AMARILLO, TX – In a recent press release, the Department of Justice (DOJ) announced that the United States had settled a civil fraud lawsuit against Gilead Sciences, Inc. (Gilead), a large pharmaceutical manufacturer. Gilead manufactures drugs for the treatment of infectious diseases, including HIV/AIDS.

According to the press release, the settlement resolves claims that Gilead offered and paid kickbacks in the form of honoraria payments, meals, and travel expenses to physicians who spoke at or attended Gilead speaker events to induce them to prescribe Stribild®, Genvoya®, Complera®, Odefsey®, Descovy®, and Biktarvy® (the “Gilead HIV Drugs”) in violation of the federal ant-kickback statute (“AKS”) and thereby caused false claims to be paid by federal healthcare programs in violation of the federal False Claims Act, (FCA).

The press release further states:

Under the settlement … Gilead agreed to pay a total sum of $202 million, of which $176,927,889.28 will be paid to the United States and the remainder will be paid to various states.  As part of the settlement, Gilead also made extensive factual admissions regarding its conduct.

U.S. Attorney Jay Clayton said: “For years, Gilead unlawfully sought to increase sales of its HIV drugs, by using its speaker programs to funnel kickbacks to doctors.  As alleged, Gilead spent tens of millions of dollars on these programs, including over $20 million in speaking fees and millions more in exorbitant meals, alcohol and travel, all in an effort to induce doctors to prescribe Gilead’s HIV drugs and drive up sales. With this settlement, Gilead has taken responsibility for its conduct and agreed to pay a significant financial penalty.  The message is clear, companies that illegally drain taxpayer dollars from federal healthcare programs will be held accountable.”

FBI Assistant Director in Charge Christopher G. Raia said: “This settlement ensures Gilead is held accountable for their illicit use of perks and kickbacks to entice doctors to prescribe the company’s medicine.  These types of schemes are not victimless – illegal kickbacks directly affect taxpayer funded healthcare programs.  The FBI will continue to investigate and stop healthcare companies attempting to benefit from deceitful and illegal practices.”

As alleged in the Complaint filed in Manhattan federal court:

The Gilead HIV Drugs are … very expensive—Medicare typically paid well in excess of a thousand dollars for a one-month supply of Complera^®, and significantly more for many of the other Gilead HIV Drugs.

As part of its marketing efforts and to increase sales, Gilead conducted events known as “HIV Speaker Programs” at which a healthcare provider involved in the treatment of HIV was engaged to present a slide deck (prepared by Gilead) and facilitate discussion about one of the drugs or a topic concerning HIV (an “HIV Disease State Topic”) to other healthcare providers involved in the treatment of HIV (“Attendees”).  Gilead’s HIV Speaker Programs were often held in the evening at restaurants (“HIV Dinner Programs”).

From January 2011 to November 2017 (the “Relevant Time Period”), Gilead conducted HIV Speaker Programs in order to promote and increase the sales of the Gilead HIV Drugs.  The HIV Speaker Programs were supposed to be educational in nature and the cost of any meals provided was supposed to be modest.  But in practice, during the Relevant Time Period, Gilead’s HIV Speaker Programs provided kickbacks to healthcare providers by: holding HIV Dinner Programs at high-end restaurants that were wholly inappropriate for educational events; allowing Attendees to attend HIV Dinner Programs on the exact same topic again and again and, thereby, obtain free lavish meals for events that held minimal educational value for them; and paying for HIV Speakers to travel to speak at desirable destinations—at times at the HIV Speaker’s request.  Further, Gilead’s compliance program failed to prevent these improper practices, even though Gilead knew that it had to comply with the AKS and the company’s own data should have put Gilead on notice of many of these abuses. 

Many healthcare providers who received these improper kickbacks then prescribed the Gilead HIV Drugs.  As a result, federal healthcare programs paid millions of dollars in reimbursements for tainted prescriptions.

As part of the settlement, Gilead admitted and accepted responsibility for certain conduct alleged by the U.S., including the following:

• Gilead paid many high-volume prescribers of HIV drugs tens or hundreds of thousands of dollars in honoraria to prepare and present as HIV Speakers …
• On many occasions, Gilead covered the travel costs of HIV Speakers who traveled long distances to speak at HIV Speaker Programs at desirable travel destinations, such as Hawaii, Miami, and New Orleans.  This was sometimes in response to an HIV Speaker’s request to be booked for an HIV Speaker Program in that city.
• Sales representatives in Gilead’s HIV therapeutic area (“Sales Representatives”) organized HIV Speaker Programs at high-end restaurants across the country …
• Sales Representatives repeatedly invited numerous doctors and other healthcare providers to attend the same HIV program over and over.  Many repeatedly attended HIV Speaker Programs covering the exact same topic, often within a short period of time.
• Over 250 prescribers of the Gilead HIV Drugs attended HIV Dinner Programs on the same topic three times or more within a six-month period.  And over 80 of them attended five or more HIV Dinner Programs on the same topic within a six-month period.
• Further, many healthcare providers who were paid to be HIV Speakers on a particular topic also attended HIV Dinner Programs on exactly the same topic, often within less than six months after speaking.
• In certain instances, the same group of doctors repeatedly attended the same HIV Speaker Programs together at various restaurants.  In many instances, they attended a HIV Dinner Program less than two weeks after speaking on the same topic.

Lessons for DME Suppliers

DME suppliers can learn several lessons from the Gilead settlement:

• Trust Your Stomach…Not Your Brain – Gilead is a large corporation with smart management and equally smart attorneys. It is hard to understand how the HIV Speaker Programs could be vetted…and approved…by Gilead management. A person’s brain may turn itself into a pretzel trying to justify the legality of the program, but the stomach never lies. At the outset, Gilead’s thinking should have been: “Sure, we can make the technical argument that this is a legitimate speaker’s program…but it just smells. It makes my stomach hurt.” A responsible person should have called a timeout at the beginning and restructured the speakers program so that it would be conservative and legally compliant.
• Avoid the “Slippery Slope” – When I have defended criminal and civil fraud cases brought by the DOJ, I have often found that the health care provider initially engaged in activities that were legally compliant. But then the provider would decide to become more aggressive and stick its toe on the proverbial slippery slope. While at first being uncomfortable, the provider would rationalize its actions (“brain over stomach”) and become comfortable again. This scenario would replay itself as the provider would move down the slippery slope. And then the provider would get caught. There is a possibility that the HIV Speaker Programs began conservatively…but then the programs became more aggressive and moved down the slippery slope. And then the speaker program got caught in the crosshairs of a whistleblower lawsuit.
• A Compliance Program is an Ongoing Process – Gilead’s Compliance Program should have recognized the dangers of the HIV Speaker Programs long before the program veered out of control. A successful Compliance Program is one that is continuously monitored and updated.
• A Successful Compliance Program Reduces the Risk of a Whistleblower Lawsuit – As a general rule, a person does not become an employee of a provider with the preconceived notion of becoming a whistleblower. A successful compliance program presents an outlet to an employee who believes that his/her employer is engaging in legally noncompliant acts. That outlet is a confidential pathway to the provider’s Compliance Officer or Compliance Committee. Normally, an employee (or ex-employee) goes to a whistleblower attorney only after the employee brings his/her concerns to company management…and management “brushes the employee off.”
• All Roads Lead to the FCA – If a provider is engaging in activities that violate the AKS…or violate the federal physician self-referral statute (“Stark”)…or violate the federal beneficiary inducement statute…the claims arising out of those activities become false claims under the FCA. Whistleblower lawsuits are based on alleged violations of the FCA. Fines and penalties under the FCA can be massive.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, a law firm based in Texas with a national healthcare practice. He represents pharmacies, infusion companies, HME companies, manufacturers, and other healthcare providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected].

AAHOMECARE’S EDUCATIONAL WEBINAR

Loan Closets, Employee Liaisons, and Other Arrangements with Referral Sources

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato & Noel Neil, ACU-Serve

Tuesday, June 3, 2025
1:30-2:30 p.m. CENTRAL TIME
In the non-health care world, businesses (e.g., auto parts stores) have very few restrictions regarding their relationships with referral sources. By contrast, the health care world is a totally different animal. Because a large portion of a DME supplier’s revenue is derived directly (or indirectly) from tax dollars, there are myriad federal and state laws designed to protect the tax dollars from fraud. Many of these laws focus on relationships health care providers have with physicians, hospitals, and other referral sources. This program will discuss such relationships between DME suppliers and referral sources. These arrangements include (i) loan closets (also known as consignment closets and stock and bill arrangements), (ii) employee liaisons, (iii) Medical Director Agreements, (iv) physician advisory boards, (v) preferred provider agreements, (vi) patient service agreements, (vii) marketing service arrangements, and (viii) subcontract agreements. The program will discuss how these relationships can be legally entered into…and pitfalls that need to be avoided.

Registration will soon be posted for Loan Closets, Employee Liaisons, and Other Arrangements with Referral Sources on Tuesday, June 3, 2025, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq. and Noel Neil.

Members:  $99
Non-Members:  $129