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Catch of the Week — Actelion Pharmaceticals

Posted  December 7, 2018

This week’s Department of Justice “Catch of the Week” goes to Actelion Pharmaceuticals US, Inc., a California pharmaceutical company that sells various pulmonary arterial hypertension drugs, including Tracleer, Ventavis, Veletri, and Opsumit. Yesterday, Actelion agreed to pay $360 million to resolve allegations that it violated the Anti-Kickback Statute by indirectly paying drug copays for thousands of Medicare patients. It did so by donating to a 501(c)(3) nonprofit organization, which in turn used those funds to pay Medicare copays for Actelion drugs. See DOJ Press Release.

Medicare copays are designed, in part, to serve as a check on the prices that pharmaceutical companies can demand for their drugs. Since allowing these companies to cover Medicare copays would undermine this check on drug prices, the Anti-Kickback Statute prohibits them from directly or indirectly paying for these costs. But Actelion allegedly flouted these restrictions by obtaining information on how much the charity foundation was spending on Medicare copays and then donating sufficient funds to cover those costs. Meanwhile, it excluded Medicare patients who could not afford Actelion drug copays from its free drug program, which was open to other financially needy patients, and instead referred those patients to the charity organization. This allowed Actelion to cover the Medicare copays, indirectly through the charity, and then bill Medicare for the remaining cost.

US Attorney Andrew E. Lelling for Massachusetts emphasized that Actelion’s conduct “undermines the Medicare program’s co-pay structure, which Congress created as a safeguard against inflated drug prices,” and noted “[d]uring the period covered by today’s settlement, Actelion raised the price of its main PAH drug, Tracleer, by nearly 30 times the rate of overall inflation in the United States.”

DOJ Assistant Attorney General Jody Hunt further highlighted the government’s focus on holding companies accountable for kickbacks, citing the costs associated with the illegal practice: “Pharmaceutical companies cannot increase drug prices while engaging in conduct designed to defeat mechanisms put in place to check such prices and then expect Medicare to pay for the ballooning costs.”

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Tagged in: Anti-Kickback and Stark, Catch of the Week, Healthcare Fraud, Pharma Fraud,