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Case number 25-5133, Vertex Pharmaceuticals Incorporated Appellant versus United States Department of Health and Human Services, EDAL.

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Mr. Hallward Dreemeyer for the appellant, Mr. Winnick for the ampoules.

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Good morning.

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Good morning.

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May it please the court, Doug Hallward Dreemeyer on behalf of Appellant Vertex.

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I'd like to reserve two minutes of my time for rebuttal.

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The district court recognized that the purpose of the AKS is to prevent the providing or purchasing of healthcare services that are medically inappropriate in exchange for financial rewards.

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The government doesn't disagree with that.

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It actually quoted the same language in its brief.

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And in another case, in the first circuit, the same government council was even more candid.

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It said that the point of the AKS is that financial conflicts in and of themselves corrupt medical decision-making.

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But if this court agrees with those characterizations of the AKS and it has to set aside the OIG's advisory opinion here, because OIG rejected the notion that the AKS requires anything inappropriate or corrupting, mere influence over medical decision-making is a crime under the analysis OIG applied.

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OIG's construction cannot be squared with the text of the AKS, and that's where I want to start.

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The AKS starts in paragraph B1 by criminalizing the solicitation or acceptance of remuneration, including any kickback bribe or rebate, in return for providing, purchasing, or referring

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federally reimbursed healthcare.

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Paragraph B2, which is the provision of issue here, is the flip side of the same coin.

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Congress criminalized offering or paying, quote, remuneration, including any kickback bribe or rebate, to induce such a referral or purchase.

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In other words, soliciting an unlawful referral or purchase in violation of B1.

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B2 and B1 operate as a complete whole.

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In Congress's use of the trio of examples, kickback, bribe, or rebate in both provisions and its phrase, remuneration to induce, which is the obverse of in return for in B1,

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confirm that AKS's two prohibitions operate together to prohibit both sides of a corrupt transaction that distorts medical decision-making from the medical merits.

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Can I ask a hypothetical that's been on my mind?

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Let's assume that the cost of the gene therapy is a million dollars, and let's assume that the cost of fertility treatment is 70,000.

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If Vertex had just reduced the cost of the gene therapy by $70,000, it means that the government, through Medicare and Medicaid, would pay $70,000 less.

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So that'd be a win for the government.

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Wouldn't necessarily be a win for the patient, though, because the government doesn't cover fertility treatments.

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So that would be $70,000 out of pocket for the patient.

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And the patient's not actually getting a personal out-of-pocket discount on the gene therapy because the patient's not paying for that.

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The government's paying for that.

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So that might've been okay to do, but it wouldn't have helped the patient's pocketbook.

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So I think what Vertex did is they said, well, we'll charge a million for the gene therapy and we'll give you 70,000 cash for the fertility treatment.

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The problem is that the government has made a choice that it doesn't want to fund fertility treatments.

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So what you've in effect done is gotten the government's million dollars for the gene therapy and then taken 70,000 of that paid for the fertility treatment.

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In other words, you have arranged the system so that the government will pay for the fertility treatment.

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instead of the patient paying for it out of pocket.

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Because even though you're the one that's giving the $70,000, you're getting that $70,000 from the million that you get from the government.

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So this seems like almost exactly what the anti-kickback statute is designed to prevent.

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You're making the government pay for stuff the government doesn't want to pay for.

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No, Your Honor, because the government will pay its share of the million dollars, whether the patient gets fertility services or not.

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The government has agreed through the terms of the Medicare Medicaid programs, what share it's going to provide.

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And that's true again here, whether or not a patient gets

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fertility services.

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Vertex is offering that from the money that it would otherwise have in order to assist patients to have access to this life-changing cure.

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And I think what, again, what OIG did in analyzing this was to assume that any influence

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on decision-making was enough to violate the statute.

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If what your honors question implies is that there is something improper about Vertex's influence, some wrongful influence,

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That is the standard that the Ninth Circuit applied in Schena, the Fifth Circuit applied in Marchetti, the Seventh Circuit applied in Swanson.

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But it's not the standard that OIG applied here.

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OIG rejected the notion that there had to be anything improper.

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They thought any kind of influence would be enough.

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And that's why OIG's construction captures merely

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engaging in a contract with an advertising agency, which is, of course, paid remuneration to recommend the purchase of a product.

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And that's the situation that's been addressed in Marchetti and Sorensen and Schena.

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And those courts recognize that it can't merely be influence.

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It has to be in some fashion wrongful

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influence in order to violate the statute.

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But that's not the standard that OIG applied here.

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Of course, we're on APA review.

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And so the proper... And maybe I'll get the numbers wrong, we'll see.

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But take two patients, one gets fertility treatment, one doesn't.

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They both get the gene therapy.

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The government pays a million dollars for each gene therapy.

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And under your program, both patients pay nothing beyond that.

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The first patient pays nothing for the fertility treatment because he doesn't get the fertility treatment.

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The second patient pays nothing for the fertility treatment because Vertex is paying the $70,000 for the fertility treatment.

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So the government in the first case is paying a million dollars for just

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for a patient who's getting just the gene therapy.

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But the government in the second case is still paying a million dollars for a patient who's getting the gene therapy plus the fertility treatment.

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So the government is in effect

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for that second patient paying for the fertility treatment.

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You know, they're getting more without having to pay for it.

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The vertex is providing the fertility care.

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And I think that the CMS couldn't vertex just knock 70,000 off the cost of its gene.

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No, because your initial question is exactly right, that this is not something that Vertex can address by lowering the price, because that doesn't address the access to care problem.

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I'm not saying they could knock off 70,000 for all patients, but they could knock off 70,000 for the patients who need fertility treatment.

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And then the government would only be paying 930,000 for

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that patients would still not get fertility treatment that the system doesn't allow it in a sense because they could still get the fertility treatment you could pay them seventy thousand dollars in that situation and they would they would get free fertility treatment the problem with that for you is you'd be paying them seventy thousand out of the nine thirty that you get from the government

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And you want to pay them 70 from the million you get from the government.

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But your honor, none of this is part of the OIG analysis because OIG doesn't require that there be anything wrongful, anything about making the service more expensive to the government.

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Here, vertexes

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product is a million dollars less than the competitor product that was on the market.

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That was reflected in OIG's opinion.

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So this is not about causing the government to spend more for Vertex's product.

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But it would be a million dollars and it would be a million and seventy thousand dollars less than the competitor's product.

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Vertex weren't kicking in the seventy thousand to pay for the fertility treatment for the patients who want the fertility treatment.

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But even that program that your honor hypothesizes would violate the criminal statute under OIG's standard, because OIG's standard is anything of value that could merely influence decision making, including in order to

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promote access to care.

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Eliminating a barrier to care is an influence that OIG says violates this criminal statute.

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And that is not consistent with what the Supreme Court said in Hanson when it construed induce not as mere influence.

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It explicitly rejected the notion that induce in a criminal statute means mere influence.

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It has to mean criminal solicitation.

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Mr. Howard-Dreamer, I mean,

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Here, the statute doesn't directly prohibit inducement.

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It talks about paying remuneration that essentially causes a person to use more federally paid for health care or services.

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It doesn't say causes, and it uses that trio of examples, kickback, bribe, or rebate, to indicate that induce does carry its traditional Camelot meaning of wrongful.

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I find your interpretation intuitively very appealing, right?

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That this is a criminal statute, and so induce needs to have some kind of wrongdoing

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aspect connected to it.

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I understand that argument, but then this statute is written so broadly in a way that suggests that basically any remuneration, including rebates, there's nothing insidious about a rebate.

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that induces a person to... Your Honor, rebate in this instance has a particular meaning because that trio of words, kickback, bribe, or rebate come from the predecessor to the AKS.

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Before the AKS was amended in 1977, its predecessor statute in 1972 prohibited the offer, solicitation, or receipt of

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One, a kickback or bribe in connection with the federally funded care or a rebate to of a fee or charge for referring a patient.

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So that phrase

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rebate of the charge or fee for referring is a form of kickback.

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It's not just to the person who otherwise paid, it's to the third party who referred.

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So it's that same corrupt.

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Right, but Congress has continued to broaden the statute and

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I don't understand Vertex to be making any non-delegation argument.

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We're not, Your Honor.

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We're arguing that.

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But it didn't broaden it as much as it did in the civil statute.

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In the civil statute, Congress did use the word influence, likely to influence.

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But it omitted that trio of corrupt examples, kickback, bribe, or rebate.

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And it added other limitations.

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For example, the civil statute does not apply to the recipient, to the beneficiary, the patient.

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The civil statute does not apply to remuneration offered to promote access to care.

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The civil statute only applies when it is likely to influence the choice of a particular provider.

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All of those limitations are necessary precisely because Congress used this broader word to influence.

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In the criminal statute, it used a traditional criminal word induced that has a long-standing meaning of criminal solicitation.

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And in B2, the criminal solicitation is the violation of B1,

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which is that corrupt transaction that the government itself has characterized in other briefs.

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Corruption is at the heart of the AKS, but OIG reads it out.

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And that's why an advertising agreement would be violative under OIG standard.

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It's why a generous aunt giving her niece money to be able to overcome the financial barrier

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to getting the care she needs would be a crime, the government cannot defend the incredible breadth and really the absurd breadth of its reading.

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Most importantly, it can't explain why the criminal statute would criminalize precisely that conduct that Congress carved out even from civil liability in the access to care.

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exception to the civil statute.

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You need that exception to the civil statute precisely because the civil statute uses the broader influence.

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But if the criminal statute only prohibits inducement, the solicitation of a crime, the solicitation of someone who's going to purchase the service in return for the money,

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A patient here is not purchasing Casgevi in return for fertility services.

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Fertility services merely address an unfortunate side effect of the conditioning necessary for Casgevi.

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Casgevi saves lives, Your Honor.

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Patients are not buying it.

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It's not medically inappropriate.

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And under all of the limitations of Vertex's program, it's designed entirely to make sure that the patient has been diagnosed with sickle cell.

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or TDT that the patient has already been determined to be appropriate for this product.

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It's not being advertised to the patient or anybody else.

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All of these are designed to ensure that the medical decision making is not being corrupted.

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If the government thought, if OIG thought that there was some problem with Vertex's proposal, that there was something else that Vertex should do in order to make sure that it was not corrupting the decision-making, it could have asked Vertex about that.

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But it never got to that because under OIG's

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reading categorically anything that influences decision making, or in the case of advertising, anything that induces one to recommend the program.

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Let me ask you a question.

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So if this court were to conclude that you succeed on your arbitrary and capricious challenge to whether there was insufficient data to determine whether the program fits under the promotes access to care exemption.

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If vertex were to prevail on that, that doesn't really give you the relief you want under the kickback statute.

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I mean, is there any carryover effect?

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Well, Your Honor, I think that it's exemplary of why the reading of the kickback statute goes over broad.

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Because again, as I said, under the government's reading, something that would satisfy the access to care provision, as CMS has determined, this is essential to overcome barriers to accessing this life-changing treatment, that would nonetheless be criminal.

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You couldn't do

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what the exemption under the civil statute, the CMPL, really invites providers to do, offer remuneration to overcome barriers to care because you would still be committing the crime.

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Do you think that HHS would have to revise its opinion about the criminal statute if it revised its opinion on the civil statute and whether vertex fit within the exemption?

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Well, Your Honor, I think that it would at the very least have to redo that analysis.

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I think that our argument that their construction of the AKS is one that would effectively prohibit companies from doing exactly what Congress encourages them to do in the exception to the civil statute.

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At the very least, I think OIG would have to redo that analysis.

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And I think that they would also have to redo their analysis in light of the three decisions in the last two years, from the Ninth Circuit, the Seventh Circuit, and the Fifth Circuit, all of which say that induce in this statute means wrongful influence, not mere influence.

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Can I also ask you a question about your standing on the timing regulations?

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So you're challenging the timing regulations.

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And now they've issued the opinion.

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So the timing, the challenge to the timing regulations isn't live in this case.

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But I don't see vertex to make a capable of repetition yet evading type of argument.

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It's not in so many terms, Your Honor.

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But in order for the issuance of the opinion to moot our argument, this court's cases suggest that we have to have somehow said, this is a one and done for us.

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The opposite is true on the evidence here.

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Vertex has submitted multiple requests for advisory opinion.

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Vertex has indicated that as an innovator in this field, it will seek other advisory opinions.

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This is what Vertex does, change patients' lives.

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But it can't do that if every time it tries

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to assist patients to access their lifesaving care, OIG is going to say, this is a crime.

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We have to.

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In fact, OIG's analysis here makes it even more likely that Vertex will have to seek advisory opinions, because under OIG's construction, everything that a pharmaceutical company does is a potential violation of the AKS.

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And so you have to go to OIG, hat in hand, asking for its blessing to do something.

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That is not how the criminal law works.

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If I may interrupt you.

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I mean, there's a hidden problem here with the issue, I suppose, and it's one that has bothered me for quite some time.

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And it depends on how you frame up the question, whether you frame it as standing,

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or whether you frame it as mootness.

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If you frame it as standing, you've got a problem because the injury has to be imminent.

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And it doesn't seem to me that you've really established any imminent injury, maybe something in the future.

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But if you frame it up as a mootness question that is capable of repetition but evading review, there's no time limit on that.

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And it could be capable of repetition in the next five years for that matter.

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And there's Supreme Court cases indicating that.

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So there's a conflict in the Supreme Court jurisprudence here.

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And I'm not really sure how intellectually you decide which is the proper framework.

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Your honor, I think that the same analysis should apply to both of those elements of justiciability.

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Because what we have here in the case of OIG is a statute in which Congress has explicitly mandated

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that OIG's regulations shall provide that the advisory opinion shall issue within 60 days of receipt of the request.

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But OIG routinely delays as it did here a year.

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In the Pfizer case, as in this case, the opinion did not issue until after the requesting party waited a year for a decision and then, unable to wait any longer, sued OIG.

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And only then

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Did OIG issue its advisory opinion?

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This is a problem that is going to repeat over and over and over again because every time OIG is sued, once the party has finally reached the breaking point, OIG will simply issue its opinion.

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over and over again, it waits a year to issue its opinions because it does not regard the 60-day statutory deadline that Congress imposed as somehow binding on it.

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It is that disregard for the law.

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It's that

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view of OIG that it is the one that dispenses justice.

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It will decide when one can or cannot offer assistance to patients.

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That is not how criminal law works in this country.

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The Supreme Court has made clear in Skilling and McDonald, in any number of cases, that we do not depend on the grace of government.

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criminal statutes are construed narrowly precisely so that parties can go forward in their normal operations without worry.

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And you don't have to go to the government to ask forgiveness.

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Can I ask you, have there been successful prosecutions of pharmaceutical companies for this type of possibly non-corrupt

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rebate.

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I'm just wondering if they have been prosecuting companies for a similar type of scheme.

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So Your Honor, you use the word prosecute.

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But I think it's really important to underscore here that the violation of the anti-kickback statute is a per se basis for a liability under the False Claims Act.

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And so relators repeatedly bring false claims at cases on the basis of a purported violation of the anti-kickback statute.

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They prefer that theory because it relieves them of any need to prove individual causation, or so they think.

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And so they rely on the anti-kickback statute.

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And the government has collected billions of dollars on the basis of purported AKS violations, including patient support programs.

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The First Circuit brief that I read

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And those are usually brought by private relators.

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And then the government comes into support because the First Circuit case that I mentioned earlier in which the government said, of course, an AKS violation is a basis for treble damages under the False Claims Act.

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They said because an AKS violation means that there's been a financial conflict that inherently corrupted medical decision making.

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That's what a brief written by Mr. Winnick in the First Circuit argued in order to establish treble damages under the False Claims Act on the basis of an AKS violation.

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That notion of inherent corruption, however, is absolutely missing from what the government thinks actually violates the AKS.

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And we think it's that interplay of the AKS, both with the civil monetary penalty statute, but also the False Claims Act.

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It makes sense that if it is a truly corrupt transaction that gives rise to AKS liability, that an AKS violation should give rise to triple damages because the claim would be false.

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But on the government's theory, the claim does not have to have impacted actual decision, medical decision making.

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It doesn't have to be inappropriate medical care in any way for there to be an AKS violation.

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And that's exactly the problem, Your Honor.

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Do you know when the next advisory opinion request will be?

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from Vertex, Your Honor.

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I would think that it would be in connection with one or another of the new programs, new products that Vertex has that we're expecting FDA approval.

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Vertex has a number of products in development.

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And when it comes on, they will then see what are the obstacles to patients being able to obtain this care.

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In the case of Kesjebi, there were two obstacles.

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One is the one we've been talking about today, which was infertility.

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and the need for fertility preservation services.

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The other was that Kezjevi can only be provided at particular treatment centers because it's a very, very specialized treatment.

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And so patients will often be unable to accept that because they can't get to the necessary hospital centers.

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Vertex also sought an OIG advisory opinion that merely offering transportation support to patients would not violate the AKS.

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Of course,

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OIG opined in that instance that as with everything, it would implicate the AKS because it would be remuneration that was likely to influence patients' decisions to access the care.

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So it's a crime.

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Offering transportation to the hospital is a crime, but in that instance, OIG exercised its grace and said they would forgive the crime.

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But that, as I said before, is not how criminal statutes are supposed to work in this country.

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We don't go ahead and hand it over.

[00:27:52] Speaker 04:
I take that point.

[00:27:53] Speaker 04:
On the delay issue, I suppose this wouldn't matter for standing or mootness, but if you do get to the merits, it seems like the delays happen when OIG asks for more information.

[00:28:05] Speaker 04:
I suppose within the 60 days, OIG could just deny

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the write a letter saying we deny it because we don't have enough information instead of giving you the opportunity to provide more information before they deny it.

[00:28:20] Speaker 02:
I think that's quite possible.

[00:28:22] Speaker 02:
But note here, Your Honor.

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How would you be better off in that regime?

[00:28:26] Speaker 02:
Well, note here, Your Honor, that the lengthiest part of the delay here was from February when OIG had already provided its oral determination that it was going to find that this implicates the AKS.

[00:28:42] Speaker 02:
And Vertex said, please write that up so that we can seek judicial review.

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That was in early February.

[00:28:48] Speaker 02:
OIG did not issue this opinion until July after Vertex had already sued.

[00:28:54] Speaker 02:
In and of itself, that's more than 60 days.

[00:28:57] Speaker 02:
Now, how does OIG justify that delay?

[00:29:00] Speaker 02:
Because they said, well, we're consulting experts.

[00:29:03] Speaker 02:
That's another tolling

[00:29:05] Speaker 02:
provision that it has given itself, even though Congress did not give it.

[00:29:10] Speaker 02:
In fact, Congress contemplated in the statute that OIG would be consulting with the attorney general, and yet in the same statute said that they have to issue their advisory opinions within 60 days.

[00:29:22] Speaker 04:
That's a strong point.

[00:29:23] Speaker 04:
If we were to vacate based on the letter being unreasonably explained, what relief would you be seeking with regard to the delay issue?

[00:29:33] Speaker 02:
I think with regard to the delay, the relief would be to declare that the regulation is inconsistent with law to the extent that it claims for OIG unilateral authority to toll the 60-day period that Congress has set for it.

[00:29:54] Speaker 03:
And your representation is that Vertex has

[00:29:59] Speaker 03:
has new drugs that are in the FDA pipeline for which you would consider similar types of commuteration.

[00:30:07] Speaker 03:
And so that brings it within the... That makes it an injury in fact.

[00:30:16] Speaker 02:
Yes, Your Honor.

[00:30:17] Speaker 04:
One last question, just go back to the merits.

[00:30:20] Speaker 04:
The government makes a lot of surplusage arguments under your interpretation of the statute.

[00:30:25] Speaker 04:
Sorry, let me correct that.

[00:30:26] Speaker 04:
Under the government's

[00:30:29] Speaker 04:
interpretation of the statute, would it create any superfluidity?

[00:30:35] Speaker 02:
Yes, Your Honor.

[00:30:36] Speaker 02:
I think it creates two different forms of superfluity.

[00:30:39] Speaker 02:
One, I think that the parenthetical, the exemplary parenthetical of kickback bribery bait becomes superfluous.

[00:30:46] Speaker 02:
We think that that's informative of what is meant by remuneration to induce or remuneration

[00:30:53] Speaker 02:
in return for, that quid pro quo.

[00:30:57] Speaker 02:
The government's construction also creates what I think is superfluity in the exception to civil liability because no one would ever undertake the very thing Congress has encouraged companies to do, promoting access to care under the civil exception,

[00:31:14] Speaker 02:
if they're nonetheless going to be criminals.

[00:31:15] Speaker 02:
We say in our brief, Congress should not be understood to have made felons of the people who are doing exactly what Congress asked them to do in the exception to the civil statute.

[00:31:27] Speaker 02:
I don't think that the exceptions to the AKS are superfluous because we can all imagine, for example, the government uses the example of the exception for employment agreements and we can all imagine

[00:31:40] Speaker 02:
situations in which an employee is recommending for purchase a product of his employer because he is receiving a salary from that person.

[00:31:51] Speaker 02:
That is his job to do.

[00:31:52] Speaker 02:
Even if he took his employee hat off, he might think that the best medically appropriate product would be another one.

[00:32:02] Speaker 04:
And I saw that in the briefing.

[00:32:05] Speaker 04:
I think, again, there's some, they have some strong points.

[00:32:08] Speaker 04:
You have some strong points.

[00:32:09] Speaker 04:
I'm not totally persuaded by the parenthetical point you made about surplusage because the government's reading would make the words following, including

[00:32:21] Speaker 04:
surplusage which words are always surplusage when they follow the word including your reading would make the words following excluding surplusage and usually words that follow excluding are not at all surplus quite important.

[00:32:38] Speaker 02:
Your honor, we gave in the brief the example of the mission products or technology case from the Supreme Court, and I happened to argue that case, so I am very well familiar with it.

[00:32:51] Speaker 02:
And I was arguing the opposite.

[00:32:53] Speaker 02:
I was arguing that all of these exceptions that only make sense if one presumes that a bankruptcy being a deemed breach does not

[00:33:03] Speaker 02:
make the contract disappear, because all of the exceptions were about how the counterparty to leases and other contracts would, in particular circumstances, retain their rights under those leases or contracts.

[00:33:17] Speaker 02:
And we said those would all be surplusage if a breach was not deemed to basically terminate the contract otherwise, but instead only provide the plaintiff with a cause of action for damages.

[00:33:30] Speaker 02:
And Justice Kagan, in her opinion, said,

[00:33:33] Speaker 02:
Yeah, maybe, but these exceptions were all adopted over a long period of time just to make sure, for Congress to make sure that these things would not be a problem.

[00:33:46] Speaker 02:
That's the same thing here.

[00:33:49] Speaker 02:
These were not a long list of exceptions all adopted at the same time.

[00:33:52] Speaker 02:
They were adopted, I think, at like nine different times over a period of, I think it's something like 20 or 30 years.

[00:34:00] Speaker 02:
And there is not a coherent theme to them.

[00:34:04] Speaker 02:
And I think that the employee example is the perfect one.

[00:34:07] Speaker 02:
Of course, there can be employees who are making recommendations or referrals solely because they are receiving a paycheck that is corrupting, arguably, and would otherwise violate the AKS.

[00:34:21] Speaker 02:
But it's not surplusage because Congress wanted to make clear that just categorically, those are off the books, right?

[00:34:28] Speaker 02:
Now, with respect to an advertising agency or other intermediary, that could violate the statute because we don't have an exception.

[00:34:38] Speaker 02:
And so the courts, when confronted with those examples, have said that it has to be somehow wrongful influence because, of course, you're hiring an advertising agency to influence referrals or recommendations.

[00:34:52] Speaker 02:
And the generous ant is another example.

[00:34:57] Speaker 02:
Of course, the generous aunt isn't committing a crime.

[00:35:01] Speaker 02:
And the government's only answered that as, well, the generous aunt doesn't want a particular product.

[00:35:06] Speaker 02:
Well, the word particular is not in the AKS.

[00:35:09] Speaker 02:
It is a limitation on the civil statute because the civil statute uses influence.

[00:35:13] Speaker 02:
But moreover, even if the generous aunt did only offer the assistance if the patient of the niece was going to choose a particular product, that still shouldn't be a crime.

[00:35:25] Speaker 02:
And the government's only other answer is to say, well, they wouldn't have acted willfully.

[00:35:29] Speaker 02:
But if the generous aunt is a lawyer, a judge, a doctor, anybody in the health care life sciences industry that knows about the AKS, they would be acting willfully.

[00:35:40] Speaker 02:
Thank you.

[00:35:41] Speaker 03:
Let me see if my colleagues have any other questions.

[00:35:44] Speaker 03:
Judge Randolph?

[00:35:45] Speaker 01:
No, I'm fine.

[00:35:47] Speaker 03:
Judge Walker?

[00:35:48] Speaker 03:
No.

[00:35:49] Speaker 03:
OK.

[00:35:49] Speaker 03:
Thank you.

[00:35:50] Speaker 03:
We'll hear from the government.

[00:35:52] Speaker 05:
Good morning, your honor.

[00:35:53] Speaker 05:
May it please the court, Daniel Winnick for the government.

[00:35:55] Speaker 05:
Before diving into the bulk of the arguments, I want to make sure I respond to two points you heard repeatedly from my friend on the other side this morning.

[00:36:03] Speaker 05:
First, the idea that we've argued in the past for some sort of separate corruption requirement, and second,

[00:36:08] Speaker 05:
the dichotomy between what he's called the civil and the criminal statutes.

[00:36:12] Speaker 05:
So on the corruption point first, it's just not right that we have previously characterized the AKS as suggesting there's some separate corruption requirement.

[00:36:20] Speaker 05:
The point of the AKS is that when remuneration is offered or given with the purpose of inducing medical decisions, that creates a financial conflict that inherently corrupts the integrity of medical decision-making and federal health care programs.

[00:36:35] Speaker 05:
The financial conflict is itself

[00:36:37] Speaker 05:
the corruption, and this is a case in point.

[00:36:40] Speaker 05:
Vertex would offer $70,000 worth of fertility services to patients in an effort to get them to use Vertex's product, Casgevi, as opposed to one of the competing products, as opposed to a different treatment, stem cell transplantation.

[00:36:53] Speaker 05:
Nobody is remotely suggesting that patients who do not need one of these arduous treatments

[00:36:58] Speaker 05:
for one of the terrible diseases in question is going to go through the treatment just to get the fertility benefit.

[00:37:03] Speaker 05:
Nobody's suggesting that, but the problem is when patients are choosing among treatments or between a cell and gene therapy and a stem cell transplant therapy, this $70,000 benefit creates a financial conflict of interest that may lead them not to make the choice that would otherwise be deemed by them and their doctors

[00:37:22] Speaker 05:
to be in their best interest.

[00:37:24] Speaker 05:
That is the corruption that the AKS exists to prevent.

[00:37:27] Speaker 05:
Second, on this civil and criminal point, you've repeatedly heard the BIS described as the civil counterpart to the AKS.

[00:37:33] Speaker 05:
That just is not correct.

[00:37:35] Speaker 05:
If you open the statutory addendum that accompanied Vertex's brief to page 29,

[00:37:40] Speaker 05:
You will see, beginning on that page, the entire civil monetary penalties law, 1320A, 7A.

[00:37:46] Speaker 05:
Okay, that goes on for pages.

[00:37:49] Speaker 05:
And if you go to page 31, you'll see two distinct paragraphs.

[00:37:54] Speaker 05:
One subparagraph, A5, that's the BIS.

[00:37:59] Speaker 05:
The second subparagraph, A7, allows HHS to impose monetary penalties for anybody who commits an AKS violation.

[00:38:09] Speaker 05:
So that one, B7, that's the civil counterpart to the AKS, not the BIS.

[00:38:14] Speaker 05:
The BIS is a distinct provision.

[00:38:16] Speaker 05:
It serves a related function.

[00:38:18] Speaker 05:
that it is categorically not true that something that is accepted from BIS liability by the Promotes Access to Care exception is accepted from all civil liability for AKS violations.

[00:38:31] Speaker 05:
The principal basis of civil monetary penalties for AKS violations

[00:38:36] Speaker 05:
is in some paragraph seven.

[00:38:38] Speaker 05:
That's the one that says you get a civil monetary penalty for conduct that violates the AKS.

[00:38:42] Speaker 05:
So this whole business of there's an absurdity because it's civilly protected but not criminally protected, that's just not right.

[00:38:49] Speaker 03:
Mr. Winnick, can I ask you maybe a related question to that point, which is if HHS were to find that a certain program fit within the promotes access to care exemption,

[00:39:03] Speaker 03:
Are there cases in which that exemption would apply, but the government would go after some company for criminal violations of the anti-kickback statute?

[00:39:13] Speaker 03:
I understand that they're not direct parallel, right?

[00:39:17] Speaker 03:
But there is, if the government were to conclude that it was within the exemption, wouldn't that have some consequence for how they exercise their prosecutorial discretion under the kickback statute?

[00:39:31] Speaker 05:
I'm sure it worked both in terms of criminal prosecutorial discretion and in terms of the discretion that HHS OIG exercises at the sort of second step of the advisory opinion decision-making process.

[00:39:42] Speaker 05:
So the first step is, do we think this would constitute remuneration to induce within the meaning of the AKS?

[00:39:48] Speaker 05:
The second step is, even if we think it does, do we think the risks here are sufficiently low that we're going to exercise discretion to say, well, forbear enforcement?

[00:39:56] Speaker 05:
you know, will make you that guarantee, will issue a positive advisory opinion.

[00:39:59] Speaker 05:
I'm sure it would influence that.

[00:40:01] Speaker 05:
But as a legal matter, the Promotes Access to Care Exception does not apply to the AKS.

[00:40:06] Speaker 05:
It does not apply to civil monetary penalties for AKS violations under subsection, under paragraph seven of the Civil Monetary Penalties Law.

[00:40:16] Speaker 05:
It applies only to the BIS.

[00:40:19] Speaker 05:
I'm happy to dive with that into sort of the principle

[00:40:22] Speaker 04:
Can I ask about the arbitrary and capricious challenge to the advisory letter?

[00:40:27] Speaker 05:
Yes.

[00:40:28] Speaker 04:
The advisory letter in footnote 13 cites this 2002 special advisory bulletin, and it says categorical financial need is not a sufficient basis for permitting valuable gifts.

[00:40:43] Speaker 04:
And I can see how if that's true, your advisory letter here kind of flows from that and maybe makes sense.

[00:40:51] Speaker 04:
But I guess I'm not sure I understand.

[00:40:53] Speaker 04:
I mean, if people have a limited amount of money and you make something cheaper, it seems like you're increasing access to that thing.

[00:41:08] Speaker 05:
Yeah, I don't think that the advisory opinion is saying anything to the contrary.

[00:41:13] Speaker 05:
I think what it is saying, and I don't have the bullet in front of me, but I do have the opinion in front of me.

[00:41:19] Speaker 05:
I think what it is saying is just that there's no general exception to BIS liability for like offering remuneration to people who are in financial need.

[00:41:27] Speaker 05:
I agree that if some program is actually serving the purpose of making it easier for people to get a treatment, an item of service, that would, generally speaking, increase access to it.

[00:41:40] Speaker 05:
The principal point of HHS's reasoning here on the promotes access to care exception was that

[00:41:46] Speaker 05:
mitigating a side effect of a drug is not actually the sort of thing you would usually think of as increasing access.

[00:41:52] Speaker 05:
So if I say, do you have access to Ozempic?

[00:41:55] Speaker 05:
What I mean is, can you get a doctor to prescribe it?

[00:41:58] Speaker 05:
Do you qualify for it?

[00:41:59] Speaker 05:
Can you get it from a pharmacy?

[00:42:01] Speaker 05:
Will your insurance cover it or can you pay for it?

[00:42:03] Speaker 05:
I don't mean like, is there some side effect of it that might cause you to choose not to use it?

[00:42:08] Speaker 05:
And so

[00:42:09] Speaker 04:
I'm not sure why, because let's take that example.

[00:42:16] Speaker 04:
It seems like a person deciding whether to purchase that drug would weigh all the benefits and would weigh all the costs.

[00:42:25] Speaker 04:
Those costs would include everything you just said.

[00:42:27] Speaker 04:
They would also include the side effect.

[00:42:31] Speaker 04:
And if you take away one of those costs, i.e.

[00:42:34] Speaker 04:
the side effect, it seems like you are, at least on the margins, increasing access.

[00:42:41] Speaker 05:
So I agree that they would certainly take that into consideration in deciding whether to use the drug, but I don't think that's what access means, both in terms of sort of plain usage and in terms of the regulations that define it here.

[00:42:52] Speaker 05:
Access refers to the ability of a patient to get an item or service, so the relevant reg

[00:42:58] Speaker 05:
in the that has the definition is one thousand three point one ten sub paragraph six says improve a beneficiary's ability to obtain items or services so if you make something more appealing by mitigating a side effect by something by giving something i think i mean let's say that the the only pharmacy where a drug exists has like a moat with sharks around it and you're destined to you know parish in the moat if you try to

[00:43:23] Speaker 04:
access the drug, and then along comes someone who eliminates the moat.

[00:43:30] Speaker 04:
I think you would have increased access, right?

[00:43:32] Speaker 04:
So why wouldn't we view a side effect as, look, maybe the side effect is fatal.

[00:43:39] Speaker 04:
And then if you eliminate that side effect, just like eliminating the moat, you've eliminated an obstacle to the care, so you've increased access to the care.

[00:43:50] Speaker 05:
I've lost your audio for a second.

[00:43:51] Speaker 05:
Can you hear me?

[00:43:53] Speaker 04:
I can hear you.

[00:43:54] Speaker 04:
Can you hear me now?

[00:43:59] Speaker 04:
I think Mr. Wittek may have frozen, but it could be on my end.

[00:44:03] Speaker 05:
It was on my end for a second.

[00:44:05] Speaker 05:
I think I'm back.

[00:44:07] Speaker 04:
OK.

[00:44:07] Speaker 04:
Can you still hear me?

[00:44:08] Speaker 05:
So the answer is yes.

[00:44:09] Speaker 05:
Obviously, eliminating the moat would increase access.

[00:44:12] Speaker 05:
I think if there's a drug that you can get once you're past the moat, and it has some unappealing side effect,

[00:44:18] Speaker 04:
Why wouldn't we mean a version of it is why wouldn't we view infertility as the moat for some people that's just a cost they're unwilling to bear.

[00:44:30] Speaker 05:
I think just like any other side effect of a drug that that you know some people can choose to bear and some others might choose not to bear.

[00:44:40] Speaker 05:
It isn't an issue of access, but I don't want to get too hung up on this point because I think really the salient point about the BIS and about this arbitrary and capricious issue is the one Judge Rao asked earlier.

[00:44:50] Speaker 05:
I am not going to fight you hard if you want to vacate the judgment in our favor in part and send this back to the district heart to remand to the agency for it to better explain its application of the promotes access to care exception.

[00:45:03] Speaker 05:
The more important point is that would have absolutely no effect on the bulk of the reasoning and the advisory opinion.

[00:45:08] Speaker 05:
It has absolutely nothing to do

[00:45:10] Speaker 05:
with HHS's judgment as to whether this violates... You wouldn't have to reach that, right?

[00:45:15] Speaker 05:
Uh, well, um, I mean, I think I suppose you wouldn't have to reach it in the sense that Vertex doesn't get what it wants unless they have a favorable advisory opinion in hand.

[00:45:25] Speaker 05:
And so I suppose even if you said, well, the whole thing sort of goes back to the agency, the agency can look at the whole thing that that sort of doesn't get them the relief.

[00:45:33] Speaker 03:
I mean, Mr. Winnick, you said earlier that, um, if the agency were to reach a different results on the promotes access to care exception, that they might

[00:45:43] Speaker 03:
then need to revisit whether they would excuse this type of program.

[00:45:48] Speaker 03:
Like even if it fits within the AKS, there might be a reason to, you know, withhold prosecution.

[00:45:59] Speaker 05:
Yeah, I mean, the point I would make about this opinion is they thought about all of these issues in deciding whether to exercise their discretion the first time.

[00:46:07] Speaker 03:
Well, they didn't because they didn't they didn't decide the promotes access to care exception.

[00:46:11] Speaker 03:
They said we don't have enough data.

[00:46:12] Speaker 03:
So if we think that's unreasonable and if they concluded that the exception applied, then there might have to be a different decision on the kickback statute.

[00:46:23] Speaker 03:
I mean, you said that at the start of your argument.

[00:46:26] Speaker 05:
Well, let me be clear.

[00:46:27] Speaker 05:
They might reconsider.

[00:46:30] Speaker 05:
They are always free to reconsider.

[00:46:31] Speaker 05:
Vertex could go back to them tomorrow and they could reconsider whether to exercise their discretion to forbear enforcement in the future.

[00:46:39] Speaker 05:
That's a heckler versus Cheney classic non-reviewable soap.

[00:46:43] Speaker 03:
But you said that the promotes access to care reasoning is connected to the forbearance of

[00:46:52] Speaker 05:
The sort of reasoning that would lead the agency or the government to think that the promoted access to care exception applies is the same sort of considerations they might consider in deciding whether to forbear enforcement.

[00:47:06] Speaker 05:
The key point I need to make though is it doesn't have anything to do with the legal issue that is really the heart of this appeal, which is what does the phrase remuneration to induce

[00:47:16] Speaker 05:
in the anti-kickback statute mean.

[00:47:18] Speaker 05:
And so I think that is the issue of greatest forward-looking significance to the government.

[00:47:24] Speaker 05:
Vertex's arguments on that point would really decimate the AKS.

[00:47:27] Speaker 05:
They would render it essentially useless.

[00:47:30] Speaker 05:
And so if the court thinks the promotes access to care analysis is insufficiently explained,

[00:47:38] Speaker 05:
You could send the case back to the agency for the limited purpose of re-evaluating that, and if the agency, in its discretion, you know, wants... You didn't have to say for the limited purposes.

[00:47:46] Speaker 04:
I mean, at least as a formal matter, they've raised an APA challenge.

[00:47:50] Speaker 04:
The remedy is to set aside the agency action.

[00:47:53] Speaker 04:
We could provide the remedy they seek by setting it aside without opining on anything other than what required it to be set aside, correct?

[00:48:01] Speaker 05:
I think that's probably right.

[00:48:02] Speaker 05:
This isn't a rule where you look at like severability for, you know, set aside the agency decision only in part.

[00:48:07] Speaker 05:
But my point is that it doesn't get them to where they ultimately want to go.

[00:48:10] Speaker 05:
I mean, the reason they are here arguing is that they think it is unlawful for OIG to say that the thing they are thinking of doing violates the NI kickback statute because it provides remuneration for the purpose of inducing medical decisions.

[00:48:23] Speaker 05:
And that's categorically wrong.

[00:48:24] Speaker 05:
And if it were true, it would decimate the AKS.

[00:48:27] Speaker 05:
It would leave it essentially a husk of itself.

[00:48:29] Speaker 03:
So to turn to that point, which is- Can you talk about the relationship between that argument and the False Claims Act, right?

[00:48:38] Speaker 03:
I mean, the False Claims Act inducement has to have, you know, is interpreted differently from how you understand induce in this statute.

[00:48:45] Speaker 03:
But there is, but the anti-kickback statute sort of gives rise to False Claims Act lawsuits and liabilities.

[00:48:56] Speaker 03:
So how do we understand how those things fit together?

[00:49:00] Speaker 05:
Sure, let me try.

[00:49:01] Speaker 05:
So first, I want to make clear that the word induce in this statute is not talking about causation.

[00:49:07] Speaker 05:
It's talking about purpose or motive.

[00:49:09] Speaker 05:
So the phrase the statute uses is gives or offers remuneration to induce.

[00:49:13] Speaker 05:
And what that means is with the purpose of inducing.

[00:49:18] Speaker 05:
The False Claims Act, and this is complicated because there are a couple of ways in which an anti-kickback statute violation can render false a subsequent claim seeking reimbursement for the government.

[00:49:30] Speaker 05:
One of them, there's a federal statute that says a claim that includes items or services resulting from an anti-kickback statute violation is false.

[00:49:39] Speaker 05:
That was the provision that was disputed in the First Circuit.

[00:49:42] Speaker 05:
case that my friend has mentioned.

[00:49:45] Speaker 05:
The government can also prove falsity where somebody falsely certifies compliance with the end of kickback statute.

[00:49:53] Speaker 05:
So there's various causation issues that arise in the FCA context that are complicated and I think not the one before this court.

[00:50:00] Speaker 05:
But in this statute, induced doesn't mean causation.

[00:50:02] Speaker 05:
It means motive or purpose.

[00:50:06] Speaker 05:
And so I'm happy to start there with whether the fertility treatments here would be given to induce choices by patients.

[00:50:13] Speaker 05:
Vertex relies essentially wholly on Hansen.

[00:50:17] Speaker 05:
But the Fourth Circuit correctly explained in its very recent decision in pharmaceutical coalition why Hansen is completely inapposite here.

[00:50:24] Speaker 05:
And the basic reason is that the statute in Hansen forbade the inducement of criminal conduct, in that case, unlawful entry into the United States.

[00:50:31] Speaker 05:
There's a lot of statutes that do that.

[00:50:32] Speaker 05:
18 U.S.C.

[00:50:33] Speaker 05:
2, for example, says,

[00:50:34] Speaker 05:
Whoever induces the commission of an offense against the United States is punishable as the principal, you know, just like aiding and abetting.

[00:50:41] Speaker 05:
But the conduct that the AKS forbids trying to induce is not unlawful conduct.

[00:50:45] Speaker 05:
The conduct the AKS forbids trying to induce is medical decisions, right?

[00:50:50] Speaker 05:
The purchase or provision of medical care, referrals, those are generally speaking not unlawful.

[00:50:56] Speaker 05:
And so if you construe the AKS as violated only by offering or paying money for the purpose of soliciting or facilitating an unlawful act, which is what Vertex urges you to do, that's the language from page 27 of their brief, it would never be violated.

[00:51:12] Speaker 05:
There's essentially no circumstance in which somebody is going to be offering or giving remuneration for the purpose of soliciting or facilitating an unlawful act.

[00:51:20] Speaker 05:
Indeed, it's worse than that, because the prior version of the AKS didn't use the remuneration to induce language.

[00:51:29] Speaker 05:
And everybody agrees that when Congress amended that statute in 1977, it was trying to broaden the statute.

[00:51:36] Speaker 05:
And so Vertex's argument would have you believe that when Congress acted in 1977 using language clearly meant to broaden the statute, it actually took a functional statute and rendered it useless.

[00:51:46] Speaker 05:
And in this point, you heard from Mr. Howard Dreemeyer this morning that actually

[00:51:51] Speaker 05:
None of that is right.

[00:51:58] Speaker 05:
First, the conduct that it is unlawful to try to induce under the Gives or Offers provision

[00:52:10] Speaker 05:
is not the solicitation or receipt of the remuneration.

[00:52:13] Speaker 05:
It's not the thing that violates the parallel provision.

[00:52:16] Speaker 05:
It's the medical care.

[00:52:18] Speaker 05:
That's not unlawful.

[00:52:19] Speaker 05:
That's not unlawful under the parallel provision.

[00:52:21] Speaker 05:
That's generally not unlawful under any provision.

[00:52:25] Speaker 05:
And second, even if you sort of understand their argument generously to be that there must be some violation of the solicitation or receipt provision,

[00:52:32] Speaker 05:
whenever there's a violation of the gives or offers provision, that's also incorrect, because the gives or offers provision is violated by an uncompleted offer, a rejected offer.

[00:52:42] Speaker 05:
And so if you offer somebody remuneration to induce a medical decision, and they say no, the medical decision is completely lawful.

[00:52:49] Speaker 05:
And so this entire response to the core superfluity that their argument would create, which is that it would render the gives or offers provision meaningless,

[00:52:58] Speaker 05:
is just completely incorrect.

[00:53:00] Speaker 05:
It is built on a fundamentally atextual understanding of the statute.

[00:53:05] Speaker 05:
And even aside from that superfluity problem, the problem of rendering the entire provision useless, the whole scheme of statutory exceptions would be pointless under their understanding, right?

[00:53:15] Speaker 05:
You don't need an exception to say, to cover the bona fide payment of a salary to a doctor and a medical practice.

[00:53:24] Speaker 05:
if they're correct about what induce means.

[00:53:27] Speaker 05:
If induce means only soliciting or facilitating an unlawful act, it's obviously not unlawful for a doctor to be providing medical services in return for a salary from a medical practice.

[00:53:42] Speaker 05:
The second basic reason Hanskin is inapposite, which is closely related to the first, is the one, Judge Rao, you noted earlier, which is that the anti-kickback statute doesn't forbid inducement as the forbidden act.

[00:53:54] Speaker 05:
It forbids giving or offering remuneration.

[00:53:57] Speaker 05:
It uses the word induce only in describing the purpose with which it is unlawful to give or offer remuneration.

[00:54:04] Speaker 05:
There's lots of other statutes that use the word induce that way,

[00:54:07] Speaker 05:
we give a number of examples in our brief, those would all likewise be rendered completely inoperative if the word induce were read as vertex does.

[00:54:16] Speaker 05:
And so we don't, they sort of act as if we're resisting Hanson.

[00:54:19] Speaker 05:
We don't resist Hanson's basic point that when you see the word induce in a criminal statute, that is, as Hanson says, a clue, a clue that it might take a specialized criminal on meaning, but that's not the end of the analysis.

[00:54:31] Speaker 05:
It wasn't the end of the analysis in Hanson.

[00:54:33] Speaker 05:
And it's certainly not the end of the analysis here for all of the reasons the Fourth Circuit ably explained.

[00:54:39] Speaker 05:
On remuneration, I'm happy to answer any further questions the court has about to induce.

[00:54:46] Speaker 05:
But on remuneration, again, they don't dispute that $70,000 worth of fertility services is remuneration in the ordinary sense of the word.

[00:54:54] Speaker 05:
It is a payment of something going to patients, right?

[00:54:57] Speaker 05:
that they what they argue is that it should be given a meaning other than its ordinary meaning and they make that argument on the basis of the Nazca tour and I used them cannons and I'll try to avoid Latin after that and it's just completely textually unconvincing so as to the Nazca tour cannon they say well kickbacks bribes and rebates are all you know corrupt evil things and therefore remuneration must also be understood in this limited way

[00:55:23] Speaker 05:
But first of all, as one of your honors noted earlier, even if kickbacks and bribes are inherently corrupt, that's not true of a rebate.

[00:55:31] Speaker 05:
And second, even if it were, the statute doesn't say kickbacks, bribes, and rebates.

[00:55:36] Speaker 05:
It says any remuneration, including any kickback, bribe, or rebate.

[00:55:40] Speaker 05:
And as the Fourth Circuit explained, there are three different textual clues there.

[00:55:44] Speaker 05:
Uh, that the meaning of remuneration is broader than the meaning of kickback bribe or rebate.

[00:55:49] Speaker 05:
There's any is including and there's the parentheses and this is not.

[00:55:53] Speaker 04:
Do you have thoughts on judge Randolph's question about standing in?

[00:55:58] Speaker 05:
Sure, so I don't perceive there to be a real difference here in terms of the logic of the doctrines.

[00:56:06] Speaker 05:
The District Court sort of talked about this in terms of mootness.

[00:56:08] Speaker 05:
I think we agree with Vertex.

[00:56:09] Speaker 05:
It's probably better thought of as an issue of standing at the time they amended their complaint.

[00:56:14] Speaker 05:
So to remind you of the of the chronology here, they filed their initial complaint.

[00:56:19] Speaker 05:
It said it's essentially like mandamus, you know, issue me the opinion and we challenge the regulations.

[00:56:25] Speaker 05:
And then three days later, OIG issues the opinion.

[00:56:27] Speaker 05:
They amend their complaint.

[00:56:29] Speaker 05:
and they say we challenge the opinion and and please invalidate the regulations so you look at standing at the time of the amended complaint that's black letter law and there is no there's nothing either alleged in the amended complaint and certainly nothing established with evidence at summary judgment that establishes a concrete forward-looking harm to them from the understanding of the statute that they and at the time of their original complaint they did not ask you they did not ask the court to vacate their regulations

[00:56:57] Speaker 04:
They did in their original complaint, same as in the amended complaint.

[00:57:01] Speaker 04:
They did or did not?

[00:57:02] Speaker 05:
They did in the original complaint.

[00:57:05] Speaker 03:
Let me just, if we assume for the purpose of this question that they do have standing to challenge the regulations, I mean, how are these regulations consistent with the statute?

[00:57:16] Speaker 03:
I mean, HHS has authority to make regulations about these advisory opinions.

[00:57:22] Speaker 03:
But then,

[00:57:24] Speaker 03:
In a section that says specific contents, it says the secretary shall be required to issue to a party requesting an advisory opinion.

[00:57:31] Speaker 03:
You know, no later than 60 days after the request is received.

[00:57:38] Speaker 05:
It says that it also says in a neighboring provision that the secretary should specify by regulation the procedure to be followed, including, quote, the interval in which the secretary shall respond.

[00:57:48] Speaker 05:
So there is certainly some play there.

[00:57:50] Speaker 03:
Well, I mean, the play that they give that discretion, but then in a section that says specific contents, it says gives the 60 day deadline.

[00:58:03] Speaker 05:
I think the best way to understand the regulations as wholly consistent with the 60-day timeline in the statute is that if you send the agency a piece of paper with a scrawled crayon drawing, and you'd say, I'd like an advisory opinion, please, any rational person receiving that is going to say, that's not a request.

[00:58:20] Speaker 05:
I haven't received a request for an advisory opinion.

[00:58:23] Speaker 05:
And I think, in substance, what OIG has done here is to say something.

[00:58:27] Speaker 05:
We have only received a request for an advisory opinion, thus starting the 60-day clock, when it actually contains the information we need to adjudicate the opinion.

[00:58:35] Speaker 05:
And if that weren't the case, there really is no way the statute would operate.

[00:58:39] Speaker 05:
Right here, OIG posed questions upon receiving, upon accepting this request for an advisory opinion.

[00:58:46] Speaker 05:
Vertex responded three and a half months later, the gap from late June to mid-October 2023.

[00:58:54] Speaker 05:
And under their interpretation of the statute, OIG would have been compelled to respond with an advisory opinion two months into that time, before OIG had gotten the information it needed.

[00:59:04] Speaker 05:
So, you know, maybe as Judge Walker suggested earlier, I suppose they could respond by saying, you've asked for an advisory opinion, right?

[00:59:11] Speaker 05:
We don't have what we need.

[00:59:12] Speaker 05:
We can't give you a favorable advisory opinion.

[00:59:15] Speaker 05:
So, you know, denied.

[00:59:16] Speaker 05:
And then they would have to come back and pay the fee again and go through the whole process again.

[00:59:21] Speaker 05:
It is very difficult to see why anybody would be better off in that situation, which I assume is why no pharma company has raised this sort of challenge before.

[00:59:29] Speaker 05:
And that is, I think that's why the sort of perfectly sound reading of the statute is the one OIG has adopted, which is- We can take one year to issue an advisory opinion that Congress has to be issued in 60 days.

[00:59:44] Speaker 05:
No, and I'm not going to defend here and they're not challenging here because this part of it is certainly moot.

[00:59:48] Speaker 05:
The time that OIG took beyond the 60 days, even as told, that's clearly not within the contemplation of the statute.

[00:59:55] Speaker 05:
But what's being challenged here is the regulations that say we told the 60 days when we don't have the information we need.

[01:00:03] Speaker 05:
either when we don't have it at the outset or when we've initially accepted the request and then we make a further request for information and it's outstanding, the requesting party hasn't responded.

[01:00:13] Speaker 05:
In that circumstance, the agency does not have, it has not received a request that it can functionally act on.

[01:00:19] Speaker 05:
And so either you say as they have that it's told and then somebody will get a real advisory opinion at the end of it, or you say, if there's no tolling, they'll just have to issue an opinion that says, we don't have enough information here to do anything and it's unclear why.

[01:00:33] Speaker 03:
Even if it's told while they're waiting for the applicant to provide more information, I mean, they still should only have a 60-day window, right?

[01:00:42] Speaker 05:
As told, right.

[01:00:42] Speaker 05:
So once the information comes back... And that doesn't seem to be what OIG is doing.

[01:00:50] Speaker 03:
I will acknowledge that in this case... Or what they have not done, at least in this case.

[01:00:55] Speaker 05:
I will acknowledge that in this case, I don't know the general statistics, but in this case, it certainly took longer than the 60 days, even as toll.

[01:01:02] Speaker 04:
I'm not defending that as... Are you saying that what they did was inconsistent with the... I know you're basically conceding it's inconsistent with the statute.

[01:01:09] Speaker 04:
Are you also conceding it's inconsistent with the regulations?

[01:01:12] Speaker 05:
It took longer here than either the statute or the regulations would allow.

[01:01:16] Speaker 05:
But any argument based on that is clearly moved.

[01:01:19] Speaker 05:
Vertex isn't making that argument.

[01:01:20] Speaker 05:
They are challenging the regulations themselves based on the idea that they have some forward-looking risk of harm.

[01:01:26] Speaker 05:
But they're really, I mean, it's quite clear, I think, under this court's precedents, they have not alleged the sort of concrete, non-speculative future risk that this court and the Supreme Court routinely require for standing, even in their complaint, which is the only thing they cite in their opening brief.

[01:01:40] Speaker 05:
first of all, complaints, not evidence, which you need it at summary judgment.

[01:01:44] Speaker 05:
But even that, they just sort of say, you know, we're a pharma company, we'll probably have advisory opinion requests in the future.

[01:01:49] Speaker 05:
That is exactly the sort of someday intention that, as Justice Klee explained in Lujan, does not establish a concrete non-speculative, you know.

[01:01:58] Speaker 03:
Why isn't this similar to some of our FOIA cases where we say repeat FOIA filers can challenge?

[01:02:04] Speaker 03:
And I understand these

[01:02:05] Speaker 03:
You know, they're not as many of these advisory opinions, but I think, I mean, there are only a handful of advisory opinions every year.

[01:02:12] Speaker 03:
Vertex is a company that's already sought several of the whatever dozen or 20 advisory opinions that are issued.

[01:02:21] Speaker 03:
They say they have, you know, innovative drugs pending FDA approval for which they might use this.

[01:02:26] Speaker 03:
I mean, why isn't that sufficient here?

[01:02:29] Speaker 05:
I think the comparison of the FOIA case law underscores quite clearly why we win here.

[01:02:34] Speaker 05:
So cause of action, which is the case they cite in their reply brief, in cause of action, the requester had multiple other FOIA requests pending at the time.

[01:02:44] Speaker 05:
Right.

[01:02:45] Speaker 03:
So that's just the nature.

[01:02:46] Speaker 03:
I mean, in some sense though, that's the nature of FOIA litigation.

[01:02:49] Speaker 03:
There are these organizations that they just send hundreds and thousands of FOIA requests.

[01:02:53] Speaker 03:
But I mean,

[01:02:55] Speaker 03:
This is just, it's a different type of, you know, government service, arguably, right?

[01:03:01] Speaker 03:
I mean, you know, no pharma company has, well, maybe some do, but you know, thousands of, you know, drugs for which they are seeking an advisory opinion.

[01:03:10] Speaker 03:
That's just not the nature of this type of thing.

[01:03:14] Speaker 05:
Let me put it this way, Your Honor.

[01:03:15] Speaker 05:
If it were easy and obvious that, like, of course they're going to have future advisory opinion requests, it would not have been difficult to do what this court's case law and the Supreme Court's case law clearly require, which is for them to say, you know, in a complaint and then in a declaration, we generally do two of these a year, right?

[01:03:31] Speaker 05:
So I anticipate we'll do two in the next year.

[01:03:33] Speaker 05:
Or we have a drug under development that we think we're considering a program like this, and we anticipate submitting a request eight months from now.

[01:03:39] Speaker 05:
There is nothing remotely like that, even this morning.

[01:03:43] Speaker 03:
Is your argument the vertex based on the representations that it has made like, you know, in reply in its reply brief and here at oral argument that it lacks standing or that they have failed to meet the burden of demonstrating standing because those are there is a little bit of a delta between those things.

[01:04:00] Speaker 05:
So I would say it's even more clearly the second.

[01:04:04] Speaker 05:
They certainly haven't met their burden.

[01:04:07] Speaker 05:
Based on the representations this morning and in the reply brief, I'm not wholly sure they could because I think Mr. Hull would dream I was careful not to be too specific.

[01:04:16] Speaker 05:
And there is just nothing either in what he said this morning or in the reply brief or in the opening brief or in the complaint.

[01:04:21] Speaker 05:
that is anything other than this sort of general, we'll probably do this in the future.

[01:04:26] Speaker 05:
And it's exactly the sort of thing that, as the Supreme Court said in Lujan, that sort of someday intention, absent any concrete specificity, absent even across the point of Sunday.

[01:04:35] Speaker 04:
Mr. Rice, you might be correct that our FOIA precedents are inconsistent with Lujan.

[01:04:40] Speaker 04:
That might be a problem for us for another day.

[01:04:43] Speaker 04:
But they are what they are.

[01:04:45] Speaker 04:
So why should we treat a pharmaceutical company worse than we treat a FOIA requester?

[01:04:50] Speaker 05:
I am not aware of a FOIA precedent that would allow standing based on what you have here, based on just the fact that you have an organization that routinely makes FOIA requests and it'll probably make some in the future.

[01:05:00] Speaker 05:
Again, they've relied on cause of action.

[01:05:02] Speaker 05:
In cause of action, you actually had multiple other pending requests at the time.

[01:05:07] Speaker 05:
There is no need in that sort of situation to speculate about whether the requesting party is again going to be subject to the harm.

[01:05:15] Speaker 05:
There's nothing like this sort of will probably do it in the future.

[01:05:18] Speaker 05:
I'm not aware of a case.

[01:05:19] Speaker 01:
FOIA or otherwise where the court has accepted that sort of theory of standing okay unless the court has further questions if you're if you're not aware of the case i can give you one and that's uh the KKK

[01:05:36] Speaker 01:
case is 972 Fed 2nd 365.

[01:05:40] Speaker 01:
It's not a FOIA case, but it's the same question about how much they have to show in terms of repeating the conduct that is now ceased.

[01:05:53] Speaker 01:
That's an opinion in our court.

[01:05:55] Speaker 05:
OK, I'm not familiar with it, Your Honor.

[01:05:57] Speaker 05:
I certainly believe you do exist.

[01:05:59] Speaker 05:
But again, I think the general case law, both from this court and the Supreme Court, requires concrete specificity as to forward-looking harm.

[01:06:06] Speaker 05:
And there's just nothing like that here.

[01:06:08] Speaker 01:
Well, I'm repeating myself.

[01:06:10] Speaker 01:
But that's only true when the issue is framed as standing.

[01:06:15] Speaker 01:
When the issue is framed as mootness, there are Supreme Court cases that do not require any showing other than what would be in a complaint.

[01:06:28] Speaker 05:
So, I mean, here, I think the comparison between standing and mootness really, again, just sort of underscores why the way Vertex is asking you to think about this is not really the right way to think about it.

[01:06:38] Speaker 05:
They sort of say, well, you know, if we don't have standing, then, like, nobody can ever challenge these regs because, you know, the case will be brought and then OIG will issue the opinion.

[01:06:49] Speaker 05:
If that is a problem, there is a way to deal with it, which is the capable of repetition but evading review exception to mootness.

[01:06:55] Speaker 05:
You would say,

[01:06:56] Speaker 05:
Is the is it clear that the same requesting party is going to be subjected to it again and is the dispute one that by its nature is too short to you know that it's not going to get resolved before the the Before the particular dispute has terminated they have made any suggestion to that effect here.

[01:07:14] Speaker 05:
I think again, that's clear because

[01:07:16] Speaker 05:
They waited months and months after the opinion supposedly became overdue on their interpretation to bring the suit.

[01:07:23] Speaker 05:
So there's no genuine problem here.

[01:07:24] Speaker 05:
If this dispute persists in the future, the court can resolve it then, but they clearly don't have, there isn't jurisdiction whether for standing or for mootness reasons to decide in this context.

[01:07:36] Speaker 03:
Okay.

[01:07:36] Speaker 03:
Are there any further questions, Judge Randolph?

[01:07:40] Speaker 01:
No.

[01:07:40] Speaker 03:
Okay.

[01:07:41] Speaker 03:
Judge Walker?

[01:07:42] Speaker 03:
I'm done.

[01:07:43] Speaker 03:
Okay, thank you.

[01:07:44] Speaker 03:
Mr. Howard, three more, two minutes for rebuttal.

[01:07:49] Speaker 02:
Thank you, Your Honor.

[01:07:51] Speaker 02:
I note that Mr. Winnick did not address the reasoning of Sorensen, Marchetti, or Shayna, each of which construed the very language we're discussing here as requiring not mere influence, but wrongful influence.

[01:08:06] Speaker 02:
Now in their brief, they say that's different because that deals with advertising and middlemen, but the statute applies equally to recommending the purchase.

[01:08:16] Speaker 02:
That is quintessential advertising.

[01:08:18] Speaker 02:
And when faced with those facts and the breadth of the statute,

[01:08:23] Speaker 02:
Marchetti and Sorensen, who weren't applying Hansen, agreed that it must be wrongful influence, not mere influence, because otherwise it would outlaw advertising, and that makes no sense.

[01:08:36] Speaker 02:
But Hansen provides the answer, and that's what Shayna relied on, because Hansen said, not simply that it's a clue, but when Congress uses this word that has an established criminal law meaning, it presumably adopts that criminal law meaning.

[01:08:52] Speaker 02:
And here, that criminal law meaning is soliciting the crime.

[01:08:57] Speaker 02:
Now here, the crime is the one defined in B1, which is purchasing the governmentally reimbursed product in return for the money.

[01:09:06] Speaker 02:
That is what one is trying to induce.

[01:09:08] Speaker 02:
We're trying to induce the purchase of the product in return for it.

[01:09:12] Speaker 02:
The money is being offered as the inducement.

[01:09:15] Speaker 02:
And so that is why in Sorensen, they specifically say, and this is at 134F4,

[01:09:22] Speaker 02:
at page 502, the payment has to be made in order to induce unlawful referrals.

[01:09:31] Speaker 02:
And again, that was not even applying, Hanson.

[01:09:34] Speaker 02:
That's just on the basis of the text of the statute itself and this relationship between B1

[01:09:39] Speaker 02:
and B2, Hanson comes in and confirms that that is correct.

[01:09:45] Speaker 02:
And that's what the Ninth Circuit analyzed in Shayna, that when you stopped the presumption, and the government never here says that they have overcome a presumption, they just want to ignore the presumption.

[01:09:57] Speaker 02:
They say Hanson's different because it was soliciting unlawful immigration, but here it's soliciting the purchase in return for the remuneration.

[01:10:07] Speaker 02:
That's the opposite of induce.

[01:10:09] Speaker 02:
And so they are on all fours.

[01:10:13] Speaker 03:
OK, I'll give you a few minutes, just now a few minutes, a few seconds to just wrap up.

[01:10:18] Speaker 03:
Yeah, please.

[01:10:18] Speaker 02:
Well, Your Honor, I think that what the government's argument here, including its failure to address how the statute applies to advertising, to the generous ant, the interplay between the civil statute and the AKS, which the Second Circuit and Hall, Sixth Circuit and Martin have recognized are cousins with the AKS, shows that its reading is overbroad.

[01:10:42] Speaker 02:
What the government wants is for

[01:10:44] Speaker 02:
parties to come hat in hand, asking for discretion on the government's part.

[01:10:49] Speaker 02:
But that's not how we construe criminal statutes in this country.

[01:10:53] Speaker 02:
Thank you, Ron.

[01:10:54] Speaker 03:
OK.

[01:10:54] Speaker 03:
Thank you very much.

[01:10:55] Speaker 03:
Thank you to both counsel.

[01:10:57] Speaker 03:
The case is submitted.