Drugmaker Agrees to Pay $360 Million to Settle Investigation Into Charity Kickbacks
Posted December 6, 2018 6:08 p.m. EST
Drugmaker Actelion Pharmaceuticals has agreed to a $360 million settlement stemming from an investigation into whether the company illegally funneled kickbacks through a patient-assistance charity, federal prosecutors said Thursday.
Actelion, which was acquired by Johnson & Johnson in 2017 and makes expensive drugs to treat a rare lung condition, is the latest pharmaceutical company to settle federal inquiries into their ties to patient-assistance groups, including whether companies have used the patient programs to increase the price of their drugs.
In 2017, United Therapeutics paid $210 million to settle similar allegations, and Pfizer paid nearly $24 million to do so in May. Several other drugmakers have disclosed that they are also under investigation for their use of patient-assistance charities, including Biogen, Celgene and others.
“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,” Joseph Hunt, an assistant attorney general for the Justice Department, said in a news release.
In 2014 and 2015, prosecutors said, Actelion raised the price of its main drug, Tracleer, by nearly 30 times the rate of inflation. Tracleer, which is prescribed to treat pulmonary arterial hypertension, sells in pharmacies for an average cash price of about $14,500 for 60 tablets, according to the website GoodRx.
Caroline Pavis, a spokeswoman for Actelion, said in a statement that the company was committed to complying with the law. It admitted no wrongdoing in its settlement. Johnson & Johnson was not implicated in the allegations since the activity under scrutiny took place before Actelion was acquired.
Drug companies often help patients pay their out-of-pocket costs through coupons or other financial assistance. These payments are not just about benevolence — they also help blunt the outrage over rising drug prices by limiting how much patients have to pay. Insurers then cover most of the cost.
But federal anti-kickback laws prohibit companies from giving such financial assistance to Medicare and Medicaid beneficiaries because doing so is considered an inducement to buy their drugs. For years, drugmakers have skirted those laws by instead donating to nonprofit charities, which then give the money to Medicare patients. Such arrangements are legal as long as there is no direct coordination between the pharmaceutical company and the nonprofit organization.
Federal prosecutors said Actelion violated the law by collecting detailed data in 2014 and 2015 about the patients receiving help from a nonprofit, the Caring Voice Coalition, and using the data to budget for future donations. As a result, Actelion ensured that the money it donated would be used only to assist patients who used its drugs, and not competing companies’ treatments for the pulmonary condition.
Prosecutors said Actelion kept up the practice even after the charity itself warned the company against it.
Actelion also steered Medicare patients to the Caring Voice Coalition who would have otherwise qualified financially for the company’s free drug program. By directing them to the nonprofit, the company avoided having to provide the drug to eligible patients and left Medicare to cover the cost instead, prosecutors said.
Caring Voice Coalition no longer offers such programs. Last year, the federal government revoked its right to do so, citing concerns that it was coordinating too closely with drug companies.
The charity was also involved in the settlement with United Therapeutics, which, like Actelion, sells drugs that treat the same lung condition.
“We continue to help as many patients as we can navigate challenges within the health care system,” Greg Smiley, the charity’s chief executive, said in a statement. He said he could not comment on legal issues.