Indian American CEO of pharma company agrees to pay $20 million to settle kickback allegations

NEW YORK (TIP): BioTek reMEDys, a Delaware-based pharma company and its Indian-origin CEO Chaitanya Gadde, have agreed to pay $20 million to resolve allegations of violating the False Claims Act of paying kickbacks to patients and physicians to protect its revenue stream.
The government alleged that, from at least August 2015 through May 2020, the specialty pharmacy that offers drugs and infusion services, routinely waived the copayments of Medicare and TRICARE patients to induce those patients to purchase its drugs and services.
Many of the specialty drugs offered by BioTek were expensive and required patients to pay large copays, a Department of Justice release stated on Monday.
The government said that the company sought to avoid deterring patients from purchasing its drugs and services by engaging in a scheme, orchestrated and implemented by Gadde to routinely waive these large copays, without regard for whether the patients were experiencing financial hardship.
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).
Congress included copay requirements in the Medicare program in part to serve as a check on health care costs.
It was also 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.
The government named Dr David Tabby — who operated a neurology practice in Pennsylvania — and claimed that he knowingly solicited and accepted the remuneration in exchange for referring numerous patients to BioTek.
The Department’s release stated that Tabby has separately paid $480,000 to settle these allegations, based on his ability to pay.
“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 Gadde, Dr 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.
The federal Anti-Kickback Statute 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 healthcare program.
This prohibition extends to companies that routinely waive the copays of Medicare patients without determination of financial need.
The Anti-Kickback Statute also extends to the payment of remuneration to physicians in exchange for patient referrals. The civil settlement includes the resolution of claims 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 settlement with BioTek and Gadde, and $91,200 as their share of the settlement with Dr Tabby.