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Sanofi Escapes Health Plans' 'Deficient' Kickback Suit

A New Jersey federal judge on Thursday permanently dismissed two health plans’ suit accusing Sanofi-Aventis, a fellow drug company and two consulting firms of engaging in a kickback scheme, finding the plans don’t have standing to sue and haven’t laid out enough details to support their case.

U.S. District Judge Kevin McNulty had previously dismissed Plumbers' Local No. 690 Health Plan’s first amended complaint as deficient and he said Thursday that the addition of another defendant, Delaware Valley Health Care Coalition, and a few other minor details didn’t strengthen the suit against Sanofi-Aventis US Inc., Fidia Pharma USA Inc., Accenture PLC and Deloitte LLP. He granted the defendants’ motion to dismiss with prejudice.

“Plaintiffs, armed with specific instructions from the court, have already once been granted leave to remedy these basic pleading deficiencies, have enlisted the aid of a trade association which lacks standing, and have failed to remedy these defects,” the opinion states.

The wide-ranging suit, first brought in February 2015, contended that Sanofi sales representatives were armed with hundreds of thousands of free samples of the osteoarthritis drug Hyalgan and were trained to provide physicians with those samples in exchange for purchases of the drug. Implicit in that training was the notion that doctors would bill clients for the free samples, the complaint said. Fidia co-makes and sells Hyalgan.

According to the health plans, this scheme cause third-party payors to pay inflated rates for Hyalgan treatments because the price charged was tied by a formula to Medicare reimbursement rates.

When dealing with standing only, Judge McNulty did clear DVHCC to sue Fidia for injunctive relief but only in California and New York. That decision was made by “squinting a bit,” he said, and was then overriden by DVHCC’s failure to state a claim.

“This 82-page, 369-paragraph [second amended complaint] contains many sweeping statements about the defendants’ misuse of Hyalgan samples nationwide. It contains only an inadequate handful of factual allegations, however, about how that misconduct might have affected the members of Local 690 or DVHCC,” Judge McNulty said.

The judge said the second amended complaint “largely recapitulates the skimpy factual allegations” of the first and the added information “is immaterial.” All allegations of harm are speculative, he said.

The complaint lacks details about who received the free samples and for which patients and how the health plans ended up paying regular or inflated prices, he said.

The plans had also claimed that Sanofi contracted with entities including Accenture and Deloitte to unduly sway physicians, hospitals and retail pharmacies to switch from competitors' products to its own diabetes drugs, which include Amaryl, Apidra and Lantus.

The diabetes drugs were pushed as part of an “unfair and deceptive scheme” that stretched from about 2012 through 2013 and used contracts that ran afoul of federal health care laws, according to the complaint. But the contracts were coded in such a way that they bypassed normal legal review procedures, the complaint said.

Judge McNulty found those claims equally unpersuasive, determining there are “essentially no connecting allegations.”

Sanofi spokeswoman Anna Robinson said the company “is pleased with the court’s ruling.” Representatives for each of the remaining parties didn’t immediately respond to request for comment Friday.

The health plans are represented by Donald E. Haviland Jr. of Haviland Hughes.

Sanofi is represented by Liza M. Walsh, Tricia B. O’Reilly and Katelyn O'Reilly of Walsh Pizzi O'Reilly Falanga LLP and Michael Koon, Darryl Anderson, Eliot Turner and Savannah Wiseman of Norton Rose Fulbright.

Fidia Pharma is represented by David R. King, Jason Anthony D'Angelo and Ronald J. Levine of Herrick Feinstein LLP.

Accenture is represented by Brian M. English and William H. Trousdale of Tompkins McGuire Wachenfeld & Barry LLP and by Craig Primis, H. Boyd Greene, Andrew Pruitt, Tracie Bryant and Damon Andrews of Kirkland & Ellis LLP.

Deloitte is represented by Mark A. Berman of Hartmann Doherty Rosa Berman & Bulbulia PC.

The case is Plumbers’ Local No. 690 Health Plan v. Sanofi US Services Inc., case number 2:15-cv-00956, in the U.S. District Court for the District of New Jersey.