ASD and Besse Medical: Free Inventory Systems, Required Drug Purchases

In the Besse Medical PODIS kickback settlement, ASD Specialty Healthcare LLC, doing business as Besse Medical, agreed to pay $1.67 million to resolve allegations that it gave retina practices free inventory systems to induce drug purchases. The telling detail was what happened to existing users who did not buy drugs from ASD: the company cut off their access even when they offered to keep paying for the system.

The Justice Department announced the pharmaceutical fraud settlement on December 13, 2024. ASD distributes specialty medical and pharmaceutical products nationwide, including injections for wet age-related macular degeneration. Its settlement admits specific facts about how PODIS access worked. The government alleged that those arrangements bought drug orders and caused false claims to federal healthcare programs.

Free PODIS Access Came With Purchase Commitments

ASD admitted that free PODIS access required customers to commit a share of their specialty-drug purchases to ASD. The settlement agreement sets out how a paid service became a purchasing incentive.

ASD acquired the rights to PODIS on May 31, 2017. The system helped retina practices manage inventory and reimbursement for expensive injectable medicines. Before the acquisition, its owner charged practices monthly license fees.

After acquiring PODIS, and through November 30, 2023, ASD gave specified customers access at no monetary cost. Those customers had to sign prime vendor agreements requiring them to buy a certain percentage of their specialty drugs from ASD. The agreements described the free access as an exchange for certain data rights. The purchase commitment sat in the same agreement as that explanation.

Other ASD customers, who did not sign prime vendor agreements, had to pay a monthly access fee. Existing PODIS users who were not ASD customers lost access after the acquisition, including practices that offered to pay to keep using it.

The Alleged Switch Involved Both the Drug and the Distributor

The whistleblowers’ complaint described a sales proposition that reached both the medicine and its supplier. It alleged that Regeneron subsidized Besse’s free inventory products:

In that account, the manufacturer stood to gain Eylea sales, while Besse stood to gain the practice’s injectable-drug purchasing account. A free tool for managing inventory allegedly became the reason to move the inventory purchases themselves. The alleged exclusivity matters: the complaint describes a bid for the practice’s injectable business, reaching beyond a single drug order.

Why the Inventory System Mattered to a Retina Practice

An inventory system that also tracks reimbursement sits close to both the drug purchase and the payment for treatment. Its value to the practice helps explain why control over access could matter in a sales negotiation.

In the pharmaceutical supply chain, wholesalers handle inventory, credit, specialty distribution and delivery. Besse occupied that distribution role: the settlement identifies ASD as a subsidiary through which Cencora distributes specialty pharmaceuticals to physicians and medical practices.

The acquisition brought a tool those practices already used under the control of their potential drug supplier. Under ASD’s admitted arrangements, the price of access depended on the customer’s relationship with the distributor.

How Do Pharmaceutical Kickbacks Work?

Pharmaceutical kickbacks can take the form of a valuable service offered to induce drug purchases paid for by federal health care programs. In the PODIS case, the government’s allegation connected the free system to drug orders and then to physicians’ claims for payment.

The Justice Department explains that the Anti-Kickback Statute reaches money or anything of value, including free inventory-management systems, used to induce purchases of drugs Medicare pays for. Its allegation here was that ASD caused physicians to submit false claims to Medicare, TRICARE and the Department of Veterans Affairs through the inventory-system incentives.

The government pursued ASD under the False Claims Act for allegedly causing the claims physicians submitted after purchasing drugs through the arrangement.

The government’s concern was unfair competition for distributors playing by the rules and the cost to taxpayers funding Medicare, TRICARE and veterans’ care.

That connection gives an insider’s commercial knowledge its importance. The access terms show what the practice received and the purchase agreement shows what ASD required in return. Orders and reimbursement claims connect the arrangement to public money. A sales arrangement inside the distributor can therefore be central to a case about bills submitted by its customers.

Regeneron’s Separate Pricing Allegations

ASD’s settlement resolved the distributor’s PODIS conduct. The Justice Department also brought its own complaint against Regeneron in the whistleblowers’ case.

The whistleblowers also alleged that Regeneron routed Eylea discounts through Besse and presented them to customers as Besse discounts. According to the complaint, that structure concealed manufacturer price reductions that would otherwise reduce Eylea’s reported average sales price.

Free Equipment and Payments for Drug Orders

Free equipment tied to purchasing also appeared in the Dermagraft allegations against Advanced BioHealing, later acquired by Shire. A whistleblower’s complaint alleged that Advanced BioHealing supplied freezers in exchange for purchases of large quantities of Dermagraft, which needed to be frozen before use. The equipment had a practical job inside the clinic. The alleged purchasing condition made that usefulness part of the sales incentive.

Cardinal Health’s separate distributor settlement involved $8 million to resolve allegations that payments induced pharmacies to purchase prescription drugs from Cardinal. Both allegations placed the benefit at the point where the customer chose its drug supplier.

What Insiders Could See

The PODIS agreement identifies commercial decisions that purchasing, sales and account-management employees would recognize: which practices received free access, which signed purchase commitments, which paid fees and which lost access. The complaint adds an alleged requirement to switch products and distributors.

For someone who knows those arrangements, a contract’s data-rights language and the sales team’s purchasing demands belong in the same conversation. We examine how the promised benefit, the actual access decisions and the drug orders fit together, then connect them to the government-paid claims. A practice administrator may know what was required to keep the system. A distributor employee may know how that requirement became part of winning the account.

How Much Money Do Pharmaceutical Whistleblowers Get for Exposing Fraud?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Two whistleblowers brought the qui tam case that led to the Besse settlement.

Both were former Regeneron employees. Their role shows why an insider’s knowledge can reach beyond the company signing the settlement: the complaint described dealings between a manufacturer, a distributor and the practices buying the drugs.

You Know What the Free System Required

If you saw free systems or equipment tied to drug orders, tell our whistleblower experts what the customer had to buy. We build the case with you around the purchasing condition and the government payments, and bring in pharmaceutical kickback whistleblower lawyers who understand distributor contracts and manufacturer incentives. We stay beside you throughout the process, working to build your strongest pharmaceutical kickback whistleblower case.