Washington, D.C.–Pharmaceutical company Actelion Pharmaceuticals US, Incorporated, based in South San Francisco, has agreed to pay $360 million to resolve claims that it illegally used a foundation as a conduit to pay the copays of thousands of Medicare patients taking Actelion’s pulmonary arterial hypertension drugs, in violation of the False Claims Act, the Justice Department said.
When a Medicare beneficiary obtains a prescription drug covered by Medicare, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance, or a deductible. These copay obligations may be substantial for expensive medications. Congress included copay requirements in the Medicare program, in part, to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs.
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.
Actelion sells a number of pulmonary arterial hypertension drugs, including Tracleer, Ventavis, Veletri, and Opsumit. The government alleged that Actelion used a foundation, which claims 501(c)(3) status for tax purposes, as an illegal conduit to pay the copay obligations of thousands of Medicare patients taking the subject drugs and to induce those patients to purchase them, because it knew that the prices Actelion set for the Subject Drugs could otherwise pose a barrier to those purchases. From 2014 to 2015, Actelion made donations to the foundation, which, in turn, used those donations to pay copays of patients prescribed the drugs. The government alleged that Actelion routinely obtained data from the foundation detailing how much the foundation had spent for patients on each drug; it then used this information to decide how much to donate to the foundation and to confirm that its contributions were sufficient to cover the copays of only patients taking the drugs.
Federal authorities further alleged that Actelion engaged in this practice even though the foundation had warned the company against receiving such information. They also alleged that, meanwhile, Actelion had a policy of not permitting Medicare patients to participate in its free drug program, which was open to other financially needy patients, even if those Medicare patients could not afford their copays for the drugs. Instead, to generate revenue from Medicare and induce purchases of the drugs, the government alleged that Actelion referred such Medicare patients to the foundation, which allowed the patients copays to be paid and resulted in claims to Medicare for the remaining cost.
“This settlement, like prior settlements concerning similar misconduct, makes clear that the government will hold accountable companies that pay illegal kickbacks,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “Pharmaceutical companies cannot increase drug prices while engaging in conduct designed to defeat mechanisms put in place to check such prices and then expect Medicare to pay for the ballooning costs.”
“Using data from CVC that it knew it should not have, Actelion effectively set up a proprietary fund to cover the co-pays of just its own drugs,” said United States Attorney Andrew Lelling for the District of Massachusetts. “Such conduct not only violates the anti-kickback statute, it also undermines the Medicare program’s co-pay structure, which Congress created as a safeguard against inflated drug prices. During the period covered by today’s settlement, Actelion raised the price of its main PAH drug, Tracleer, by nearly 30 times the rate of overall inflation in the United States.”
The investigation was conducted by the Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of Massachusetts, in conjunction with the Department of Health and Human Services, Office of Inspector General; and the Federal Bureau of Investigation.