Teva Charged With Paying Kickbacks to Increase Sales of MS Drug

Teva Pharmaceuticals has joined a growing list of healthcare organizations alleged to have used charitable foundations to pay hundreds of millions of dollars in kickbacks.

Earlier this month, the U.S. Attorney’s Office in Boston filed a complaint against Teva Pharmaceuticals USA, Inc. and Teva Neuroscience, Inc., the maker of Copaxone. It alleged the company conspired with a specialty pharmacy and two independent foundations to violate the Anti-Kickback Statute and False Claims Act by using the foundations as conduits to subsidize Medicare co-pays for the drug, while at the same time increasing the price.

The complaint alleges that Teva “intended the payments to ensure that Copaxone patients never faced the steep prices that Teva charged for its drug, thus inducing the patients, including Medicare patients, to purchase the drug.â€

The independent foundations are identified as the Chronic Disease Fund (CDF) and the Assistance Fund (TAF). Copaxone is used in the treatment of multiple sclerosis (MS). According to the complaint, Teva referred most of its Copaxone patients who were Medicare beneficiaries to Advanced Care Scripts, Inc. (ACS), a specialty pharmacy. ACS, in turn, arranged for the patients to obtain co-pay coverage from the foundations and reported the information back to Teva. At the end of each year, Teva paid back the foundations based on the amount of co-pays they covered.

The government alleges that from 2006 until at least 2015 Teva paid the foundations more than $300 million. During that same period, Teva raised the price of Copaxone to more than $73,000 from approximately $17,000 a year – or 19 times the rate of inflation.

“Teva gamed Medicare and tried to deflect attention away from a 329 percent increase in the cost of its drug by masking kickbacks as charitable contributions,†said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division, in a press release.

While drug makers are not permitted to subsidize co-payment for Medicare beneficiaries, they can donate to independent nonprofits that offer co-payment assistance. However, 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.

“Teva’s alleged kickbacks undermined the Medicare program’s co-pay structure, which Congress created as a safeguard against inflated drug prices,†said Andrew E. Lelling, United States Attorney for the District of Massachusetts, in a news release.

In addition, the complaint alleges that Teva and the pharmacy worked together to enable Teva to cover Medicare co-pays for patients who started the drug after the beginning of the year, when the foundation’s funds were often closed to new patients because they had allocated all of their money to existing patients.

The pharmacy would provide updates to Teva on the number of patients on Medicare awaiting co-pay coverage and when there were a substantial number in the queue, Teva would send a payment to the pharmacy, according to the complaint.

“Teva would notify ACS, which then would send a ‘batch file’ of applications for all the waiting Copaxone patients to the foundation so that the foundation would act on those applications as soon as the fund re-opened.  In this way, Teva and ACS ensured that the vast majority of Teva’s payments to the foundations went to cover the Medicare co-pays of Copaxone patients,†according to the complaint.

Advanced Care Scripts and the foundations previously agreed to pay a combined $9.5 million to resolve related charges.

Teva isn’t alone in allegedly using foundations to funnel money to Medicare patients in the form of co-pays so they will continue to use their drugs. 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.

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 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 assistance 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.