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Drug maker settles illegal charity copay claims for $360 million

As drug prices rise in the U.S., some have expressed concerns that charitable payment of drug copays could be contributing to price inflation. This is because, although most patient assistance groups of this type are charities, pharmaceutical companies routinely donate to the groups.

These donations are encouraged where legal, but they can only be made when the charity is independent from the pharmaceutical company. If the drug companies were to pay patients' copays directly they would be in clear violation of the Anti-Kickback Statute, which prohibits offering or paying, directly or indirectly, anything of value to induce Medicare patients to buy a particular drug manufactured by that company. Since indirect inducements are prohibited, payment of copays by charities must be done independently from the drug maker.

The Department of Justice recently accused the pharmaceutical company Actelion of engaging in illegal kickbacks of this kind. Actelion sells several drugs to treat pulmonary arterial hypertension, including Opsumit, Ventavis, Veletri and Tracleer. A charity called Caring Voice Coalition (CVC) was involved in paying Medicare patients' out-of-pocket costs when they could not afford their copays.

Actelion allegedly asked for and obtained CVC's data on how much was spent on copays for Actelion drugs and then using that information to determine how much it should donate to CVC. In other words, it donated just enough to cover the copays for its own medications. This served to undermine the purpose of copays, which is largely to act as a check on drug prices.

Actelion also excluded Medicare patients from its free drug program

Even while Actelion was paying Medicare patients' copays thorough this alleged subterfuge, the Justice Department says, its policy was to exclude Medicare patients from its own free drug program, even when such patients otherwise qualified for the program. Instead, Actelion allegedly referred all such patients to CVC. This was allegedly done to induce the patients into purchasing the drug with the covered copay instead of receiving it for free. That left Medicare on the hook for the remainder of the bill.

Actelion settled the allegations for $360 million without an admission of liability.

Although no whistleblowers were involved in this case, the case itself involved the False Claims Act. That law allows private citizens to file lawsuits on behalf of the government when they have evidence of fraud, waste or abuse in federal contracting. When such cases are successful, the whistleblower receives a substantial portion of any money recovered as a reward for their service. If you are interested in filing a False Claims Act lawsuit, discuss your situation with an experienced attorney.

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