Pharmaceutical Company Ultragenyx Agrees to Pay $6 Million for Allegedly Paying Kickbacks to Induce Claims for its Drug Crysvita

BOSTON – 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. The settlement concerns Ultragenyx paying for free genetic tests for patients and buying test result information to induce prescriptions of Crysvita. 

Ultragenyx is a pharmaceutical manufacturer headquartered 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.  
    
As part of the settlement, Ultragenyx admitted and accepted responsibility for certain facts providing the basis of the settlement. Ultragenyx understood that, in some cases, an insurer (including Medicare or Medicaid) would require a positive genetic test for a genetic mutation consistent with XLH to pay for a patient’s prescription for Crysvita, or a health care provider (HCP) would require a positive genetic test 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. Ultragenyx sales personnel discussed the XLH testing program with HCPs and delivered order forms for the tests to HCP’s 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 ( “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 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 to beneficiaries in the form of free genetic tests to induce their purchase of Medicare- or Medicaid-reimbursed Crysvita and to the Laboratory for the Results Reports to induce the Laboratory’s to refer to Ultragenyx the names of HCPs to whom Ultragenyx could market Crysvita.   

“Kickbacks, in whatever form, have no business in our federal healthcare system. 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,” said Acting United States Attorney Joshua S. Levy. “As medical practices evolve, our office is committed to ferreting out improper financial kickbacks of any permutation.”

“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 Department of Justice’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.”

 “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 U.S. Department of Health and Human Services, Office of Inspector General. “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.”

“Today’s settlement makes it crystal clear that pharmaceutical companies like Ultragenyx will not be allowed to exploit patient data to target patients for treatments in order to boost their bottom line at the expense of taxpayer-funded health care programs,” said Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division. “Let this case be a warning to others that the FBI and our law enforcement partners are hard at work investigating allegations of health care fraud, and anyone engaging in similar conduct will face similar consequences.”

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 U.S. 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.  

Acting U.S. Attorney Levy; AAG Boynton; HHS-OIG SAC Coviello; and FBI SAC Cohen made the announcement today. Assistant U.S. Attorneys Brian LaMacchia and Diane Seol and Senior Counsel for Health Care Fraud Augustine Ripa handled the matter.