Drug companies pay $122 million to settle case charging kickbacks including bribery to patients under the guise of charitable organizations on co-pays

big-pharma-300x196Jazz Pharma, Alexion, and Lundbeck were the subject of SOJ lawsuits asserting kickbacks and committing general violations of Medicare laws. The United States Department of Justice has decided to agree to a settlement of $122.6 million in total from these three alleged Medicare violators.

The drug companies were accused of offering remuneration in hopes of encouraging patients to purchase their medications. They would pay kickbacks, a form of negotiated bribery, to patients of Medicare and Civilian Health and Medical Program (ChampVA) under the guise of charitable organizations that subsidized the co-pays. This is not an uncommon practice, but it is one many law enforcement programs are attempting to discontinue.

The DOJ states that in this case, the companies violated the Federal False Claims Act. This act is a way of imposing liability onto anyone, be it a group or individual, that has been discovered interfering with government-funded programs such as in this case with Medicare. This is one of the government’s main tools in defending against fraudulent acts.

Andrew Lelling is a U.S. attorney that believes the “misconduct is widespread” and continues to state that strict enforcement of these types of acts will not stop until anti-kickback laws are no longer violated.

Each of these drug companies has their own part in this settlement, and as such, the settlement agreed that each company would pay a certain portion of the total in correlation to their allegations; Alexion will pay $13 million, Lundbeck will pay $52.6 million, and Jazz Parma will pay $57 million. This would equal a total of $122.6 million in settlement funds.

Alexion is the company that provides the drug Soliris, which is used to treat paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS). The price of this medication has grown to the price of $500,000 per year. This company would encourage patients to use their products by agreeing to support them with established funds, but once patients switched from Solaris, they would instantly withdraw all foundation support.

Jazz Pharma is the seller of drugs Prialt and Xyrem. Prialt is a chronic pain drug, while Xyrem is used for narcolepsy. They also started a foundation that would create a fund that would cover copays for their drugs offered through government programs. However, they have raised the cost of Xyrem by more than 24 times the U.S. rate of inflation.

Lundbeck did the same as it raised the price of its movement disorder drug, Xenazine, to more than 22 times the rate of inflation from just 2011 to 2016.

Jazz Pharma and Lundbeck are both entered into a corporate integrity agreement that requires them to implement monitoring and controls to encourage liberation from payment assistance programs. This agreement is meant to last for five years.

The pharmaceutical industry, in particular, is one area of the corporate world that the government is closely watching due the consistent levels of fraud that occur there as well as the substantial damage it is causing. Both violations of the False Claims Act and the excessive increase in prices are two acts the government is particularly cracking down on.

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