When Is a Kickback Not a Kickback? In Amgen Case, It's When You Filled Out Paperwork to Get It

Last Updated Apr 27, 2010 12:08 PM EDT

A federal judge has dismissed a case alleging Amgen (AMGN) enrolled doctors in a kickback scheme for its anemia drug Aranesp because the forms physicians filled out to join the scheme did not say "This is a kickback scheme" on them.

That's my interpretation of parts of Massachusetts judge William G. Young's recent ruling in a whistleblower suit filed last November by a group of states and Kassie Westmoreland, a pharmacist formerly employed by Amgen.

The ruling gives managers and their lawyers in pharmaceutical companies another way to avoid getting sued if they construct kickback schemes to encourage doctors to use their drugs: They can now alter the legal language on the forms everyone has to fill out to get Medicare and Medicaid reimbursement to comply with Young's ruling.

Young's ruling concentrates so firmly on the minutiae of the forms and paperwork that it misses the central issue, which is whether Amgen supplied vials of Aranesp that contained more of the drug than doctors needed for each dose, allowing them to save the "overfill" and use it on other patients. The docs then allegedly billed Medicaid for both the regular doses they paid for and the free "overfill" they had not -- and that functioned as Amgen's kickback, the plaintiffs alleged.

Young dismissed the case on a number of grounds, including whether the defendants had made "false certifications." On page 22 of the ruling, Young writes that if Amgen and its doctors didn't know that they were going to be breaking the law when they first signed up, then they weren't breaking the law:

The Plaintiffs do not allege that when the providers signed the enrollment forms, they knew that they would be accepting kickbacks from the Defendants in violation of the anti-kickback statute. Without such pleading, there can be no "false claim."
This part of the ruling sends the wrong message to the drug business: It seems to state that you can set up any kickback scheme you like as long as the doctors you enroll believe it's a legit reimbursement operation on the day they sign the forms to join.

In another part of the ruling, Young writes that even if you sign a form stating you will abide by the law and then break it, that's not a false certification unless it's really, really specific. He cited:

... language in the provider agreements requiring "compliance with applicable state and federal laws" or an agreement "to not engage in or commit fraud or abuse." ... Such broad language requiring compliance with "all applicable state and federal laws" is insufficient to constitute an express certification of compliance with anti-kickback statutes.
Again, the message to drug company compliance departments seems to be, "Keep those forms nice and vague. It'll come in useful later. Wink, wink."

And finally: Drug companies will celebrate the fact that this ruling comes from a judge in the Bay State. Previously, Massachusetts judge Patty Saris had handled dozens of pharmaceutical fraud cases in this jurisdiction, including the monster-sized drug pricing case. She often ruled against drug companies. Now, Big Pharma seems to have a friend on the bench in that state.