Prosecutors allege the Johnson & Johnson subsidiary used a charity as a funnel to pay Medicare patients' copays for pulmonary arterial hypertension drugs.
Actelion Pharmaceuticals US, Inc. will pay $360 million to resolve claims that it illegally paid the copays of thousands of Medicare patients who used the drug maker's hypertension drugs, the Justice Department announced.
Federal prosecutors said the San Francisco-based Actelion used Caring Voice Coalition Inc., a tax-exempt patient financial assistance charity as an illegal conduit to pay the copays for a number of expensive pulmonary arterial hypertension drugs, including Tracleer, Ventavis, Veletri, and Opsumit.
The illegal copays induce Medicare patients to buy the drugs that would be otherwise unaffordable.
The Anti-Kickback Statute bans drug makers from payment in any form to induce Medicare patients to purchase the company's drugs.
This week's settlement is the third time in the past year that a drug maker has been caught using charities to skirt anti-kickback laws.
In December, 2017, United Therapeutics Corp. agreed to pay $210 million to resolve claims that it used a foundation to pay the copays of Medicare patients taking UT’s pulmonary arterial hypertension drugs. Pfizer paid $24 million in April to settle similar allegations.
"This settlement, like prior settlements concerning similar misconduct, makes clear that the government will hold accountable companies that pay illegal kickbacks," DOJ Civil Division Assistant Attorney General Jody Hunt said in a media release.
"Pharmaceutical companies cannot increase drug prices while engaging in conduct designed to defeat mechanisms put in place to check such prices and then expect Medicare to pay for the ballooning costs," Hunt said.
Actelion spokesperson Caroline Pavis on Thursday issued a brief statement noting that the allegations occurred before the company was acquired by Johnson & Johnson in 2017, and that the company is "committed to full compliance with all laws and regulations in our work to help patients get the medicines they need."
According to DOJ, from 2014 to 2015, Actelion made donations to Caring Voice Coalition, which used the money to pay copays of patients for the drugs. During the time covered in the settlement, prosecutors said Actelion raised the price of Tracleer by nearly 30 times the rate of inflation in the United States.
Actelion routinely obtained data from CVC detailing how much it had spent for patients on each drug, and then used the information to decide how much to donate to the foundation and to confirm that its contributions were sufficient to cover the copays of only patients taking Actelion's drugs.
Prosecutors said Actelion also would not allow Medicare patients to participate in its free drug program for financially needy patients, even if the Medicare patients couldn't afford the copays.
Instead, Actelion allegedly referred Medicare patients to CVC, which paid the copays, allowing the claims to be paid for by Medicare.
Actelion continued to do this even after CVC warned the company about the impropriety, DOJ said.
CVC's website published a notice last January that it would no longer offer financial assistance for drug copays.
Greg Smiley, CEO of Richmond, VA-based CVC, told HealthLeaders that the charity "cannot comment on ongoing legal matters."
"Still, we know people throughout the U.S. continue to struggle with healthcare costs and access," Smiley said.
"Although CVC is no longer providing financial assistance to patients for therapies, we continue to help as many patients as we can navigate challenges within the health care system.”
“Pharmaceutical companies cannot increase drug prices while engaging in conduct designed to defeat mechanisms put in place to check such prices and then expect Medicare to pay for the ballooning costs.”
DOJ Civil Division Assistant Attorney General Jody Hunt
John Commins is a senior editor at HealthLeaders.
The Actelion settlement marks the third time in the past year that a drug maker has been caught using charities to skirt anti-kickback laws.
The alleged illegal copays to Medicare patients continued even after Actelion was warned by the charity that was being used as a conduit.
The allegations occurred before Johnson & Johnson acquired Actelion in 2017.