A pharmaceutical company headquartered in Delaware has agreed to pay $12.6 million to resolve allegations that it violated the False Claims Act by paying kickbacks.

The settlement resolves allegations that Incyte Corporation purportedly used an independent foundation as a conduit to pay the copays of certain federal beneficiaries taking Incyte’s drug Jakafi, which was approved to treat myleofibrosis in 2011.

Specifically, Incyte was the sole donor to a fund that was opened in November 2011 to assist only myleofibrosis patients. After the fund opened, the government alleges that Incyte used the fund to pay the copays of federal beneficiaries taking Jakafi who were ineligible for assistance from the fund because they did not have myleofibrosis.

Incyte managers pressured the foundation, through phone calls and emails, to provide economic assistance to these ineligible patients, and Incyte’s contractor helped ineligible patients to complete applications submitted to the fund for assistance. The government alleges that through this conduct, Incyte caused false claims for Jakafi to be submitted to Medicare and TRICARE.

When a beneficiary obtains a prescription drug covered by Medicare or TRICARE, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance or a deductible. Congress included copay requirements in these federal programs, in part, to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs.

Under the Anti-Kickback Statute, a pharmaceutical company is prohibited from offering or paying, directly or indirectly, any remuneration – which includes money or any other thing of value – to induce federal beneficiaries to purchase the company’s drugs. This prohibition extends to the payment of patients’ copay obligations.

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Justin Dillon, a former compliance executive at Incyte. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned U.S. ex rel. Dillon v. Incyte Corp., No. 2:18 -cv-2642 (E.D. Pa.).

Dillon will receive approximately $3.59 million of the recovery.