Actelion agrees to pay $360 million to settle kickback allegations involving patient copayments

by Ben Vernia | December 6th, 2018

On December 6, the Department of Justice announced that the pharmaceutical firm Actelion will pay over a third of a billion dollars to resolve civil allegations that the company violated the False Claims Act by providing kickbacks to patients in the form of copayment

Pharmaceutical company Actelion Pharmaceuticals US, Inc. (Actelion), based in South San Francisco, California, has agreed to pay $360 million to resolve claims that it illegally used a foundation as a conduit to pay the copays of thousands of Medicare patients taking Actelion’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, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance, or a deductible (collectively “copays”).  These copay obligations may be substantial for expensive medications.  Congress included copay requirements in the Medicare program, in part, 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 drugs.  This prohibition extends to the payment of patients’ copay obligations.

Actelion sells a number of pulmonary arterial hypertension drugs, including Tracleer, Ventavis, Veletri, and Opsumit (the “Subject Dugs”).  The government alleged that Actelion used a foundation, which claims 501(c)(3) status for tax purposes, as an illegal conduit to pay the copay obligations of thousands of Medicare patients taking the Subject Drugs and to induce those patients to purchase them, because it knew that the prices Actelion set for the Subject Drugs could otherwise pose a barrier to those purchases.  From 2014 to 2015, Actelion made donations to the foundation, which, in turn, used those donations to pay copays of patients prescribed the Subject Drugs.  The government alleged that Actelion routinely obtained data from the foundation detailing how much the foundation had spent for patients on each Subject Drug; it then used this 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 the Subject Drugs.  The Government further alleged that Actelion engaged in this practice even though the foundation had warned the company against receiving such information.  The Government also alleged that, meanwhile, Actelion had a policy of not permitting Medicare patients to participate in its free drug program, which was open to other financially needy patients, even if those Medicare patients could not afford their copays for the Subject Drugs.  Instead, to generate revenue from Medicare and induce purchases of the Subject Drugs, the government alleged that Actelion referred such Medicare patients to the foundation, which allowed the patients copays to be paid and resulted in claims to Medicare for the remaining cost.

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The case apparently arose from a government investigation, and not from a whistleblower’s lawsuit.

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