The Los Angeles Times reports that agents for the Federal Bureau of Investigation raided Proove Biosciences, an Irvine company that sells a DNA test it claims can determine whether a patient is at risk of addiction to opioid painkillers. In a press conference, FBI spokeswoman Cathy Kramer said the raid was part of an ongoing investigation concerning healthcare fraud. No arrests were made.

Anonymous company employees told STAT News, a healthcare news site, that about 25 agents arrived with a search warrant and spent several hours hauling out boxes of documents. The employees had been told by Proove to stay home for the day.

Proove maintains that its test can determine a patient’s risk of addiction with 93% accuracy. But, in December, an article published by STAT questioned the scientific basis for Proove’s test. Rockefeller University’s Dr. Mary Jeanne Kreek, who researches genetic links to addiction, told STAT that Proove’s test was “hogwash.” In February, the site said Proove’s method of paying physicians to participate in clinical trials might violate anti-kickback laws. That article included a statement from CEO Brian Meshkin, who said that “Proove is acting within the confines of the law – [and intends] to follow both the letter and spirit of the law.”

For doctors, the brochure from the California medical laboratory sounded like easy money: $30 for every person enrolled in a study of genetic tests meant to help select the best pain medication for each patient. A typical physician could make $144,000 a year in “research fees.”

And authorities have asserted that “research fees” are hidden kickbacks to physicians in other medical industries such as compounded pharmaceuticals.

For example, Jacksonville-based WELL Health Pharmacy and its owner have agreed to pay more than $3 million, as well as 50% of its net profits for five years, to resolve concerns that it knowingly filled prescriptions that were written by referral sources that had a financial interest in the prescriptions.  While these referring physicians were purportedly participating in a “research study” related to compounded prescriptions, the government contends that this research study was a sham and that the compensation far exceeded fair market value.

And Topical Specialists, a pharmacy based in Jacksonville, Florida, has agreed to pay the government more than $2.2 million for its role in submitting prescriptions that were tainted by so-called “research fees,” which was an elaborate guise for paying physicians to write prescriptions. This settlement is directly related, and in addition to, the WELL Health settlement described above.  

And there remain several compound pharmacies who advertise “clinical trials” programs today on their websites.  Greenpark Compounding Pharmacy in Houston Texas, McGuff Compounding Pharmacy in Santa Ana California, Pharmacy Creations in Randolph New Jersey, MasterPharm in New York are a few examples of some who can be identified by a Google search.  It would require an intense investigation to discover if any compounding pharmacy is engaged in a hidden kickback scheme disguised as research fees to physicians, or if it is legitimate medical research.

Proove Biosciences had 2016 revenues of $28 million, according to STAT. The company was able to collect more than 100,000 DNA specimens, largely because of a regulatory loophole regarding “laboratory-developed tests.” Essentially, these tests are free from Food and Drug Administration regulation so long as they’re designed, manufactured and used within a single laboratory.

Last November, the Obama administration halted plans to close the loophole, and the FDA elected to leave the decision for the Trump administration.

The authenticity of a “research fee” is one more investigatory task for the SIU unit to consider in claim reviews.