On Monday, February 26, 2024, BioMarin Pharmaceutical, Inc. (“BioMarin”) disclosed in its annual filing that the company recently received a subpoena from the U.S. Department of Justice (DOJ) requesting certain documents regarding BioMarin’s sponsored testing programs relating to two of its products, VIMIZIM and NAGLAZYME.[1] BioMarin also stated that the company “produced documents in response to the subpoena and are cooperating fully, but there is no assurance that such sponsored testing programs, or [BioMarin’s] other operations or programs, will not be found to violate” healthcare fraud and abuse laws.[2]

Recent Regulatory Activity Regarding Sponsored Testing Programs

This subpoena comes on the heels of Ultragenyx’s December 2023 $6 million settlement with DOJ to resolve allegations it violated the False Claims Act by paying kickbacks through its sponsored genetic testing program.[3] The Ultragenyx settlement marked the first major enforcement action involving a sponsored genetic testing program after the U.S. Department of Health and Human Services, Office of Inspector General (OIG), issued Advisory Opinion 22-06 in April 2022, which addressed a separate sponsored genetic testing program.[4]

Sponsored testing programs can reduce barriers to testing that allow patients to make more informed decisions about their health. However, DOJ and OIG are concerned that sponsored testing programs might be a permutation of an impermissible kickback which can lead to overutilization or inappropriate utilization, skew clinical decision-making, or be used as a sales or marketing tool. For example, DOJ believed Ultragenyx’s use of its sponsored genetic testing program, caused the submission of false claims to federal health care programs “by paying remuneration: (1) to the Laboratory to induce the Laboratory to provide the Results Reports which referred Ultragenyx employees to HCPs [health care providers] for the furnishing or arranging for the furnishing of Crysvita through a targeted effort that resulted in Crysvita prescriptions reimbursed by Medicare and Medicaid; and (2) to beneficiaries in the form of covering the cost of the genetic tests, to induce their purchase of Medicare or Medicaid-reimbursed Crysvita.”[5]

Practical Implications for Sponsored Testing Programs

BioMarin’s subpoena indicates that DOJ intends to keep scrutinizing sponsored testing programs and are willing to investigate such programs – especially now that they are supported with guidance from OIG’s Advisory Opinion 22-06 and at least one successful enforcement action in Ultragenyx’s settlement. Accordingly, manufacturers, laboratories and genetic counseling entities who participate in sponsored testing programs would be well served to re-evaluate their arrangements under AO 22-06 and in light of the facts underlying recent enforcement actions.

Just as DOJ, in recent years, built upon OIG guidance and its own enforcement actions regarding pharmaceutical manufacturers’ charitable donations and patient assistance programs, it may continue to build upon these rapidly developing actions to regulate sponsored testing programs.

ENDNOTES

[1] BioMarin Pharmaceutical Form 10-K Filing at 48 (Feb. 26, 2024), https://d18rn0p25nwr6d.cloudfront.net/CIK-0001048477/fd0e0f2c-c93d-4f16-a677-a14d321ea560.pdf.

[2] Id.

[3] See Sponsored Genetic Testing Programs: Compliance Considerations Following DOJ False Claims Act Settlement (Jan. 18, 2024), https://www.ebglaw.com/insights/publications/sponsored-genetic-testing-programs-compliance-considerations-following-doj-false-claims-act-settlement.

[4] OIG Advisory Opinion No. 22-06 (April 11, 2022), https://oig.hhs.gov/documents/advisory-opinions/1028/AO-22-06.pdf.

[5] USA v. Ultragenyx – Settlement Agreement (Dec. 19, 2023), https://www.justice.gov/media/1329981/dl.