In rare co-pay fraud case, United Therapeutics agrees to pay $210 million

by Ben Vernia | December 26th, 2017

On December 20, the Department of Justice announced that Maryland-based pharmaceutical company, United Therapeutics, had agreed to settle kickback allegations relating to copayments for $210 million. According to DOJ’s press release:

Pharmaceutical company United Therapeutics Corporation (UT), based in Silver Spring, Maryland, has agreed to pay $210 million to resolve claims that it used a foundation as a conduit to pay the copays of Medicare patients taking UT’s pulmonary arterial hypertension drugs, in violation of the False Claims Act, the Justice Department announced today.

When a Medicare beneficiary obtains a prescription drug covered by Medicare Part B or Part D, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance, or deductible (collectively “copays”).  These copay obligations may be substantial for expensive medications.  Congress included copay requirements in these programs, in part, to encourage market forces to serve as a check on health care costs—including the prices that pharmaceutical manufacturers can demand for their drugs.  Under the Anti-Kickback Statute, a pharmaceutical company is prohibited from offering or paying, directly or indirectly, any remuneration—which includes money or any other thing of value— to induce Medicare patients to purchase the company’s product.

UT sells a number of pulmonary arterial hypertension drugs, including Adcirca, Remodulin, Tyvaso, and Orenitram (the “Subject Dugs”).  The government alleged that UT used a foundation, which claims 501(c)(3) status for tax purposes, as a conduit to pay the copay obligations of thousands of Medicare patients taking the Subject Drugs.  In particular, from 2010 to 2014, UT allegedly made donations to the foundation, which, in turn, used those donations to pay copays for the Subject Drugs to induce patients to purchase these drugs.  The government alleged that UT routinely obtained data from the foundation detailing how much the foundation had spent for patients on each Subject Drug and that this data was used by UT to decide how much to donate to the foundation.  The Government also alleged that UT had a policy of not permitting needy Medicare patients to participate in its free drug program, which was open to other financially needy patients, and instead referred Medicare patients to the foundation, which allowed claims to be submitted to Medicare.

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UT has also entered into a corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).  The five-year CIA requires, among other things, that UT implement measures designed to ensure that arrangements and interactions with third-party patient assistance programs are compliant with the law.  In addition, the CIA requires reviews by an independent review organization, compliance-related certifications from company executives and Board members, and the implementation of a risk assessment and mitigation process.

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The case, which also resulted in a five-year corporate integrity agreement between the company and the Office of Inspector General of HHS, apparently arose from a government investigation, and not from a qui tam whistleblower’s complaint.

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