Pharma Company Pays $12.6M to Settle Charity Kickback Allegations

Another pharmaceutical company has agreed to a multimillion-dollar settlement to resolve allegations that it used a charity as a conduit to pay the copays of patients taking one of its drugs.

Federal prosecutors alleged that Incyte Corporation of Delaware was the sole donor to an independent foundation set up in November 2011 to assist patients with myelofibrosis, a rare type of blood cancer.

After the fund opened, the government alleges that Incyte used the fund to pay the copays of Medicare and TRICARE beneficiaries taking its drug Jakafi who were ineligible for assistance from the fund because they did not have myleofibrosis. The payments are alleged to have taken place between from November 2011 and December 2014.

“Incyte managers pressured the foundation, through phone calls and emails, to provide economic assistance to these ineligible patients, and Incyte’s contractor helped ineligible patients to complete applications submitted to the fund for assistance,†a press release states.

Under the Anti-Kickback Statute, a pharmaceutical company is prohibited from offering or paying, directly or indirectly, any remuneration, which includes money or anything else of value, to induce federal beneficiaries to purchase the company’s drugs. The prohibition extends to the payment of patients’ copay obligations.

The case came to the government’s attention via a whistleblower (qui tam) lawsuit filed in Pennsylvania by Justin Dillon, a former compliance executive at Incyte. The case is captioned U.S. ex rel. Dillon v. Incyte Corp., No. 2:18 -cv-2642 (E.D. Pa.). Dillon will receive approximately $3.59 million of the $12.6 million government settlement.

“Pharmaceutical companies cannot skirt the anti-kickback rules by disguising their inducements to federally-insured patients as charitable donations,†said Acting U.S. Attorney Jennifer Arbittier Williams for the Eastern District of Pennsylvania.

As we wrote about in 2019, congressional lawmakers have been concerned about drug makers’ using patient assistance charities to pay kickbacks to Medicare beneficiaries as a way to get them to use their drugs.

Last December, pharma giant Biogen agreed to pay $22 million to resolve claims that it used two charities that help cover Medicare patients’ out-of-pocket drug costs as a way to pay them kickbacks to use its multiple sclerosis drugs, Avonex and Tysabri.

And in January 2019, we wrote about how Actelion Pharmaceuticals, a San Francisco-based biopharmaceutical company, 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.

In 2019, Massachusetts Sen. Elizabeth Warren, and Sen. Sheldon Whitehouse of Rhode Island, sent a five-page letter to HHS’s acting Inspector General asking for increased oversight into these types of activities.

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