Three drugmakers will pay $122.6 million to resolve claims they used charities that help cover Medicare patients’ out-of-pocket drug costs as a way to pay kickbacks aimed at encouraging use of their medications, including some expensive ones.
The U.S. Justice Department on Thursday said Jazz Pharmaceuticals Plc, Lundbeck and Alexion Pharmaceuticals Inc were the latest companies to settle claims stemming from an industry-wide probe of drugmakers’ financial support of patient assistance charities.
The government in an earlier settlement said drugmakers used such charities as a means to improperly pay the copay obligations of Medicare patients using their drugs, in violation of the Anti-Kickback Statute.
The investigation came amid growing attention to soaring U.S. drug prices. Copays are partly meant to serve as a check on healthcare expenses by exposing patients to some of a drug’s cost.
Jazz will pay $57 million, Lundbeck will pay $52.6 million and Alexion will pay $13 million.
None of the companies admitted wrongdoing, a fact Lundbeck and Jazz noted in separate statements. Alexion said the settlement recognized “significant” positive changes at the company.
Drug companies are prohibited from subsidizing copayments for patients enrolled in the government’s Medicare healthcare program for those aged 65 and older. Companies may donate to non-profits providing copay assistance as long as they are independent.
But according to the settlement agreements, the drugmakers used certain charities as “conduits” to pay patients’ copays.
The government alleged Alexion in 2010 asked a foundation to set up a fund to support patients using Soliris, a treatment for two rare blood disorders that costs over $500,000 annually.
While such funds are typically set up to help patients afford treatments for a given disease or condition, the government said Alexion discussed wanting the fund to support only patients using Soliris.
The department said Jazz asked a foundation to set up funds to cover copays for patients using its narcolepsy treatment Xyrem and its Prialt pain medication.
The department said Lundbeck, beginning in 2011, donated to a charity’s fund that ostensibly covered only copays for patients with Huntington’s Disease.
The fund actually helped patients who used its Xenazine drug for any condition, including unapproved ones, the government said. Medicare and a health care program for veterans subsequently paid claims for Xenazine.