Cambridge-headquartered Biogen, Inc. will pay $22 million to settle fraud allegations involving illegal Medicare copays for its drugs Avonex and Tysabri.
Copays for prescription drugs covered by Medicare are important to keep drug prices in check. When Medicare beneficiaries are required to make a partial payment, drugmakers have to charge a price they can afford. Pharmaceutical companies, however, often circumvent this requirement by illegally paying copays to boost Medicare reimbursements. To disguise these unlawful payments, they often use sham ‘charitable’ foundations.
Charitable patient assistance programs fulfill an important role. They subsidize the prescription drug copays for insolvent Medicare beneficiaries. Dishonest pharma companies often make “donations” to these foundations, which automatically translate into more prescriptions, more copays, and ultimately more sales.
The alleged misconduct was brought forward in a False Claims Act complaint filed by whistleblower Paul Nee in February 2017. Nee was Biogen’s Director of Global Forecasting between 2012 and 2015. He filed his lawsuit under the False Claims Act, which enables tipsters to receive up to 30 percent of any recoveries resulting from their information. Nee will receive a $3.96 million whistleblower reward.
Biogen allegedly used two foundations as “conduits to pay the copay obligations of Medicare patients to induce those patients to purchase Medicare-reimbursed Avonex and Tysabri.” Biogen allegedly transferred individuals from its free drug program to the foundations, to find patients in need of prescriptions of the two multiple sclerosis drugs. Thus, the patients kept receiving free drugs, and Biogen paid Medicare copays through the foundations. The alleged misconduct took place between 2011 and 2013. Advanced Care Scripts (ACS) was allegedly involved in the scheme and has also agreed to a settlement.
According to First Assistant United States Attorney Nathaniel R. Mendell, “Biogen coordinated with ACS to game the foundation system by timing its payments to two foundations with its transfer of financially needy free drug patients, all so that Biogen could obtain significant financial rewards. By treating the foundations simply as conduits to pay the co-pays of its own patients, Biogen violated the anti-kickback statute and undermined Medicare’s co-pay structure.”
DOJ-Civil Division’s Acting Assistant Attorney Jeffrey Bossert said in a statement that the settlement with Biogen “demonstrates the government’s commitment to hold accountable companies that pay kickbacks to undermine important constraints on rising drug costs.”
A spokesperson for the HHS-Office of the Inspector General said the government will continue to hold pharmaceutical companies and pharmacies accountable “if they work together to subvert the charitable donation process and violate the prohibition on the payment of kickbacks.”