Pharma Giant Pays $22M to Settle Alleged Kickback Scheme Involving Charitable Foundations

Pharma giant Biogen Inc. has become the most recent company to resolve allegations that it violated the False Claims Act by illegally using two charities to pay the co-pays of Medicare patients taking its multiple sclerosis drugs, Avonex and Tysabri.

The U.S. Department of Justice announced earlier this month that the Cambridge, Mass.-based company agreed to pay $22 million to settle allegations it engaged In a kickback scheme with Advanced Care Scripts (ACS), a specialty pharmacy that performed services for Biogen. Advanced Care Scripts, in a separate settlement, agreed to pay $1.4 million to resolve its role in the case. Both denied any wrongdoing.

The case grew out of a whistleblower complaint, which allows private parties to bring suit on behalf on the government and share in any recovery. In this case the whistleblower will receive approximately $3.6 million of the recovery. The lawsuit is captioned United States ex rel. Nee vs. Biogen et. al., Case No. 17-CV-10192-MLW (D. Mass.). 

The government alleged that Biogen used third-party foundations, Chronic Disease Fund (CDF) and The Assistance Fund (TAF), as conduits to pay the copay obligations of Medicare patients taking Avonex and Tysabri. Medicare then subsequently paid these patients’ claims for the drugs.

As part of the scheme, Biogen identified for Advanced Care Scripts certain patients in its Avonex or Tysabri free drug program.  Biogen then worked with the specialty pharmacy to transfer these patients to the foundations, which received payments from Biogen and then covered the costs of Medicare copays for most or all of these patients, the government alleged. Medicare paid the remaining portion of the patients’ claims. The government alleged these payments took place starting in 2011 and lasted until 2013.

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.

As we have written about before, the government has been cracking down on these schemes involving charitable foundations. In August, we wrote about Teva Pharmaceuticals being charged with conspiring with Advanced Care Scripts and the same two foundations, CDF and TAF, to subsidize Medicare co-pays for its multiple sclerosis drug Copaxone.

In July, we wrote about Pharma giant Novartis agreeing to pay $51.25 million to settle allegations it illegally paid the co-pay obligations for Medicare patients taking its drugs Gilenya and Afinitor.

In September, Gilead Sciences agreed to pay $97 million to resolve claims it illegally used a foundation as a conduit to pay the co-pays of Medicare patients taking its pulmonary arterial hypertension drug Letairis.

In June, The U.S. Department of Justice sued Regeneron Pharmaceuticals alleging that it paid kickbacks to a charitable foundation to increase sales of its macular degeneration drug treatment Eylea.

And, in January 2019, we wrote about Actelion Pharmaceuticals’ agreement to pay $360 million to resolve allegations it provided kickbacks to a charitable organization that was paying the co-pays of Medicare beneficiaries using Actelion’s drugs.

The practice has caught the attention of lawmakers who, last year, asked HHS to revise its guidance on the proper administration of such patient assistance charities.

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 info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.