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Life Sciences Symposium Held Yesterday

Attendees at yesterday’s Life Sciences Symposium held in Washington, D.C. sponsored by the economic consulting firm of Bates White clearly had a good time at a lunch-time panel discussing the Anti-Kickback Act (“AKA”).  “Greatly entertaining and informative,” said one attendee; “engaging and fantastic discussion” said another.

 

Attorney Bob Thomas of the Whistleblower Law Collaborative in Boston was one of the featured speakers, along with his Harvard Law School classmate David Rosenbloom of the Chicago office of McDermott, Will, and Emery, and University of Georgia Professor David Bradford.  The panel explored the contours of the statute and its “safe harbors,” and the extent to which economics (the subject matter expertise of most of the attendees) enters into AKA prosecutions and settlements.

 

The AKA is a criminal statute that seeks to remove the insidious influence of monetary kickbacks in the practice of medicine.  The statute makes it illegal, for example, for doctors or other providers of medical services to “solicit” payment from a third party such as a drug manufacturer in return for referring a patient or purchasing a product.  Similarly, the law makes it illegal for a party to “offer or pay” a doctor or provider payment in any form in an attempt to “induce” that doctor or provider to make a purchase or refer a patient.

 

Sounds simple enough until you start to think of all the different scenarios in which economic activity can take place between these parties, like volume discounts, for example.  Volume discounts are quite common in a capitalist economy; are they illegal in this setting?  (The AKA has a “safe harbor” allowing such discounts, if they are properly disclosed and accounted for.)  Part of the purpose of the panel was for the attorneys to address the ways in which certain economic activities can be illegal, even if, to an economist thinking of efficiencies, such activities might seem desirable.

 

The dialogue was far from theoretical.  Bob Thomas and David Rosenbloom not only gave many examples of actual cases, they also spoke at length about the U.S. ex rel. v. Westmoreland v. Amgen litigation in which they were opposing counsel.  The case, which involved a kickback theory, led to an eventual $762 million settlement between the company and the government, and demonstrated the extent to which very subtle forms of economic marketing can run afoul of the AKA.

 

As for the perspective of economics, the panelists agreed that the most direct application of this expertise would be in the modeling of different damage scenarios, since it is widely acknowledged that kickback damages are different from more easily measured forms of harm.

 

One big picture thought emerged from the lively discussion:  between defense and in-house lawyers advising their clients how to stay onsides with this law and the cherry-picking practices of prosecutors exercising their discretion to go after only the most egregious conduct, there is a vast middle ground of uncertainty about what is possible and what will be enforced.

 

In the tens of millions of health care transactions that take place every day, there is only so much that the government enforcement people can monitor.  This is where whistleblowers play a vital role.  As in the Westmoreland case, they shed light on an almost invisible, almost undetectable form of activity and explain to the government investigators what’s really behind it, what a company is really trying to “induce.”   Without whistleblowers, the government wouldn’t have much of a chance to stop the companies that choose to cross the line.