The two companies allegedly used independent foundations to pay Medicare beneficiaries' copays for their own products, an illegal inducement under the Anti-Kickback Statute.
Pharmaceutical companies Astellas Pharma U.S. Inc. and Amgen Inc. will pay a combined $124.7 million to resolve allegations that they each used independent foundations as conduits for illegal kickbacks, the Department of Justice said.
The two companies allegedly used the foundations to pay Medicare beneficiaries' copays for their own products, an illegal inducement under the Anti-Kickback Statute. Astellas has agreed to pay $100 million, and Amgen will pay $24.75 million, DOJ said.
The settlements are the latest in a string of lawsuits involving drug makers. Earlier this month—Jazz Pharmaceuticals plc, Lundbeck LLC, and Alexion Pharmaceuticals Inc.—agreed to pay $57 million, $52.6 million, and $13 million, respectively, to resolve similar allegations.
"According to the allegations in today's settlements, Astellas and Amgen conspired with two copay foundations to create funds that functioned almost exclusively to benefit patients taking Astellas and Amgen drugs," said Andrew E. Lelling, U.S. Attorney for the District of Massachusetts.
"As a result, the companies' payments to the foundations were not 'donations,' but rather were kickbacks that undermined the structure of the Medicare program and illegally subsidized the high costs of the companies' drugs at the expense of American taxpayers," Lelling said.
Astellas, the maker of Xtandi, an androgen receptor inhibitor, allegedly asked two foundations about the creation of copay assistance funds to cover the copays for Medicare patients taking ARIs, but not for other types of prostate cancer drugs. In July 2013, both foundations opened ARI-only copay funds; Astellas was the sole donor to both funds.
Prosecutors alleged that Astellas knew that Xtandi would likely account for the vast majority of utilization from each fund. In fact, Medicare patients taking Xtandi received nearly all of the copay assistance from the two ARI funds.
Astellas allegedly promoted the existence of the ARI funds as an advantage for Xtandi over competing drugs in an effort to persuade medical providers to prescribe Xtandi.
Astellas issued a statement that "denies any wrongdoing. These donations were conducted with the understanding that our actions were lawful and appropriate."
"We are pleased to resolve this matter and remain focused on pursuing our mission of turning innovative science into value for patients around the world," the company said.
Amgen allegedly used a foundation to induce Medicare beneficiaries to use its secondary hyperparathyroidism drug Sensipar and the multiple myeloma drug Kyprolis.
Amgen acquired Kyprolis with its acquisition of Onyx Pharmaceuticals Inc. in 2013.
Prosecutors allege that from 2011 through 2014 Amgen worked with a foundation to create a "Secondary Hyperparathyroidism" fund that would support only Sensipar patients.
Amgen allegedly made payments to the fund even though the cost of these payments exceeded the cost to Amgen of providing free Sensipar to financially needy patients. However, by using the foundation to cover the copays, Amgen caused claims to be submitted to Medicare and generated revenue for itself.
Prosecutors also alleged that Onyx asked a foundation to create a fund that ostensibly would cover healthcare related travel expenses for patients taking any multiple myeloma drug, but which was actually used almost exclusively to cover travel expenses for patients taking Kyprolis, which must be infused at certain health care facilities.
The government alleged that Onyx was the sole donor to this travel fund and that Amgen, after integrating Onyx into its operations in 2015, continued to donate to the fund. The foundation also operated a second fund that covered copays for multiple myeloma drugs, including Kyprolis.
Onyx allegedly got data from the foundation on the fund's anticipated and actual expenses for coverage of Kyprolis copays, which it used to tailor its donations to the fund to just the amount needed to cover the copays of Kyprolis patients.
Amgen issued a statement saying it "does not agree with the government’s view of the relevant facts or that its conduct was inappropriate; accordingly, the settlement does not contain or constitute an admission of liability."
"This settlement reflects Amgen's desire to put this legal matter behind it and focus on the needs of patients. Donations to independent charitable organizations can provide significant assistance to patients with their copayments for prescriptions, and Amgen continues to believe these programs help patients lead healthier lives. As an element of Amgen’s efforts to help ensure patients have access to critical medicines, Amgen continues to donate to independent charity patient assistance programs," the company said.
In addition to the financial settlements, Amgen and Astellas each signed five-year corporate integrity agreements with federal regulators.
“The companies' payments to the foundations were not 'donations,' but rather were kickbacks that undermined the structure of the Medicare program and illegally subsidized the high costs of the companies' drugs at the expense of American taxpayers. ”
Andrew E. Lelling, U.S. Attorney for the District of Massachusetts.
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.
The settlements are the latest in a string of anti-kickback lawsuits involving drug makers.
Astellas has agreed to pay $100 million, and Amgen will pay $24.75 million.
Astellas said it 'denies any wrongdoing,' and said the donations 'were conducted with the understanding that our actions were lawful and appropriate.'