PhRMA Wants Kickback Decision Reconsidered
Pharmaceutical Research and Manufacturers of America (PhRMA) has filed an amicus brief supporting a request by CCS Medical Supplies that a Massachusetts federal court certify an anti-kickback law decision for interlocutory appeal. The case involves whistleblowers’ claims that CCS, which markets ostomy and continence care products, engaged in “illegal kickback schemes, illegal telephone solicitation campaigns, and deceptive sales campaigns designed to defraud Medicare and … Medicaid.” The suit alleges that Colorplast, which manufactured the products at issue, provided kickbacks to CCS, a supplier, in exchange for that company’s “soft campaigning” to move patients to Colorplast products.
The court initially dismissed the whistleblowers’ suit, saying that based on the description of the negotiation record between Colorplast and CCS that preceded the sale of the items in question, the discounts offered were fixed at the time of the sale. The court held that the whistleblowers did not allege with the necessary particularity that Colorplast had failed to disclose the discounts to CCS in writing or that the arrangement was oral or off the books.
After the whistleblowers asked the court to reconsider its dismissal order, the federal government, which had declined to intervene in the case, issued a statement of interest that argued that the statutory exception and regulatory safe harbor for discounts should not apply in this case. The court then reconsidered and reversed its dismissal order. CCS is now asking the court to again reconsider the matter. And PhRMA says that if the court decides to stay with its decision, the issue is significant enough that the court should certify the case for appeal.
PhRMA says the government is advancing a theory on the discount exception and safe harbor that does not appear in the law or in HHS Office of Inspector General regulations. As such, it says, the government’s interpretations amount to “regulation by litigation” and raise serious constitutional questions. The court’s order reversing its decision, PhRMA says, was predicated on the same misunderstanding of the discount exception and safe harbor.
“The government’s statement of interest and the court’s reconsideration decision threaten criminal and quasi-criminal liability under the Anti-Kickback Statute and the False Claims Act respectively for beneficial discount arrangements regularly used by pharmaceutical manufacturers,” the trade association says. “The issue presented is a purely legal one that is dispositive of the claims against CCS in this case, and the court’s interpretation of the safe harbor could have broader implications for discount arrangements that are ubiquitous within the healthcare sector. Appellate review at this time would materially advance the ultimate termination of this case, and the fact that this court initially granted dismissal and then reconsidered demonstrates that there is substantial ground for disagreement. Interlocutory review of this important legal question is therefore appropriate.”