Gilead Agrees to Pay $97 Million to Resolve Allegations that it Paid Kickbacks through a Co-Pay Foundation
To date, the U.S. Attorney’s Office has collected over $1 billion in settlements stemming from co-pay foundation kickback schemes
BOSTON – Pharmaceutical company Gilead Sciences, Inc. (Gilead), based in Foster City, Calif., has agreed to pay $97 million to resolve claims that it violated the False Claims Act by illegally using a foundation, Caring Voice Coalition (CVC), as a conduit to pay the Medicare co-pays for its own drug, Letairis.
When a Medicare beneficiary obtains a prescription drug covered by Medicare 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 (collectively, co-pays). 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.
As part of today’s settlement, the government alleged that Gilead used CVC, which claimed 501(c)(3) status for tax purposes, as a conduit to pay the co-pay obligations of thousands of Medicare patients taking Letairis, which is approved to treat pulmonary arterial hypertension (PAH). According to the government’s allegations, Gilead used CVC to cover the patients’ co-pays in order to induce those patients’ purchases of Letairis. Gilead knew that the prices it set for Letairis otherwise could have posed a barrier to those purchases.
The government specifically alleged that, from June 15, 2007, through Dec. 31, 2010, Gilead routinely obtained data from CVC detailing how many Letairis patients CVC had assisted, how much CVC had spent on those patients, and how much CVC expected to spend on those patients in the future. Gilead allegedly received this information through funding requests, telephone calls, and written reports. Gilead then used this information to budget for future payments to CVC to cover the co-pays of patients taking Letairis, but not of patients taking other manufacturers’ PAH drugs. The government alleged that Gilead engaged in this practice even though it knew it should not receive or use data concerning CVC’s expenditures on co-pays for Letairis. The government also alleged that, to generate revenue from Medicare, Gilead referred Medicare patients to CVC, which resulted in claims to Medicare to cover the cost of Letairis.
“Like its competitors, Actelion and United Therapeutics, Gilead used data from CVC that it knew it should not have, and effectively set up a proprietary fund within CVC to cover the co-pays of just its own drug,” said United States Attorney Andrew E. Lelling. “Such conduct not only violates the anti-kickback statute, it also undermines the Medicare program’s co-pay structure, which Congress created as a safeguard against inflated drug prices. During the period covered by today’s settlement, Gilead raised the price of Letairis by over seven times the rate of overall inflation in the United States.”
“This settlement, like prior settlements concerning similar misconduct, demonstrates the government’s commitment to hold accountable companies that pay illegal kickbacks, whether directly or through a third party,” said Acting Assistant Attorney General Jeffrey Bossert Clark of the Department of Justice’s Civil Division. “We will not permit pharmaceutical manufacturers to set unaffordable drug prices while circumventing important cost-control mechanisms within the Medicare program.”
“When pharmaceutical companies deceitfully employ the charitable donation process as an instrument to subsidize copays for their own drugs, it subverts a critical safeguard against the excessive inflation of drug costs,” said Phillip M. Coyne, Special Agent in Charge, Office of the Inspector General of the Department of Health and Human Service’s Boston Regional Office. “Manipulation of this process threatens the integrity of our federal healthcare system, disregarding the American taxpayer who ultimately bears the cost. As such, we remain vigilantly focused on confronting this type of conduct and will continue our aggressive enforcement in this area.”
“Health care fraud costs our country tens of billions of dollars each year because of unscrupulous schemes like the one Gilead orchestrated that dangled kickbacks disguised as copay assistance in front of Medicare patients,” said Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigations, Boston Division. “Today’s $97 million settlement ensures Gilead pays for defrauding a government insurance program and reaffirms the FBI’s resolve to pursue investigations and exhaust all efforts to uncover these schemes.”
To date, the Department of Justice has collected over $1 billion from eleven pharmaceutical companies (United Therapeutics, Pfizer, Actelion, Jazz, Lundbeck, Alexion, Astellas, Amgen, Sanofi, Novartis, and Gilead) that allegedly used third-party foundations as kickback vehicles. The Department also has reached settlements with four foundations (Patient Access Network Foundation, Chronic Disease Fund, The Assistance Fund, and Patient Services, Inc.) and a pharmacy (Advanced Care Scripts, Inc.) that allegedly conspired or coordinated with pharmaceutical companies on these kickback schemes.
U.S. Attorney Lelling, Acting Assistant Attorney General Clark, HHS-OIG SAC Coyne and Boston FBI SAC Bonavolonta made the announcement today. The matter was handled by Assistant U.S. Attorneys Gregg Shapiro and Abraham George of Lelling’s Affirmative Civil Enforcement Unit, and Trial Attorneys Sarah Arni and Augustine Ripa of the Department of Justice’s Civil Division.