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.
Today’s settlement resolves allegations that, from November 2011 through December 2014, 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.
“Drug companies undermine the integrity of federal health care programs and contribute to rising drug costs when they illegally use foundations to cover patients’ costs for their own drugs,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “This resolution reflects the government’s continuing commitment to hold pharmaceutical companies accountable for this conduct.”
“Pharmaceutical companies cannot skirt the anti-kickback rules by disguising their inducements to federally-insured patients as charitable donations,” said Acting U.S. Attorney Jennifer Arbittier Williams for the Eastern District of Pennseylvania. “This resolution shows our office’s continuing commitment to holding drug companies accountable for this conduct.”
“Protecting TRICARE, the health care system for U.S. military members and their dependents, is a top priority for the Defense Criminal Investigative Service (DCIS),” said Special Agent in Charge Patrick J. Hegarty of the DCIS Northeast Field Office. “Submitting false claims for ineligible patients compromises the integrity of the TRICARE program. Today's settlement is the result of a joint effort with the U.S. Attorney’s Office, DOJ Civil Frauds, and HHS-OIG, and it demonstrates our ongoing commitment to work with our law enforcement partners to investigate those who engage in health care fraud.”
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 (collectively “copays”). 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.
The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Eastern District of Pennsylvania, with assistance from the U.S. Department of Health and Human Services Office of Inspector General, the Department of Defense Office of Inspector General, and the Office of Personnel Management Office of the Inspector General.
The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
The matter was investigated by Senior Trial Counsel Jennifer Cihon of the Civil Division’s Commercial Litigation Branch, Fraud Section, and Assistant U.S. Attorneys Paul Koob and Matthew Howatt and Auditor George Niedzwicki of the U.S. Attorney’s Office for the Eastern District of Pennsylvania.
The claims resolved by the settlement are allegations only and there has been no determination of liability.