Foster City drugs giant Gilead to pay $202 million over alleged kickback scheme

Foster City pharmaceuticals giant Gilead Sciences has agreed to pay a $202 million settlement over allegations in a lawsuit by state and federal authorities that it paid doctors kickbacks, sent them on trips and fed them dinners at fancy restaurants to promote the company’s HIV drugs, used to treat the virus that causes AIDS.

The lawsuit by California, 47 other states and the federal government alleged an unspecified number of “San Francisco doctors,” whose names were redacted from a 193-page complaint over the claimed scheme, received a total of more than $1 million in kickback payments for speaking at Gilead events.

Gilead gave money, expensive meals and trips to physicians to speak at events and “induce” colleagues to prescribe the company’s six HIV drugs, the lawsuit filed earlier this year in New York federal court alleged.

State and federal anti-kickback laws bar drug companies from paying doctors to recommend drugs.

Under the settlement, Gilead admitted that between 2011 and 2017 it paid nearly $24 million to more than 500 health care providers who served as “HIV speakers,” often at posh restaurant dinners attended by other health providers involved in HIV treatment.

Many of the speakers received tens of thousands of dollars, and about 60 received more than $100,000 each, the settlement agreement said.

“The vast majority of these individuals prescribed a large volume of the Gilead HIV drugs,” the agreement said.

A Gilead spokesperson described the company’s admitted behavior as a “legacy matter” and said it had strengthened its programs for legal and regulatory compliance.

“Gilead’s HIV speaker programs have served to educate healthcare professionals about the appropriate use and benefits of these important medicines,” the spokesperson said. “We believe these efforts are important for healthcare providers and patients to have the necessary information to make the best decisions for their care.”

The lawsuit alleged the induced prescriptions led to false claims to healthcare programs including Medicare and Medicaid, resulting from violations of anti-kickback laws. Nearly $50 million from the settlement, including more than $4 million to California, will go to Medicaid, the health care program for low-income people.

This week, California’s Attorney General Rob Bonta noted that the deal — approved for the federal government in April and for states this week — comes as President Donald Trump’s recently signed tax and spending bill is expected to slash Medicaid funding across the U.S. by $1 trillion over the next decade.

“At this time of unprecedented funding cuts to Medicaid, it is particularly important to protect the program from illegal kick-back schemes that harm the program and patients alike,” Bonta said in a news release.

Gilead, which reported $480 million in profit last year, often paid speakers’ travel costs, including when the health care providers asked specifically to speak in “desirable travel destinations, such as Hawaii, Miami, and New Orleans,” the settlement agreement said. Several of the events took place at “upscale restaurants” in San Francisco, at costs of up to $163 per person, according to the lawsuit.

One of the Gilead dinners was held at Le Papillon in west San Jose, which is not accused of any wrongdoing, and currently offers a $145-per-person four-dish menu, with, for an extra $10, “slow poached lobster with lemongrass, tamarind, and basil.”