Department of Justice sues Teva Pharmaceuticals over copayment kickbacks

by Ben Vernia | August 30th, 2020

On August 18, the Department of Justice filed a civil lawsuit against Teva Pharmaceuticals USA, Inc., and its subsidiary, alleging that the companies violated Medicare’s Antikickback Statute and the False Claims Act by paying patients’ copayments. According to DOJ’s press release:

The United States has filed a False Claims Act complaint against Teva Pharmaceuticals USA Inc. and Teva Neuroscience Inc. (Teva), alleging that they illegally paid the Medicare co-pays for their multiple sclerosis (MS) product, Copaxone, through purportedly independent foundations that the companies used as conduits in violation of the Anti-Kickback Statute, the Department of Justice announced today.

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When a Medicare beneficiary obtains a prescription drug covered by Medicare Part D, the beneficiary may be required to make a partial payment, which may take the form of a co-payment, co-insurance, or deductible (collectively, co-pays). These co-pay obligations may be substantial for expensive medications. Congress included co-pay 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. The Anti-Kickback Statute prohibits pharmaceutical companies 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 companies’ drugs.

The government alleges that, from 2007 through 2015, Teva paid The Assistance Fund (TAF) and Chronic Disease Fund (CDF) with the intent and understanding that the foundations would use Teva’s money to cover the Medicare co-pays of patients taking Copaxone.  During the same period, Teva raised the price of Copaxone from approximately $17,000 per year to over $73,000 per year.

According to the United States’ complaint, Teva largely effectuated its scheme through its vendor, Advanced Care Scripts Inc. (ACS), a specialty pharmacy to which Teva referred virtually all Copaxone patients who faced Medicare co-pays for the drug.  Teva used information from ACS and from TAF and CDF to calculate how much money to pay each foundation to maintain coverage of the Medicare co-pays of Copaxone patients enrolled in each foundation.  The U.S. further alleges that ACS coordinated the referral of newly-prescribed Copaxone patients to TAF and CDF with Teva, referring patients in batches at the same time that Teva made payments to the foundations, which ensured that Copaxone patients received the vast majority of the co-pay assistance TAF and CDF provided with money from Teva.

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

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