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directly or indirectly, overtly or covertly, in cash or in kind" to a second person to induce that

second person:

  • (a)

    to refer an individual to a person for the furnishing of any item or service for which payment may be made in whole or in pmt under a Federal health care program, or

  • (b)

    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).

40.

Under the AKS, drug companies may not offer or pay any remuneration, in cash

or in kind, to induce anyone to order or recommend drugs that may be paid for by Medicaid.

These regulations prohibit both outright bribes and rebate schemes as well as any payment by a

drug company that has as one of its purposes inducing additional prescriptions for the company's

pharmaceutical products.

41.

The AKS reaches all fraudulent attempts to cause the government to pay claims it

owes no obligation to pay, including claims that are the byproduct of the payment of illegal

remuneration. Hence, the AKS creates liability for both sides of an impermissible "kickback"

transaction.

  • C.

    THE MEDICAID REBATE STATUTE AND RELATED LEGISLATION

    • 42.

      Congress enacted the Medicaid Rebate Program in an effort to control Medicaid

costs. 42 U.S.C. §1396r-8. Under this program, drug manufacturers, including at all relevant

times all the Defendant Mm1Ufacturers, voluntarily enter into Rebate Agreements with the Center

for Medicaid and Medicare Services ("CMS"), the federal agency that administers Medicaid.

43.

In

these

Agreements,

CMS

agrees

to

make

each

manufacturer's

products

reimbursable through Medicaid. In exchange, each drug manufacturer is required to report to

11

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