Drug manufacturer Actelion pays $360 Million to end kickbacks case using foundation to pay Medicare copays for high blood pressure meds

Pharmaceutical manufacturer Actelion Pharmaceuticals US, Inc. (Actelion), will pay $360 million to settle 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 government says 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 certain 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. Actelion’s pulmonary arterial hypertension drugs are Tracleer, Ventavis, Veletri, and Opsumit.

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 (collectively “copays”).  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.

The government alleged that Actelion routinely obtained data from the foundation detailing how much the foundation had spent for patients on each Subject 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 Subject Drugs.  The Government further alleged that Actelion engaged in this practice even though the foundation had warned the company against receiving such information.  The Government 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 Subject Drugs.  Instead, to generate revenue from Medicare and induce purchases of the Subject 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.