Government cracking down on drug company ties to charities

A blue door with two small holes in it.

Actelion Pharmaceuticals, a San Francisco-based biopharmaceutical company, recently agreed to pay $360 million to resolve allegations it provided kickbacks to a charitable organization through contributions it made, and that the charity turned around and used those contributions to pay the copays of patients using Actelion’s drugs.

Drug makers are not permitted to make Medicare patient copays. However, the government came to the conclusion that Actelion used a “purportedly independent” patient foundation as a means to do just that.

The case dates back to November 2017 when the U.S. Department of Health and Human Services Office of the Inspector General announced it was revoking a 2006 Advisory Opinion it previously issued that protected the charity – Caring Voice Coalition – from becoming the target of kickback charges.

The OIG said it was rescinding its opinion “based on the requestor’s failure to fully, completely and accurately disclose all relevant and material facts and certifications that were material to OIG’s initial conclusion that the charity’s arrangement would not be in violation of the anti-kickback statute.â€

The government alleged that in 2014 and 2015, Actelion routinely obtained data from the charity detailing how many patients on each of its drugs the charity had assisted, how much the charity spent on those patients, and how much it expected to spend on those patients in the future. Actelion used this information to budget for future “donations†to the charity on a drug-specific basis and to confirm that its contribution amounts to the charity were enough to cover the copays of patients taking Actelion’s drugs, but not of patients taking other manufacturers’ drugs.

The government also alleged that Actelion had a policy of not allowing Medicare patients to participate in its free drug program, which was available to other financially needy patients, even if those Medicare patients could not afford their copays for Actelion’s drugs. Instead, the government alleged that Actelion referred these Medicare patients to the charity, which allowed the patients’ copays to be paid and resulted in claims to Medicare for the remaining cost.  

“Pharmaceutical companies cannot have it both ways—they cannot continue to increase drug prices while engaging in conduct designed to defeat the mechanisms that Congress designed to check such prices and then expect Medicare to pay for the ballooning costs,† noted Assistant Attorney General Joseph H. Hunt of the Department Justice’s Civil Division.

Johnson & Johnson purchased Actelion in early 2017, but the alleged misconduct took place before the buyout and J&J says it is in compliance with all laws.

The government has had a long-running investigation into pharmaceutical company ties to charities, and in recent years there have been several settlements relating to alleged improper dealings.

In December 2017, United Therapeutics Corporation (UT), a seller of pulmonary arterial hypertension (PAH) drugs, agreed to pay $210 million to resolve allegations that it violated the False Claims Act by paying kickbacks to Medicare patients through a purportedly independent charitable foundation. In May 2018, Pfizer agreed to pay $23.8 million to settle allegations it used its charity to pay kickbacks to Medicare patients who purchased the company’s drugs. Also in May, Jazz Pharmaceuticals said in an SEC filing that it had set aside more than $57 million to settle an investigation over donations to charities that help people. It said in the filing it had reached a tentative settlement, but no formal announcement has yet been made. And, in June 2018, Danish drugmaker Lundbeck said it had agreed to pay $52.6 million to resolve questions into its financial support of patient assistance charitable foundations.

The Health Law Offices of Anthony C. Vitale can review your patient assistant program to confirm compliance with the major fraud and abuse laws which govern this area. Contact us for additional information at 305-358-4500 or send us an email to and let’s discuss how we might be able to assist you.

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The Health Law Offices of Anthony C. Vitale