Pharma Insiders Expose Medicare Fraud Involving Illegal Kickbacks

Patient Services, Inc. (PSI) will pay $3 million to resolve allegations that it illegally funneled Medicare copay reimbursements to benefit Insys, Aegerion, and Alexion. The three pharmaceutical companies allegedly used PSI to cover copays that enabled Medicare beneficiaries to cover out-of-pocket costs for their drugs.

The alleged misconduct came to light in a series of whistleblower lawsuits, which have already led to settlements amounting to hundreds of millions of dollars. Over the last few years, the DOJ has uncovered numerous illegal kickback schemes involving fraudulent contributions by Big Pharma to copay assistance charities.

Patient Services purportedly helps patients cover copays for pricey prescription drugs. These types of charities have often been used to abuse the system. Pharmaceutical companies inflate drug prices and make “charitable donations” (illegal copayments in disguise), which enable them to collect millions of dollars in Medicare reimbursements.

According to the Office of the Inspector General, “Where a manufacturer patient assistance program (“PAP”) offers subsidies tied to the use of the manufacturer’s products (often expensive drugs used by patients with chronic illnesses), the subsidies present all the usual risks of fraud and abuse associated with kickbacks, including steering beneficiaries to particular drugs; increasing costs to Medicare; providing a financial advantage over competing drugs; and reducing beneficiaries’ incentives to locate and use less expensive, equally effective drugs.”

Prosecutors said PSI could have been liable for tens of millions of dollars, but the DOJ settled at $3 million after reviewing the company's financial situation. In previous cases involving PSI and illegal kickbacks, pharmaceutical whistleblowers have received awards amounting to millions of dollars for their roles in exposing Medicare fraud. Insys, Aegerion, and Alexion have paid hundreds of millions of dollars to settle these whistleblower cases.

Insys allegedly funneled copayments for its opioid painkiller Subsys through PSI's “Breakthrough Cancer Pain” fund, which boasted no other donors. According to prosecutors, the fund systematically covered Subsys copays for patients who had no cancer diagnosis.

The DOJ stated that Aegerion collaborated with PSI to create another fund to subsidize its homozygous familial hypercholesterolemia treatment, Juxtapid. PSI also created a Complement Mediated Diseases (CMD) fund to assist Medicare beneficiaries with copayments for Alexion's drug Soliris, a treatment for paroxysmal nocturnal hemoglobinuria. In this case, the CMD allegedly received 'donations' from the drug's manufacturer.

A spokesperson for the FBI, which played a key role in the investigation, said in a statement,

“Few things undermine public confidence quite like finding out the pharmaceutical companies and non-profits they entrust with their health and financial peace of mind have been playing fast and loose with the law. Schemes like these, and the individuals and organizations who perpetrate them, are an affliction on our health care systems. This settlement demonstrates the FBI’s resolve to ensure that patients receive care that is based solely on sound medical judgment, and not compromised by kickbacks.”

The False Claims Act enables whistleblowers with original information about Medicare fraud to receive awards ranging from 15 to 30 percent of the government's recoveries. To be eligible for an award, whistleblowers must enlist an attorney and file an FCA complaint featuring as much detail as possible about when and how the misconduct occurred.


Medicaid Fraud Hotline: 888.742.7248 or Report Online
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