Gilead pays $97 million to resolve Letairis copay kickback allegations

by Ben Vernia | September 24th, 2020

On September 23, the Department of Justice announced that California-based Gilead Sciences, Inc., had agreed to pay $97 million over its use of a foundation to cover patients’ copayments for the use of one of its drugs. According to DOJ’s press release:

Pharmaceutical company Gilead Sciences, Inc. (Gilead), based in Foster City, California, has agreed to pay $97 million to resolve claims that it violated the False Claims Act by illegally using a foundation as a conduit to pay the copays of thousands of Medicare patients taking Gilead’s pulmonary arterial hypertension drug, Letairis, the Justice Department announced today. 

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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”).  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. 

Gilead sells Letairis, which is approved for treatment of pulmonary arterial hypertension.  The government alleged that Gilead 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 Letairis and to induce those patients to purchase Letairis, because it knew that the prices Gilead set for Letairis could otherwise pose a barrier to those purchases.  From 2007 through 2010, Gilead made payments to the foundation, which, in turn, used those funds to pay copays of patients prescribed Letairis.  The government alleged that Gilead routinely obtained data from the foundation detailing how much the foundation had spent for patients on Letairis; it then used this information to decide how much to pay to the foundation and to confirm that its payments were sufficient to cover the copays of only patients taking Letairis.  The government also alleged that, to generate revenue from Medicare and induce purchases of Letairis, Gilead referred Medicare patients to the foundation, which resulted in claims to Medicare to cover the cost of Letairis.  

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The case apparently arose from a government investigation, and not from a whistleblower’s complaint. Gilead was not reported to have signed a corporate integrity agreement as part of the settlement.

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