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States Have a Case Over Anemia Drug Kickbacks

(CN) - The 1st Circuit revived state-law claims in a whistle-blower lawsuit alleging that Amgen pharmaceuticals defrauded Medicaid to boost sales of its anemia treatment Aranesp.

A Massachusetts federal judge had dismissed the complaint, in which seven states had intervened as plaintiffs, for failure to properly identify a false claim for Medicaid payment as required by state false-claim laws.

The federal False Claims Act and state versions of the law impose liability on people or companies that defraud government programs. In successful qui tam lawsuits, the United States can recover $30 billion in treble damages plus civil penalties while the whistle-blower is entitled to as much as 25 percent of any recovery.

Former Amgen employee Kassie Westmoreland claimed that the company put up to 19 percent more of the Aranesp medication into each single-dose vial as a freebie and then encouraged health care providers to bill the overage to Medicaid.

Westmoreland also alleged that Amgen and the drug's other marketers and distributors offered sham consulting agreements, honoraria and luxurious retreats to encourage providers to buy Aranesp.

U.S. District Judge William Young dismissed the state claims saying that the plaintiffs failed to identify state laws that expressly conditioned Medicaid payment on compliance with anti-kickback statutes. Young said the states' Medicaid provider agreements were so broad that health care providers could submit legitimate claims even if they had accepted the free Aranesp and other honoraria from Amgen.

The Boston-based federal appeals court rejected Young's reliance on this requirement.

While the plaintiffs did not have to rely on a statutory definition in each state, they did have to show that each state's program preconditions claim payment on the understanding that no kickbacks influenced the claim.

"The question here is whether claims submitted to the seven state Medicaid programs misrepresented compliance with a precondition of payment recognized by those particular programs," Chief Judge Sandra Lynch wrote for the court.

After examining the seven states in question, the three-judge panel found that the burden had been met with regard to New York, Massachusetts, California, Illinois, Indiana and New Mexico.

But the plaintiffs failed to show Georgia's Medicaid program set this standard.

"It bears emphasis that Georgia, unlike the other six states involved in this litigation, does not have a state law analogue to the federal AKS," Lynch wrote, referring to the Anti-Kickback Statute.

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