On November 15, 2024, the United States Attorney’s Office for the District of Massachusetts announced that QOL Medical and its CEO, Frederick E. Cooper, agreed to pay $47 million to resolve allegations that they caused the submission of false claims to federal health care programs by offering kickbacks, in the form of free Carbon-13 breath testing services, to induce claims for QOL’s drug Sucraid.
According to the press release, “QOL paid a laboratory to analyze the breath tests, report the results to health care providers, and provide [deidentified] results to QOL.” The pharmaceutical company’s sales force then used the test results to target health care providers whose patients had positive results.
In its settlement agreement with the Department of Justice, QOL admitted that, “[i]n January 2019, Cooper, after reviewing HHS-OIG guidance on the [anti-kickback statute] and Beneficiary Inducement Civil Monetary Penalty … law, wrote in an email to three QOL executives that QOL was ‘going to have to provide [the Carbon-13 test] without making it a marketing cornerstone’ or using the word ‘free’ in C13 test marketing materials, and likely was ‘going to have to stop sharing’ C13 breath test results with its sales representatives. QOL then stopped using the word ‘free’ in C13 test marketing materials, but later resumed.”
The allegations resemble those in a December 2023 settlement that the same United States Attorney’s Office reached with Ultragenyx Pharmaceutical. In that case, the company agreed to pay $6 million to resolve allegations that it used the provision of free genetic tests as kickbacks to obtain prescriptions for Crysvita, a rare disease drug. In its settlement agreement with the Department of Justice, Ultragenyx admitted that it paid a genetic testing “[l]aboratory to provide test results back to Ultragenyx and [that] its commercial team used the results, in part, to find potential Crysvita patients and their HCPs for follow up Crysvita marketing efforts.”
Notably, in April 2022, the Office of Inspector General of the Department of Health and Human Services issued an advisory opinion warning that a pharmaceutical company’s provision of genetic tests could violate the anti-kickback statute if the tests were used “as a marketing or sales tool to induce physicians to order additional items and services.”