On July 20, 2022, Biogen, Inc. (“Biogen” or the “Company”), formerly known as Biogen Idec, Inc., agreed to pay $900 million to resolve allegations that the Company violated the federal Anti-Kickback Statute (“AKS”) and False Claims Act (“FCA”) by paying physicians to prescribe its Multiple Sclerosis (“MS”) drugs. After a decade of litigation, the parties agreed to settle just one week before trial was set to begin.
The FCA allows private citizens, known as “relators” or “whistleblowers,” to bring lawsuits on behalf of the government against entities suspected of misusing government funds. These lawsuits are known as qui tam actions, derived from the Latin phrase “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” meaning “one who sues in this matter for the king as well as for himself.” In 2010, Congress clarified that violations of the AKS are also FCA violations.
Importantly, because a qui tam action is filed on behalf of the government, whistleblowers must first allow the Department of Justice (“DOJ”) to investigate their claims. The government may then elect to take over prosecution of the case, do nothing and allow the relator to prosecute the case, or move to dismiss the lawsuit. If an FCA suit is successful, the relator is entitled to a share of the recovered funds.
The DOJ investigated the claims in the instant action for three years following the suit’s initiation by former Biogen employee Michael Bawduniak in 2012. The government ultimately declined to intervene in the case, permitting Bawduniak and his counsel to continue prosecuting the action independently.
Bawduniak’s allegations accuse Biogen of paying kickbacks to physicians in exchange for prescriptions of MS drugs Avonex, Tysabri, and Tecfidera (collectively, the “Drugs”). Such kickbacks violate the AKS, and under the FCA, any prescriptions resulting from AKS violations are false claims.
Bawduniak specifically alleged the kickbacks took the form of lavish meals and alcohol at “sham” speaker and consulting programs, where Biogen paid a cadre of loyal prescribers to give presentations on basic scientific information about the Drugs that was already well-known by program attendees.
In 2016, Biogen filed a motion to dismiss the lawsuit. The Company argued that its payments to physicians were pursuant to personal services contracts protected by the statutory safe harbor in the AKS, which precludes liability where “[t]he aggregate services contracted for do not exceed those which are reasonably necessary to accomplish the commercially reasonable business purpose of the service,” and the payments are “consistent with fair market value in arms-length transactions.” 42 C.F.R. § 1001.952(d)(7). Biogen also argued that Bawduniak failed to allege facts supporting the FCA’s causation element, i.e., that prescriptions for the Drugs “resulted from” the kickbacks.
In April 2018, the United States District Court for the District of Massachusetts largely denied the motion.
In its opinion, the Court identified numerous specific allegations which plausibly support the conclusion that the quantity and quality of Biogen’s speaker and consulting programs exceeded the realm of “reasonably necessary.” The Court also found for Bawduniak on the causation element, holding that “a claim is false if it seeks reimbursement for a prescription that was not provided in compliance with the Anti-Kickback Statute, regardless of whether the claim was the result of a quid-pro-quo exchange or would have been submitted even absent the kickback.”
On July 8, 2022, after many months of discovery, the Court indicated the action’s suitability for trial when it predominantly denied the parties’ motions to exclude the reports of each other’s experts. Rather than face the risk of further litigation, the parties agreed to settle the lawsuit later that month.
The settlement does not contain any admission of liability and is yet to receive final approval from the Court and the DOJ. If approved, the settlement will be among the largest ever reached in a pharmaceutical qui tam action. The caption for the lawsuit is United States ex rel. Bawduniak v. Biogen Idec, Inc., Civil Action No. 12-cv-10601-IT, filed in the United States District Court for the District of Massachusetts.
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