Pharmaceutical Manufacturer Agrees to Pay $12.6 Million to Resolve Allegations it Provided Kickbacks Through Donations to a Third-Party Charity
PHILADELPHIA—Acting United States Attorney Jennifer Arbittier Williams announced that Incyte Corporation, headquartered in Delaware, has agreed to pay $12.6 million to resolve allegations that it violated the False Claims Act by using a foundation as a conduit to pay the copays of Medicare and TRICARE patients taking Incyte’s drug Jakafi. TRICARE is the health care program for uniformed service members, retirees, and their families.
When a Medicare or TRICARE beneficiary obtains a prescription drug covered by a federal health care plan, the beneficiary may be required to make a partial payment, in the form of a copayment, coinsurance, or a deductible (collectively “copays”). Congress included copays in the 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 cannot offer or pay, directly or indirectly, any remuneration—which includes money or any other thing of value—to induce Medicare or TRICARE patients to purchase the company’s drugs. This prohibition includes the payment of patients’ copay obligations. Payment of those prescriptions in violation of the Anti-Kickback Statute leads to submission of false claims to Medicare and TRICARE and violations of the False Claims Act.
Incyte sells Jakafi, a medication approved to treat myelofibrosis in 2011 and approved to treat other disorders after 2014. Incyte allegedly was the sole donor to a fund that was opened by a nonprofit foundation in November 2011 to assist only myleofibrosis patients. After the fund opened, the government alleges that from November 2011 through December 2014, Incyte used its influence as the sole donor of the fund to have the foundation pay the copays of Medicare and TRICARE patients taking Jakafi that did not have myelofibrosis, and thus were not eligible for assistance from the fund. Incyte managers allegedly 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 their applications that were 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.
“Pharmaceutical companies cannot skirt the anti-kickback rules by disguising their inducements to federally-insured patients as charitable donations,” said Acting United States Attorney Jennifer Arbittier Williams. “This resolution shows our office’s continuing commitment to holding drug companies accountable for this conduct.”
“Protecting TRICARE is a top priority for the Defense Criminal Investigative Service (DCIS),” stated Special Agent in Charge Patrick J. Hegarty, DCIS Northeast Field Office. “Incyte’s false claims for ineligible patients compromised 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.”
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.) and was filed by Brian McCormick of Ross Feller Casey LLP in Philadelphia, PA.
“We thank the relator and relator’s counsel for their contributions to this case. Without information from citizens like the relator, detecting fraud and conserving government program funds would be much more difficult,” said Acting U.S. Attorney Williams.
The investigation was conducted by the Department of Defense Office of Inspector General and the U.S. Department of Health and Human Services Office of Inspector General. The investigation and resolution obtained in this action were handled by Assistant United States Attorneys Paul J. Koob and Matthew E.K. Howatt, Deputy Chief Charlene Keller Fullmer, and Auditor George Niedzwicki. This matter was handled in conjunction with the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section’s Senior Trial Counsel Jennifer Cihon.
The claims resolved by the settlement are allegations only and there has been no determination of liability.