Alexion Pharmaceuticals, Jazz Pharmaceuticals and Lundbeck will pay $123 million to settle charges that they used copay assistance foundations to directly cover the costs of Medicare and veterans' program beneficiaries taking their drugs, in violation of federal anti-kickback laws, the Justice Department announced on Thursday.
Prosecutors charge that the three companies made low-income Medicare patients ineligible for free drugs in order to steer them into copay assistance programs, thereby illegally increasing company revenues. Alexion helped create a fund narrowly crafted to support its expensive ultra-rare disease drug Soliris, the Justice Department said.
Patient assistance has been a sore point with both government and private insurance plans because they can drive patients to higher-priced drugs and inflate spending. Pharma companies, meanwhile, have struggled with legal compliance because federal law forbids direct assistance to help patients in federal health programs seeking a specific drug.
As patients struggle with cost-sharing imposed on expensive medication by their insurance plans, the pharma sector has responded by helping cover those expenses.
For patients with commercial insurance, that assistance can come as payment from pharmaceutical companies to help purchase their products, often in the form of a coupon. But for government-supported insurance programs like Medicare, Medicaid and military veterans' benefits, such direct assistance is illegal because it artificially inflates taxpayer expenditures.
To comply with federal law, pharma companies contribute to disease-specific charities that are not permitted to favor one drug over another.
The inspector general of Department of Health and Human Services (HHS) has issued several advisory opinions about how these arm's-length charities function and communicate with their donors. For example, the charities cannot provide the donors with data about patient diagnoses nor which drugs they received thanks to the assistance they received.
Daniel Klein, president of the Patient Access Network Foundation, which runs nearly 70 assistance programs, said for an ultra-rare disease that has only a single treatment, a drug company could perhaps stay in compliance by also covering supportive care drugs that treat symptoms or complications of the disease.
"(HHS) has been very clear that they don’t want to have single drug programs," Klein told BioPharma Dive in an interview. "They don’t want these charities to serve as a conduit back to a product."
Yet, for the three companies accused Thursday, that appears to be what spurred the Justice Department's concerns.
Jazz, for instance, paid $57 million to settle charges that it created a narcolepsy-specific fund at a charity and that Jazz was made aware its donations to this fund were used almost exclusively for its drug Xyrem (sodium oxybate), which constitutes a small share of the overall market, prosecutors say. Jazz also made Medicare patients ineligible for its free drug program and referred patients to the foundation, according to the Justice Department.
The release also says Jazz had a similar arrangement for pain drug Prialt (ziconotide).
Lundbeck, meanwhile, paid nearly $53 million related to claims it referred patients taking its drug Xenazine (tetrabenazine), a treatment for a movement disorder resulting from Huntington's disease, to a Huntington's disease charity to which Lundbeck was the sole donor. The government said Lundbeck also referred patients taking Xenazine for unapproved uses to the charity, along with a similar practice to Jazz of not allowing Medicare patients or veterans to take part in the free drug program.
Alexion manufactures Soliris (eculizumab), which treats the ultra-rare condition paroxysmal nocturnal hemoglobinuria, and created a "complement mediated diseases" fund at a charity to which it was the sole donor.
The fund's administrators told Alexion that assistance from the fund was contingent on taking Soliris, while Alexion let the administrators know when a patient had stopped Soliris treatment so that assistance could be revoked, according to the Justice Department. Prosecutors said Alexion had a general practice of not allowing Medicare patients to take part in a free drug program. The company paid $13 million to settle.