Indian-origin CEO of speciality pharma firm agrees to pay $20 million to settle kickback allegations

A speciality pharmacy company in the US and its Indian-origin chief executive officer have agreed collectively to pay $20 million to resolve allegations that they paid kickbacks to patients and physicians to protect its revenue stream, the justice department said.

“BioTek allegedly provided improper physician inducements and covered up kickbacks for patient referrals by waiving co-pays,” said US Attorney Jacqueline C. Romero for the Eastern District of Pennsylvania.

"BioTek’s alleged scheme, orchestrated and implemented by Chaitanya Gadde, Dr David Tabby, and others, to routinely waive these copays -- without regard for whether the patients were experiencing financial hardship -- ensured a steady revenue stream for BioTek and undermined patient care to citizens of this District", Romero said in a statement.

When a Medicare beneficiary obtains a prescription drug covered by Medicare, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance or a deductible (collectively copays).

The Federal Anti-Kickback Statute under the False Claims Act prohibits the offering, paying, soliciting or accepting, directly or indirectly, of any remuneration - which includes money or any other thing of value - to refer or arrange for the referral of items or services payable by any federal health care programme.

The US government alleged that BioTek, a speciality pharmacy that offers drugs and infusion services, from August 2015 through May 2020 routinely waived the copayments of Medicare and TRICARE patients to induce those patients to purchase its drugs and services, a US Department of Justice statement said.

Many of the speciality drugs offered by BioTek were expensive and required patients to pay large copays, a Department of Justice release stated on Monday.

It alleged that BioTek provided remuneration in the form of gifts, dinners and free administrative and clinical support services to physicians to induce them to refer patients to BioTek.

Dr Tabby -- who operated a neurology practice in Pennsylvania -- claimed that he knowingly solicited and accepted the remuneration in exchange for referring numerous patients to BioTek.

Tabby has separately paid $ 480,000 to settle these allegations, based on his ability to pay.

The claim was brought under the qui tam or whistleblower provisions of the False Claims Act by former BioTek employees Shantae M. Wyatt and Latoya Sparrow.

Under those provisions, a private party may file an action on behalf of the US and receive a portion of any recovery.

Wyatt and Sparrow will receive $ 4 million as their share of the settlememt with BioTek and gadde, and $ 91,200 as their share of the settlement with Dr Tabby.

Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, said: “This settlement reflects the government’s continuing commitment to protect the integrity of these programmes and the healthcare decisions made by and on behalf of beneficiaries.”

The claims asserted by the US are allegations only and there has been no determination of liability, the statement said.