On October 3, 2022, the Department of Justice (“DOJ”) announced that a hematology and oncology practice in Fort Lauderdale, Florida will pay $130,000 to settle allegations that the practice violated the False Claims Act and Anti-Kickback statute by accepting illegal kickbacks from its pharmaceutical distributor. The drugs were purchased by the practice for administration to its patients in an outpatient setting. The alleged kickbacks were in the form of “upfront discounts” or “rebates” and based on the practice’s agreement to purchase 90% of all branded and generic pharmaceuticals from the distributor. Notably, the discounts or rebates were not tied to the sale of specific products and only appeared as general credits to the practice’s account. This settlement comes after the pharmaceutical distributor entered into a $13M settlement in January 2022 to resolve these and other allegations.
Under certain circumstances, a physician practice may purchase drugs at a legally discounted rate from a pharmaceutical company for administration of those drugs in an outpatient setting. However, the Office of Inspector General for the Department of Health and Human Services has stated that unless upfront discount arrangements are tied to specific purchases and the distributors maintain appropriate controls to ensure discounts are withdrawn if the purchasers do not purchase enough product to earn the discount, then the arrangement presents significant risk under the Anti-Kickback Statute. In the instant case, the payments the Florida medical practice received were not attributable to identifiable sales.
The full DOJ release can be accessed here: https://www.justice.gov/usao-ma/pr/florida-medical-practice-agrees-pay-130000-resolve-allegations-it-received-kickbacks
Should you have any questions regarding the above, please contact Susan St. John at 754-228-3853 or [email protected], or your primary Garfunkel Wild attorney.