In December, Ultragenyx Pharmaceutical Inc. agreed to pay $6 million to settle civil allegations that it unlawfully induced referrals for its drug, Crysvita, in violation of the Anti-Kickback Statute and False Claims Act. The government alleged that these violations occurred as a result of (1) providing free genetic tests to Medicare and Medicaid beneficiaries to induce purchase of Crysvita; and (2) paying a genetic testing laboratory to process tests and generate reports ultimately used to target referrals for Crysvita prescriptions.
As part of the scheme, Ultragenyx offered Medicare and Medicaid beneficiaries free genetic tests through its arrangement with a genetic testing laboratory. Ultragenyx marketers promoted the free testing program directly to healthcare providers in a position to order the tests and provided requisition request forms to the providers’ offices. After performing the genetic testing, the laboratory provided results to patients’ healthcare providers. Additionally, Ultragenyx paid the laboratory a secondary fee in order to obtain a copy of the test results, enabling the manufacturer to further market its prescription product to providers whose patients’ results showed an indication for the drug. Notably, after an April 2022 OIG Advisory opinion was issued addressing free genetic testing and counseling services, Ultragenyx ceased distributing the test results to their marketers for purposes of contacting providers whose patients had showed a genetic indication for the drug.
This settlement agreement serves as a reminder to healthcare organizations, such as pharmaceutical manufacturers and laboratories, of the risk associated with the provision of free services or items, and a warning to carefully scrutinize marketing models and financial relationships between manufacturers and clinical providers (such as labs) prior to participation. Participating in improperly structured arrangements may implicate federal and state fraud, waste, and abuse laws, including the Anti-Kickback Statute and False Claims Act.
Contact Frier Levitt to speak to an experienced regulatory attorney who can review your organization’s current or proposed marketing models or other financial relationships with manufacturers to assess compliance with federal and state law.
