Astellas Pharma US and Amgen Inc. have just agreed to pay nearly $125 million to resolve allegations that they implemented a fraudulent scheme using foundations to illegally pay Medicare copays for drugs they themselves commercialized.
Medicare beneficiaries are sometimes required to copay for drugs prescribed to them and covered under the healthcare program. Among other reasons, copays were created by the government to help keep drug prices in check.
Under the Anti-Kickback Statute, it is illegal for a pharmaceutical company to offer any financial incentive to patients or doctors to purchase or prescribe their drugs. Thus, footing the bill for Medicare beneficiaries’ required copays is also a violation of the Statute.
The way fraudsters carry out this type of schemes usually involves foundations that claim to be independent from the drug manufacturers. The pharma companies make donations to the foundations, which then offer to assist patients with their copay obligations. And that is precisely what prosecutors say Astellas and Amgen did.
Assistant Attorney General Jody Hunt explained the scheme very clearly: “When pharmaceutical companies use foundations to create funds that are used improperly to subsidize the copays of only their own drugs, it violates the law and undercuts a key safeguard against rising drug costs.”
One of the drugs involved in the alleged scheme is Astellas’ Xtandi, a prostate cancer drug. Prosecutors Astellas induced two foundations to create copay assistance funds. Astellas then became the only donor to those funds, which almost exclusively covered copays for Medicare beneficiaries taking Xtandi.
In fact, the existence of the funds was cited by Astellas as a competitive advantage, when trying to encourage doctors to prescribe Xtandi. To resolve the anti-kickback violation allegations, the pharma company will pay a total of $100 million.
Amgen’s alleged misconduct involved the drugs Sensipar and Kyprolis. According to the prosecution, Amgen also used a copay fund managed by a ‘friendly’ foundation to boost sales of Sensipar. In the case of Kyprolis, because it is a myeloma drug that has to be administered at certain facilities, sometimes patients require assistance with travel expenses.
Amgen allegedly used a foundation that purportedly assisted patients taking any multiple myeloma drug, but which, in fact, only assisted patients taking Kyprolis. Likewise, Amgen allegedly used a copay fund managed by the same foundation to boost sales of Kyprolis. Amgen will pay $24.75 million to resolve these allegations.
As part of the recent settlements, Amgen and Astellas have also entered corporate integrity agreements with the Office of the Inspector General. Over the next five years, the pharmaceutical companies’ donations to patient assistance programs will be closely monitored.
According to Special Agent Phillip Coyne of the Dept. of Health and Human Services, “Kickback schemes can undermine our healthcare system, compromise medical decisions, and waste taxpayer dollars.” Coyne emphasized the fact that the government “will continue to hold pharmaceutical companies accountable for subverting the charitable donation process in order to circumvent safeguards designed to protect the integrity of the Medicare program.”
Under the U.S. and state False Claims Acts, whistleblowers that report healthcare fraud involving Medicaid or Medicare could be entitled to a percentage of any verdict or settlement. Report fraud today, and you might earn a multimillion-dollar reward - hundreds of whistleblowers have already received rewards.