disease education. However, prosecutors and critics say such practices, even if helpful, are intended to encourage continued use of specific drugs over alternatives. Additionally, some critics say that such tactics can boost overall health-care costs by pushing higher-priced drugs on people.

A federal anti-kickback statute prohibits payments to induce drug prescriptions or other medical care that is reimbursed by government health programs.

The Justice Department has probed drug manufacturers' donations to third-party charities that help pay drug copays for Medicare patients. That practice tends to boost overall sales because Medicare pays the bulk of the cost. Last year, United Therapeutics Corp. agreed to pay $210 million to settle Justice Department allegations related to use of a third-party foundation to pay copays. United Therapeutics didn't admit liability.

In Sanofi's case, the U.S. attorney's office for the Southern District of New York sent the company's U.S. unit a civil investigative demand in August 2017 requesting documents and information about the company's "certified diabetes educator program," Sanofi said in a securities filing in March. Government officials sometimes seek broad information through such demands, but it doesn't always lead to further action.

The Sanofi program consisted of nurse practitioners and other health-care professionals who answered patients' questions about diabetes and trained them to use Sanofi's diabetes products, a Sanofi spokeswoman said. The program is no longer in effect.

Sanofi is cooperating with the investigation into whether it violated the anti-kickback law, the spokeswoman said. A spokesman for the U.S attorney's office in New York declined to comment.

Gilead Sciences has received state and federal inquiries. In September 2017, the U.S. attorney's office for the Eastern District of Pennsylvania requested information about Gilead's "reimbursement support offerings, clinical education programs and interactions with specialty pharmacies" for its hepatitis C drugs Sovaldi and Harvoni, the company said in a February securities filing. The U.S. attorney's office in Pennsylvania declined to comment.

In October 2017, the California insurance department and the Alameda County, Calif., district attorney's office sent a subpoena to Gilead requesting documents about similar matters, Gilead said. The company said in its filings it is cooperating in both inquiries. A company spokeswoman declined to comment further.

Biogen, which makes several drugs for multiple sclerosis, received a civil investigative demand from the federal government in December 2016 for documents and information about its relationships with "entities providing clinical education and reimbursement support services," Biogen said in securities filings last year. The company said in filings it is cooperating with the government; a spokesman declined to comment further.

The California lawsuit against AbbVie said the company has sent registered nurses to visit patients to train them how to inject the company's arthritis drug Humira and provide other assistance. The lawsuit said AbbVie also provided staff to help doctors' offices with paperwork for obtaining reimbursement for the drug, which can cost more than $50,000 a year.

According to the lawsuit, such services saved doctors time and money, inducing them to prescribe Humira, the highest-selling drug in the world. In 2017, Humira had $18.4 billion in global sales, including $12.4 billion in the U.S. California is seeking monetary damages on behalf of private insurers that have paid $1.29 billion since 2013 to cover Humira prescriptions for California patients.

The state insurance commissioner, Dave Jones, said the nurses deployed by AbbVie were trained to ensure patients stay on Humira and to sidestep questions about Humira's risk of side effects.

"It's of particular concern when decisions about medical care are being driven by kickbacks and inducements as opposed to what's in the best interest of patients," Mr. Jones said in an interview.

California's lawsuit against AbbVie updates a prior whistleblower lawsuit filed by Lazaro Suarez, who worked in 2013 and 2014 as a Humira "nurse educator" for an AbbVie contractor, Quintiles, now part of IQVia Holdings Inc. The state joined the case as lead plaintiff and filed a revised lawsuit Tuesday.

Drug companies' free services to doctors and patients may sound positive, but it "undermines medical decision making," said Rachel Geman, Mr. Suarez's attorney.

Mr. Suarez also has filed a lawsuit against AbbVie in federal court in Illinois with similar allegations. Mr. Suarez could collect a share of any money the federal government or California collects via settlements or judgments.

A spokesman for IQVia, which isn't a defendant in the California lawsuit, said the company adheres to the highest ethical standards.

Write to Peter Loftus at [e-mail]

(END) Dow Jones Newswires

September 21, 2018 15:38 ET (19:38 GMT)

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