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Whistleblower lessons for Pharma from $900M Biogen Settlement

The high cost of Biogen's $900 million False Claims Act (FCA) settlement demonstrates the government's continued interest in cases involving unlawful bribes in physician referrals, according to experts and attorneys.

According to David Colapinto, partner at the whistleblower law firm Kohn, Kohn & Colapinto, "it is a wake-up call to companies that they need to remain diligent in their compliance in this area."

After Michael Bawduniak, a former employee, litigated for years, Biogen finally reached a deal last month. Bawduniak claimed the business paid illegal kickbacks to doctors to get them to prescribe Biogen's multiple sclerosis medications. He was represented by boutique law firm Greene.

Bawduniak filed the lawsuit in 2012, saying that between 2009 and 2014, Biogen submitted hundreds of millions in erroneous claims to Medicare, Medicaid, and other federal and state government programs.

Bawduniak will get almost $266.4 million, which is thought to be the biggest whistleblower reward ever made under a single government program.

The record compensation, according to Danielle Pelfrey Duryea, head of Boston University's Compliance Policy Clinic, "I’m sure it will encourage some would-be whistleblowers, and that’s not a bad thing."

Bawduniak was entitled to a 15–30% part of the federal government's contribution under the qui tam provisions of the FCA. Because the government decided not to become involved in the case in 2015, his 29.6% stake was at the high end of the range.

At that moment, the case may have collapsed, but Bawduniak and Greene persisted. The matter was "settled on the courthouse steps," according to Colapinto, one week before to trial.

"I know the type of effort it would take without government participation, and it is a tremendous effort. Not everyone is able to do that,"  he noted. Businesses like Biogen "devote millions" to defending them.

Big Pharma frequently has the financial resources to cover the expense of both defense and settlements. Biogen agreed to pay $900 million, but Colapinto pointed out that the company makes an average of $10 billion annually.

According to Asha Scielzo, head of the health law and policy program at American University Washington College of Law, the Biogen deal should serve as a warning to pharmaceutical corporations to reassess how they interact with doctors.

According to Scielzo, who oversees the healthcare compliance certificate program at American University, "we’ve had guidance for more than 20 years about this," including a special fraud alert about speaker fees from the Office of Inspector General at the Department of Health and Human Services two years ago.

She described the notice as "a big clue" that government enforcement agencies were still seeing this type of fraud and intended to examine it more carefully.

Colapinto concurred, saying "Compliance shouldn’t assume violations of the anti-kickback statutes are a thing of the past." Although there are fewer cases than there formerly were, he insisted that "the practice has not been cured."

According to the Department of Justice, kickbacks are still "pernicious" in the healthcare sector.

According to Pelfrey Duryea, the existing healthcare system is a source of kickbacks. Pharma revenues may be substantial, and the rivalry for them can be fierce, she added, creating incentives for businesses or workers to make shady recommendations.

Pelfrey Duryea observed, "I’m confident that as long as there are speaker programs there will be either individuals or whole companies looking for ways to maximize their use for promotional purposes rather than for scientific education. It would perhaps take a real shake-up in our health system to fix the misalignment " of incentives, she warned.

Furthermore, during the time Biogen was allegedly engaged in its dangerous activity, high-profile FCA cases were settling, yet the corporation was unaffected.

Pelfrey Duryea remarked, "One would think during that time the big settlements would have had a preventive effect. I hope that, over time, through the combined effect of enforcement and internal compliance and ethics, we can put an end to the explicit use of those (speaker) programs as kickbacks."

According to his agents at Greene, Bawduniak attempted to contact Biogen's management and compliance specialists before filing the complaint but was ignored. That error is all too typical, according to Colapinto.

"When we represent whistleblowers, we’ve heard the hostility and arrogance they receive in response to raising these issues internally," the man stated.

According to Scielzo, businesses need to foster a "true speak-up culture" that encourages staff members to raise issues internally. "Whistleblowers play a vital role in your compliance program. You want them to know they will be heard," she added.

"It’s a call for companies to remember compliance is there to keep them out of this kind of trouble," Pelfrey Duryea said. "You have a compliance function for a reason."

There were 598 qui tam lawsuits filed in the 2021 fiscal year. According to the Justice Department, of the $5.6 billion in FCA settlements made throughout the year, $1.6 billion were resolved through settlements and judgements in this and prior lawsuits.



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