When a Medicare beneficiary obtains a prescription drug covered by Medicare Part B or Part D, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance, or deductible (collectively “copays”).  These copay obligations may be substantial for expensive medications.  Congress included copay requirements in these programs, in part, to encourage market forces 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 product.

UT sells a number of pulmonary arterial hypertension drugs, including Adcirca, Remodulin, Tyvaso, and Orenitram (the “Subject Dugs”).  The government alleged that UT used a foundation, which claims 501(c)(3) status for tax purposes, as a conduit to pay the copay obligations of thousands of Medicare patients taking the Subject Drugs.  In particular, from 2010 to 2014, UT allegedly made donations to the foundation, which, in turn, used those donations to pay copays for the Subject Drugs to induce patients to purchase these drugs.  The government alleged that UT routinely obtained data from the foundation detailing how much the foundation had spent for patients on each Subject Drug and that this data was used by UT to decide how much to donate to the foundation.  The Government also alleged that UT had a policy of not permitting needy Medicare patients to participate in its free drug program, which was open to other financially needy patients, and instead referred Medicare patients to the foundation, which allowed claims to be submitted to Medicare.


UT has also entered into a corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).  The five-year CIA requires, among other things, that UT implement measures designed to ensure that arrangements and interactions with third-party patient assistance programs are compliant with the law.  In addition, the CIA requires reviews by an independent review organization, compliance-related certifications from company executives and Board members, and the implementation of a risk assessment and mitigation process.

“UT used a third party to do exactly what it knew it could not lawfully do itself,” said Acting United States Attorney William D. Weinreb.  “According to the allegations in today’s settlement agreement, 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 PAH 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.”

Jeffrey Newman represents whistleblowers but not those in this case.