A recent decision from the United States District Court for the District of Columbia continues to give significant deference to the U.S. Department of Health and Human Services’ (HHS) interpretation of the Anti-Kickback and Beneficiary Inducement Statutes, particularly where it involves the evaluation of scientific data within the technical expertise of the HHS and where the HHS’s assessment is predictive – in this case whether providing a financial benefit to patients would improve access to a novel treatment while posing a low risk of harm. On March 31, 2025, Chief Judge James E. Boasberg issued an opinion upholding the HHS’s interpretation that a program proposed by Vertex Pharmaceuticals, Inc., to provide funding for fertility-support services to patients undergoing gene-editing therapy, would violate the Anti-Kickback Statute and the Beneficiary Inducement Statute. Vertex Pharmaceuticals Inc. v. United States Department of Health & Human Services, No. 24-cv-02046 (JEB), 2025 U.S. Dist. LEXIS 61021 (D.D.C. Mar. 31, 2025).
Vertex, a biotechnology company based in Boston, Massachusetts, developed a novel gene therapy treatment for sickle-cell disease and transfusion-dependent beta-thalassemia which requires patients who receive such therapy to first undergo chemotherapy. Hoping to expand access for patients, Vertex sought to mitigate the impact of chemotherapy on patient fertility by proposing a fertility assistance program that would provide eligible patients with up to $70,000 for fertility-related services.
As companies often do, Vertex sought the protection of an advisory opinion from the HHS OIG. However, in this instance, the HHS informed Vertex that it would not issue a favorable advisory opinion and instead opined that the program as proposed would violate the Anti-Kickback Statute and the Beneficiary Inducement Statute. The threat of potential HHS OIG enforcement action set forth in the HHS advisory opinion would effectively preclude Vertex from offering their Fertility Program to patients who receive insurance through government healthcare programs, including Medicare and Medicaid.
Rather than forego the program entirely, and miss an opportunity to increase patient access to care, Vertex instead sought court intervention and filed an action alleging that the HHS OIG was incorrect and that the Fertility Program does not violate the Anti-Kickback Statute or the Beneficiary Inducement Statute.
In addressing the parties’ cross-motions for summary judgment, the Court began first by analyzing the Beneficiary Inducement Statute, which makes it unlawful to “offer to or transfer remuneration to any individual eligible for benefits under [a federal or state healthcare program] that such person knows or should know is likely to influence such individual to order or receive from a particular provider, practitioner, or supplier any item or service for which payment may be made, in whole or in part, under [a federal or state healthcare program].” 42 U.S.C. § 1320a-7a(a)(5). The HHS argued that the funds offered by the program would influence patients to seek out particular treatment centers and physicians and would constitute “valuable remuneration” under the statute. In response, Vertex sought to invoke the Promote Access to Care Exception, which allows for “remuneration which promotes access to care and poses a low risk of harm to patients and Federal health care programs.” 42 U.S.C. § 1320a-7a(i)(6)(F). The Court declined to do so, concluding that the agency’s determination that the program did not meet the threshold for the exception, informed by its earlier findings regarding the lack of available information about using and accessing novel gene therapies, was “reasonable and reasonably explained” and did not depart from HHS precedent. Citing prior decisions, the Court observed that an agency is entitled to “an extreme degree of deference [ ] when it is evaluating scientific data within its technical expertise.” The Court found dispositive the HHS OIG’s claimed lack of sufficient supporting data demonstrating that the program would increase access to care.
The Court next turned to the Anti-Kickback Statute, also known as the Medicare and Medicaid Fraud and Abuse Statute, which imposes civil and criminal penalties on anyone who “knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person . . . to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program.” 42 U.S.C. § 1320a-7b(b)(2). The parties’ dispute turned on the statutory interpretation of the meaning of the words “induce” and “remuneration.”
The HHS OIG argued the Court should apply the ordinary meaning of induce. Vertex, on the other hand, cited a recent Supreme Court decision, United States v. Hansen, 599 U.S. 762 (2023), and argued that induce should be applied as an Anti-Kickback Statute term requiring a corrupt quid pro quo relationship. In Hansen, the Supreme Court considered whether the term induce in an immigration statute should be defined by its ordinary meaning or in a manner specific to the statute. There, the Supreme Court rejected the government’s argued ordinary meaning and, instead, held that induce in that instance should be defined by its more specific “criminal law meaning.” Vertex argued that the Hansen holding should be applied to the Anti-Kickback Statute too.
The Court disagreed. In providing its lengthy analysis regarding the interpretation of “induce,” the Court distinguished the use of the term in the statute at issue in Hansen, before adopting the “ordinary meaning of ‘induce’ — ‘influence to an act or course of conduct, lead by persuasion or reasoning, incite by motives, prevail on.’” Had the Court applied the Hansen definition and defined “induce” using its criminal meaning, the outcome would likely have been different. This may present an opening for appeal in this case, or for a different outcome in another court confronting a similar issue.
The Court then moved to “renumeration,” and similarly adopted the “ordinary” meaning of – “any ‘[r]eward; recompense; [or] salary.’” Vertex argued that the program did not provide prohibited remuneration because the proposed program solely sought to increase patient access to care and prohibited remuneration should be limited to “transactions that corrupt physicians’ and patients’ decision making and thus solicit or facilitate an unlawful act on the part of the recipient.” The HHS OIG again argued for the common definition of remuneration which would include any exchange of value, not limited to corrupt exchanges. The Court concluded “the Anti-Kickback Statute forbids all forms of remuneration done with the purpose of inducing the purchase of federally reimbursable healthcare services, regardless of whether the remuneration or induced conduct is independently unlawful.” Using these definitions, the Court then upheld the HHS OIG’s determination that the proposed program would violate the Anti-Kickback Statute. While the Court recognized “Vertex[’s] admirable work in pressing its view of nuanced statutes,” it ultimately deemed the HHS’s interpretation lawful and granted the HHS’s motion for summary judgment. Vertex is likely considering whether to appeal the District Court’s decision.
Advisory opinions are only binding on the requesting party, but they often provide important insight into the HHS OIG’s interpretation of these important statutes. The Vertex opinion sets forth a precedent that companies in the healthcare space and pharmaceutical industry specifically will want to take notice of—especially those trying to assist patients in accessing a novel treatment at the mercy of the HHS OIG.
Takeaways:
- The HHS OIG continues to closely scrutinize (and be skeptical of) programs providing financial assistance to patients.
- Even programs designed with the best of intentions and with patient care at heart may be deemed high risk by the HHS OIG.
- HHS OIG advisory opinions will receive significant deference in court. Given this anticipated deference, it remains vitally important to build a sufficient record at the agency level to support subsequent court challenges to agency action.
