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Pharma and charitable foundations’ ties scrutinized for kickbacks

A pharmaceutical company’s donation to a charity to help patients pay their copays for prescription drugs can sound like a magnanimous gesture, but if done to induce Medicare patients to purchase the company’s drugs, those donations can violate the federal Anti-Kickback Statute and the federal False Claims Act.

That was what the government alleged Actelion Pharmaceuticals US Inc. did in a recent settlement with the pharma company for $360 million. The government asserted that from 2014 to 2015, Actelion was using the Caring Voice Coalition to pay the copays of thousands of Medicare patients taking its pulmonary arterial hypertension drugs, including Tracleer, Ventavis, Veletri and Opsumit.

Congress created the copay structure as an important safeguard against inflated drug prices by giving patients a stake in the true cost of prescriptions. Eliminating copays removes a patient’s financial incentive to choose a cheaper drug, especially when Medicare will pay the balance. This can drive up costs for the Medicare program and undermine efforts to control drug prices generally.

According to the government, Actelion raised the price of one of its hypertension drugs, Tracleer, by nearly 30 times the US inflation rate during the time it was making donations to the foundation to cover copays for that drug. At the time of the settlement, the retail price for a single tablet of Tracleer was approximately $189, which is commonly prescribed for daily use.

The company and the charity claimed they were independent, but the government alleged that was not the case. Actelion sought and received data from the charity that showed how much it was spending on the copays for Actelion patients. The government alleged that this information enabled Actelion to ensure it was contributing enough money to cover copays for Actelion’s drugs, but not so much it would be covering the copays of other drugs as well.

Contributions to a charitable foundation that are made to cover the copays of Medicare patients can constitute violations of the Anti-Kickback Statute (“AKS”) if their purpose is to induce the use of particular drugs. The AKS prohibits persons, including companies like Actelion, from offering or paying, directly or indirectly, any “remuneration” – including money, or anything of value – to induce Medicare patients to purchase medicine or medical services that are covered by a Medicare program.

The AKS does not prohibit pharma from making charitable contributions to help patients pay for their drugs when the donations are made without an effort to influence the purchase of particular drugs.

Claims for payment that are tainted by violations of the AKS are considered false claims to the Medicare program and therefore violate the federal False Claims Act. A False Claims Act case can be initiated by the government or by a whistleblower who has knowledge of the violation. Whistleblowers can file “qui tam” cases on behalf of the government to recover funds and can receive a share of the government’s recover as a reward. See “What is a qui tam lawsuit” for more information.

 

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