At the end of December, the Second Circuit joined several other circuit courts in holding that a plaintiff adequately pleads an Anti-Kickback Statute (“AKS”) violation when she states with the requisite particularity that at least one purpose of the alleged scheme was to induce fraudulent conduct, the “at-least-one-purpose” rule.

In United States ex rel. Camburn v. Novartis Pharmaceuticals Corp., Relator Steven Camburn alleged that Novartis violated the AKS, and the False Claims Act (“FCA”), in marketing its drug Gilenya, which is prescribed for multiple sclerosis (“MS”).  Since approving Gilenya in 2010, the FDA has imposed a first-dose observation requirement for new patients, who must be monitored by a doctor while attached to an electrocardiogram machine for six hours.Continue Reading Second Circuit Adopts At-Least-One-Purpose Rule For Anti-Kickback Statute Violations

Recently, in United States ex rel. Hart v. McKesson Corp., the Second Circuit clarified the standard for acting “willfully” under the federal anti-kickback statute (AKS).

False Claims Act relator Adam Hart alleged that the defendant violated the AKS by providing business management tools to its customers, without charge, to induce those customers to purchase drugs from them.  The tools helped providers to maximize profits and mitigate the risk that reimbursement rates would fall below the cost of the drugs to them.  One tool, the Margin Analyzer, compared profit margins for drugs considered to be interchangeable, and the second, the Regimen Profiler, provided margin information for an entire course of treatment as opposed to specific drugs.  The unlawful kickback, according to relator, was that the defendant did not offer these tools on a stand-alone basis, but only offered them to providers who agreed to use the defendant as their primary wholesaler of branded and generic drugs.  The defendant allegedly provided the tools as a kickback to induce drug sales. 

The Second Circuit first addressed the proper understanding of “willfulness” under the AKS.  The Court held that, in order to violate the federal AKS, a defendant must act knowing that the conduct is in some way unlawful but does not have to know specifically that the conduct violates the AKS.  The Court stated that this interpretation accords with the general goal of criminal law to punish only those who act with a “vicious will.”  Notably, in 2010, Congress amended the AKS to provide that a violation does not require actual knowledge of the AKS or a specific intent to violate the AKS.  Also, particularly with respect to the analysis of applications of AKS safe harbors to conduct, this interpretation also avoids unfairly sweeping innocent conduct under the reach of the criminal statute.Continue Reading Second Circuit Defines “Willfulness” Standard Under Anti-Kickback Statute