A recently unsealed lawsuit in the U.S. District Court for the Eastern District of Texas names Eli Lilly and Company Inc. (Lilly) and United BioSource Corporation (UBC), a subsidiary of pharmacy benefit management giant Express Scripts Inc., among others, as the perpetrators of a multifaceted illicit marketing scheme designed to defraud government health care programs of millions of dollars.

The suit, filed by whistleblower Health Choice Alliance, LLC on behalf of the U.S. government, 30 states, and the District of Columbia, alleges that Lilly, UBC, and others utilized three separate schemes that induced doctors to prescribe Lilly diabetes medications Humalog and Humalin, along with the osteoporosis drug Forteo, in order to enrich themselves at the expense of government health care programs, including Medicare, Medicaid and TRICARE. The suit argues that the inducements violate the federal Anti-Kickback Statute and the false claims acts of the plaintiff states.

The first segment of the scheme involved Express Scripts subsidiary UBC. To induce recommendations of Lilly’s products over competing medications, Lilly sales reps offered a kickback: free reimbursement support services for prescribers who wrote prescriptions for Lilly’s medications. The remuneration was a tangible, in-kind benefit that greatly reduced, and in some cases eliminated, a prescriber’s administrative costs related to prescribing Lilly’s drugs. These services, provide by UBC and one other company, were intended to induce prescribers to choose Lilly’s drugs over those of its competitors. The reimbursement support services included prior authorization assistance, verifications, coverage determinations, and appeals.  Handling these tasks for prescribers freed them and their staff from often onerous and time consuming administrative tasks that would have to be handled “in-house” or outsourced to a third party.  Lilly’s provision of this service, in exchange for prescribing its drugs, resulted in significant cost savings to prescribers.

The second part of the scheme involved the use of free nursing services. As described in the complaint, there was a direct relationship between Lilly’s diabetes and osteoporosis nursing services and prescriptions for Lilly’s drug products. Physicians would prescribe Lilly’s drugs so that their patients could receive medical support services and follow-up from Lilly’s team of contract nurses and those provided by two of the other defendant companies.  Thus, prescribers reduced the time and cost required to treat patients, freed up time to see other patients, and increased profitability when their patients received medical assistance and guidance from Lilly’s contracted nursing services. The nurses were effectively free employees given to prescribers in exchange for prescribing Lilly’s diabetes and osteoporosis drugs. Lilly’s nurses enabled prescribers to eliminate an expense they otherwise would have incurred, thus violating the Anti-Kickback Statute.

The third scheme also involved the use of nurse educators, in this instance to gain access to prescribers to push the use of Lilly drugs. Known as “white coat” marketing, Lilly paid nurse educators to recommend Lilly’s products to prescribers. The nurse educators received sales training, were actively used by Lilly and the other defendant companies to drive sales, and were tasked with promoting Lilly’s products. The Department of Health and Human Services Office of Inspector General has previously warned about the use of white coat marketing, noting that it is “closely scrutinized under the anti-kickback statute because physicians and other health care professionals are in an exceptional position of public trust and thus may exert undue influence when recommending health care-related items or services.”

The FisherBroyles Pharmacy and Health Care Law team will continue to track issues of importance, along with notable accounts of fraud and wrongdoing, in the pharmaceutical and health care industries. We welcome your questions. Please contact any of the following attorneys:

Brian Dickerson, FisherBroyles Partner
Brian E. Dickerson

Anthony Calamunci, FisherBroyles Partner
Anthony Calamunci

Nicole Waid, FisherBroyles Partner
Nicole Hughes Waid

Amy Butler, FisherBroyles Partner
Amy Butler

Katy Wane, FisherBroyles Partner
Katy Wane