Actelion Pharmaceuticals US, Inc., has agreed to pay $360 million to resolve allegations that it violated the False Claims Act by paying kickbacks to Medicare patients through a purportedly independent charitable foundation.

When a Medicare beneficiary obtains a prescription drug covered by Medicare Part B or Part D, the beneficiary may be required to make a partial payment, which may take the form of a co-payment, co-insurance, or deductible. These co-pay obligations may be substantial for expensive medications.

Congress included co-pay requirements in these programs, in part, to encourage market forces to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs.

The Anti-Kickback Statute prohibits pharmaceutical companies from offering or paying, directly or indirectly, any remuneration – which includes money or any other thing of value – to induce Medicare patients to purchase the companies’ drugs.

Prosecutors alleged that Actelion used a foundation as a conduit to pay the co-pay obligations of thousands of Medicare patients taking Actelion’s PAH drugs. By doing so, the government alleged, Actelion was able to induce patients to purchase its drugs when the prices Actelion had set for those drugs otherwise could have posed a barrier to purchases.

The government alleges that Actelion routinely obtained data from the foundation detailing how many patients on each Actelion drug the foundation had assisted, how much the foundation had spent on those patients, and how much the foundation expected to spend on those patients in the future.

Actelion used this information to budget for future payments to the foundation on a drug-specific basis and to confirm that its contribution amounts to the foundation were sufficient to cover the copays of patients taking Actelion’s drugs, but not of patients taking other manufacturers’ PAH drugs.

Actelion engaged in this practice even though the foundation warned the company against receiving data concerning the foundation’s expenditures on copays for Actelion’s drugs.

Meanwhile, the government also alleged that Actelion had a policy of not permitting Medicare patients to participate in its free drug program, which was open to other financially needy patients, even if those Medicare patients could not afford their copays for Actelion’s drugs. Instead, to generate revenue from Medicare and induce purchases of its drugs, the government alleged that Actelion referred such Medicare patients to the foundation, which allowed the patients’ copays to be paid and resulted in claims to Medicare for the remaining cost.  

On June 16, 2017, after the alleged conduct, Johnson & Johnson acquired Actelion. Johnson & Johnson was not involved, directly or indirectly, in the alleged conduct and the allegations above do not relate in any way to Johnson & Johnson.