Pharmaceutical company Ultragenyx Pharmaceutical Inc. (Ultragenyx) has agreed to pay $6 million to resolve allegations that it caused the submission of false claims to Medicare and Medicaid, in violation of the False Claims Act, by paying for free genetic tests, plus a separate fee to receive test result information for marketing purposes, to collectively induce prescriptions of its drug Crysvita and referrals of health care providers (HCPs) to Ultragenyx for the furnishing or arranging for the furnishing of Crysvita.
Ultragenyx is a pharmaceutical manufacturer with a principal place of business in California that manufactures Crysvita. Crysvita is an FDA-approved drug to treat X-linked hypophosphatemia (XLH) in adult and pediatric patients six months of age and older. XLH is a rare inherited disorder characterized by low levels of phosphate in the blood, which can lead to weak bones and, in many instances, may require a genetic test to definitively diagnose.
Ultragenyx understood that, in some cases, a positive genetic test for a genetic mutation consistent with XLH would be required for an insurer (including Medicare or Medicaid) to pay for a patient’s prescription for Crysvita, or for a healthcare provider (HCP) to make a definitive diagnosis of XLH and prescribe Crysvita. Thus, Ultragenyx entered into an arrangement with a genetic testing laboratory (Laboratory), whereby Ultragenyx paid the Laboratory to conduct genetic tests — at no cost to HCPs or patients — and provide the results to the HCP. Ultragenyx referred to this program as its “sponsored” XLH testing program and Ultragenyx sales personnel discussed the XLH testing program with HCPs and delivered order forms for the tests to HCP offices.
Ultragenyx separately paid the Laboratory to provide the test results to Ultragenyx, including the name of the HCP who ordered the test, a de-identified patient ID number, the date the test was ordered and — once ready — the test result itself (collectively, Results Reports). Ultragenyx used the Results Reports, in part, for marketing purposes to find potential Crysvita patients and their HCPs. Until April 2022, Ultragenyx received Results Reports and disseminated this information to its sales force with instructions to make sales calls for Crysvita to HCPs who ordered a test or, in particular, who had a patient with a positive test result. Ultragenyx’s sales force followed up with HCPs regarding test results. The United States contends that, as a result of these actions, Ultragenyx caused the submission of false claims to Medicare and Medicaid by paying kickbacks 1) to beneficiaries in the form of free genetic tests to induce their purchase of Medicare or Medicaid-reimbursed Crysvita and 2) to the Laboratory for the Results Reports to induce the referral to Ultragenyx of HCPs to whom Ultragenyx could market Crysvita.
As part of the settlement, Ultragenyx admitted and accepted responsibility for certain facts providing the basis of the settlement.
“The department is committed to protecting the integrity of federal health care programs and the medical care received by their beneficiaries,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division. “A primary focus of this effort is the pursuit of kickback schemes that can allow third parties, such as pharmaceutical manufactures, to insert themselves into the doctor-patient relationship and potentially undermine the objectivity of treatment decisions by physicians and patients.
“Kickbacks, in whatever form, have no business in our federal healthcare system” said Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts. “We are always on the lookout for financial kickbacks that can improperly influence medical decisions, undermine patient care and cause waste to federal healthcare programs. As medical practices evolve, our office is committed to ferreting out improper financial kickbacks of any permutation.”
“Kickback arrangements designed to improperly influence medical decisions will always be an investigative priority for our agency,” said Special Agent in Charge Roberto Coviello of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “The goals of our continued enforcement in this area are to protect the integrity of taxpayer-funded health care programs such as Medicare and Medicaid, and to curb schemes that can inappropriately manipulate the health care choices of patients and their doctors.”
“The FBI and its partners will not stand by when a pharmaceutical company illegally takes advantage of our health care system,” said Executive Assistant Director Timothy Langan of the FBI’s Criminal, Cyber, Response and Services Branch. “Those who engage in activity that violates the False Claims Act must face the consequences of their actions. As we strive to protect the American people, we will not stop working to combat healthcare fraud.”
The allegations resolved by the settlement agreement were, in part, originally brought in a case filed under the whistleblower, or qui tam, provision of the False Claims Act. The case is captioned United States ex rel. Ruggiero v. Ultragenyx Pharmaceutical, Inc. (D. Mass.) (No. 1:21-cv-11176-ADB). The False Claims Act permits private parties to sue for fraud on behalf of the United States and to share in any recovery. The act also permits the government to intervene in such actions, as the government did, in part, in this case. Of the total $6 million recovery, approximately $5.8 million constitutes a recovery for Medicare and the federal share of Medicaid and approximately $200,000 constitutes a recovery for State Medicaid programs. The whistleblower will receive approximately $1.07 million from the federal portion of the recovery.
The government’s pursuit of this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800‑HHS‑TIPS (800-447-8477).
The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the District of Massachusetts, with investigative support from HHS-OIG and the FBI’s Boston Field Office.
The claims resolved by the settlement are allegations only and there has been no determination of liability.
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