Several big pharmaceutical companies have been under investigation for using charities that fund drug co-pays in ways that violate the False Claims Act’s (FCA) rules regarding illegal payments (kickbacks). The Anti-Kickback Statute (AKS) forbids drug companies from paying for a Medicare patient’s drugs by offering either partial or full remuneration, because doing so might be an inducement to choose one company’s drugs over another.
Many pharmaceutical companies donate to charities, often called patient assistance groups, which provide drug co-pay subsidies to Medicare patients of limited financial means. It’s a good thing that the companies do this, because a patient’s share of some drugs’ costs can be extremely high. However, the charities must be independent of the drug companies; companies are not allowed to subsidize co-pays, either directly or indirectly.
To date, at least three companies have settled cases alleging that they were in violation of the AKS by using charities. More than a dozen have been under investigation.
In December, 2017, United Therapeutics (UT) agreed to pay $210 million to settle claims that it illegally used the charity Caring Voice Coalition to pay the out-of-pocket drug costs for Medicare patients. The claim is that UT was attempting to boost sales and to “eliminate price sensitivity” for a class of expensive drugs that treats pulmonary arterial hypertension (PAH), a type of high blood pressure medication.
It is alleged that UT used the charity between 2010 and 2014 to subsidize the Medicare patient co-pays for the drugs Adcirca, Orenitram, Remodulin, and Tyvaso. The company obtained numbers from the charity that spelled out how many patients it helped buy UT drugs and then used the numbers to determine how much it would donate to the charity. The direct correlation of the amounts donated to the amounts paid to subsidize UT drugs is what makes the practice a violation of the AKS.
According to Acting United States Attorney William D. Weinreb, “UT used a third party to do exactly what it knew it could not lawfully do itself.”
Caring Voice Coalition’s authorization to operate has also been revoked.
Pfizer Inc. and Jazz Pharmaceuticals
In May, 2018, Pfizer agreed to settle allegations for $23.85 million that it used a supposedly-independent charity to subsidize all the Medicare patient out-of-pocket drug costs paid through the charity for Pfizer products. The U.S. Department of Justice’s (DOJ) claim is that Pfizer used the Patient Access Network Foundation (PANF) as a channel to cover co-pays for patients who were taking three Pfizer drugs in violation of the AKS. The DOJ asserts that Pfizer did so to increase both revenue and prices for the drugs from 2012 through 2016.
The DOJ claims that Pfizer worked with Advanced Care Scripts, a third-party pharmacy, to transfer patients taking the kidney cancer drugs Sutent and Inlyta to PANF rather than provide the drugs free of charge to qualified patients. The company also allegedly worked with PANF to establish a fund for patients taking Tikosyn, a heart drug, an action that occurred simultaneously with a price hike for the drug.
Jazz Pharmaceuticals agreed in May, 2018, to pay $57 million to settle a claim that the company has engaged in a charity-funding practice similar to the one used by United Therapeutics. Jazz produces a narcolepsy drug, Xyrem, which is very costly. The agreement to pay was reached in principle; Jazz has stated it cannot guarantee that a final settlement would be reached.
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