Medicare beneficiaries are often required to make a copayment, use coinsurance or pay a deductible when buying prescription drugs. These are collectively referred to as "copays." Congress mandates certain copays, which rise with the expense of the drug, in order to introduce market forces into the purchase of prescription medications. Copays serve both to sway patient choices and to limit what pharmaceutical companies can charge for their drugs.
For these market forces to work, pharmaceutical companies are barred from offering inducements to patients for buying their products. The Anti-Kickback Statute prohibits drug makers from offering or paying any direct or indirect remuneration for that purpose -- and that includes covering patients' copays.
The Department of Justice says that Maryland-based United Therapeutics Corporation (UT) violated that law. UT did not itself pay the copays, but instead used its charitable arm to do so.
According to the DOJ, between 2010 and 2014 UT made donations to its charitable foundation which used that money for patient copays. The charity then detailed those payments for UT, which in turn used the information to determine how much to donate to the foundation.
Moreover, the DOJ says that UT submitted false claims to Medicare. The company had set up a program to provide free drugs to needy patients, which is generally legal. However, UT's policy was to exclude Medicare patients from the free drugs program and instead to refer them to the foundation. The foundation then paid the patients' copays and allowed claims to be submitted to Medicare.
"UT used a third party to do exactly what it knew it could not lawfully do itself," commented an acting U.S. Attorney. "UT understood that the third-party foundation used UT's money to cover the co-pays of patients taking UT drugs. UT's payments to the foundation were not charity for [pulmonary arterial hypertension] patients generally, but rather were a way to funnel money to patients taking UT drugs. The Anti-Kickback Statute exists to protect Medicare, and the taxpayers who fund it, from schemes like these that leave Medicare holding the bag for the costs of expensive drugs."
UT has agreed to pay $210 million to the federal government to resolve these claims. The company also agreed to enter into a five-year corporate integrity agreement which will, among other things, require UT to ensure that its activities involving third-party patient assistance programs comply with the law.
If you are aware of kickbacks or false claims against the government, you should know that the False Claims Act allows successful whistleblowers to collect a substantial reward. If you know about fraud, waste abuse or mismanagement, contact an attorney about protecting your rights as you blow the whistle.