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Justice News

Department of Justice
U.S. Attorney’s Office
District of Massachusetts

FOR IMMEDIATE RELEASE
Wednesday, November 20, 2019

Third Foundation Resolves Allegations that it Conspired with Pharmaceutical Companies to Pay Kickbacks to Medicare Patients

BOSTON – The U.S. Attorney’s Office announced today that The Assistance Fund (“TAF”), a foundation based in Orlando, Fla., has agreed to pay $4 million to resolve allegations that it violated the False Claims Act by enabling certain pharmaceutical companies to pay kickbacks to Medicare patients taking the companies’ drugs.

TAF operated a fund that was ostensibly for any Medicare patient with multiple sclerosis (MS). The government alleged, however, that TAF conspired with three MS drug manufacturers so that the fund functioned as a conduit for money from those manufacturers to patients taking their MS drugs.  The conspiracy enabled the pharmaceutical companies to ensure that Medicare patients did not consider the high costs that the companies charged for their MS drugs. The conspiracy also minimized the possibility that the companies’ money would go to patients taking competing MS drugs made by other companies.

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 (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. The law further prohibits third parties, such as co-pay foundations, from conspiring with pharmaceutical companies to violate the Anti-Kickback Statute.

“Pharmaceutical companies and foundations cannot undermine the Medicare program through the use of kickbacks disguised as routine charitable donations. TAF operated as a vehicle for specific pharmaceutical companies to pay kickbacks at the ultimate expense of the American taxpayers who support the Medicare program,” said United States Attorney Andrew E. Lelling. “We will continue to pursue this kind of enforcement until the practice disappears.”

“TAF cared more about helping its big pharma donors make money than about helping individual patients in need of life changing assistance. The FBI is proud to be a part of the investigation that brought TAF’s corrupt practices to light, and we will continue to seek justice against any person or entity involved in such schemes,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division.

“Foundations that coordinate with pharmaceutical company donors to benefit the donors are not operating independently to equitably benefit needy patients,” said Gregory E. Demske, Chief Counsel to the Inspector General.  “Our Integrity Agreements promote independence between foundations and their donors and require the foundations to provide assistance to eligible patients on a first-come, first-served basis.” 

The United States alleged that TAF conspired with three MS drug manufacturers – Teva, Biogen, and Novartis – to enable them to pay kickbacks to Medicare patients taking their drugs. Details of the alleged conduct can be found in attached addendum.

The amount of the settlement announced today was determined based on analysis of TAF’s ability to pay after review of its financial condition.

TAF entered a three-year Integrity Agreement (IA) with HHS-OIG as part of the settlement. The IA requires, among other things, that TAF implement measures designed to ensure that it operates independently and that its arrangements and interactions with pharmaceutical manufacturer donors are compliant with the law. In addition, the IA requires compliance-related certifications from TAF’s Board of Directors and detailed reviews by an independent review organization.

TAF is the third foundation to settle allegations of kickbacks. In total, the three foundations (TAF, Chronic Disease Fund, and Patient Access Network Foundation) have paid $10 million. In addition, the United States has collected more than $840 million in total from eight pharmaceutical companies (United Therapeutics, Pfizer, Actelion, Jazz, Lundbeck, Alexion, Astellas and Amgen) to resolve allegations that they used third-party foundations as instruments for kickbacks.

U.S. Attorney Lelling, HHS-OIG Chief Counsel Demske and FBI SAC Bonavolonta made the announcement today. The U.S. Postal Inspection Service also assisted with the investigation. The matter was handled by Assistant U.S. Attorneys Gregg Shapiro and Abraham George, of Lelling’s Affirmative Civil Enforcement Unit, with assistance from Trial Attorney Douglas Rosenthal, of the Department of Justice’s Civil Division.

ADDENDUM

TAF’s solicitation and receipt of payments from Teva that correlated with TAF’s spending on Copaxone renewal patients. Teva sells Copaxone, and TAF’s MS fund provided grants to cover Medicare co-pays for patients taking Copaxone. TAF’s MS fund also provided grants to cover Medicare co-pays for patients taking other MS drugs, such as Avonex and Tysabri, which Biogen sells, and Gilenya, which Novartis sells. In the month of December prior to each of the years 2011-2015, TAF conveyed to Teva how much money TAF’s MS fund needed to renew co-pay grants for the fund’s existing Copaxone patients in the upcoming year. In order to determine these amounts, which ranged from over $18 million to over $30 million per year, TAF multiplied the number of Copaxone patients in the fund by the fund’s average grant amount, and then added the cost of TAF’s administrative fee. TAF understood that Teva knew how TAF was calculating the amounts of these funding requests, and that, accordingly, Teva was using TAF’s MS fund as a conduit to cover Medicare co-pays for Copaxone patients.

TAF’s practice of not maintaining wait lists and its coordination of the openings of the MS fund with Teva, Biogen, and Novartis. During the period from 2011-2014, TAF’s MS fund frequently ran out of funding and was closed to new patients. If any patients applied for co-pay assistance at that time, TAF did not maintain a wait list of such patients. As a consequence, whenever TAF’s MS fund received a payment and opened to new patients, the fund provided grants to the patients who applied immediately after the opening and did not provide grants to patients who had sought to apply earlier, but at a time when the fund was closed. As described further below, TAF’s practice of not maintaining wait lists enabled TAF to coordinate with Teva, Biogen, and Novartis to ensure that TAF used the companies’ funding to cover the co-pays of patients taking their respective drugs.

TAF’s coordination with Teva. During the period from 2011 to 2014, Teva not only made large payments to TAF’s MS fund to cover the renewal of grants for Copaxone patients at the beginning of each year, Teva also made numerous smaller payments, typically less than $3 million each, to TAF’s MS fund at subsequent times during each year. In conjunction with each of these smaller payments, TAF coordinated with Teva and Teva’s vendor, Advanced Care Scripts (“ACS”), to ensure that Copaxone patients received a disproportionate share of the grants from the fund during each window when the fund opened after a Teva payment. Each time that Teva was prepared to make a payment, TAF understood that ACS had told Teva how many Copaxone patients were awaiting assistance. Meanwhile, TAF had told Teva the average MS fund grant amount at the time of the payment. TAF knew that Teva was multiplying the average grant amount by the number of waiting Copaxone patients to determine the amounts Teva would pay to TAF’s MS fund. TAF further knew that, whenever Teva made a payment to TAF’s MS fund and the fund opened, ACS immediately would send a “batch file” of Medicare co-pay assistance applications for Copaxone patients. As a result, each time TAF’s MS fund opened after one of Teva’s post-January payments during this period, Copaxone patients received a substantial majority of the grants that the fund provided, even though Copaxone accounted for much less than a majority of the overall MS drug market. Further, TAF maintained a “portal” that gave ACS real-time access to the enrollment status of the patients ACS referred; the portal, as TAF knew, enabled ACS to update Teva on the number of Copaxone patients who had received grants from TAF’s MS fund.

TAF’s coordination with Biogen. Biogen made payments to TAF’s MS fund on May 24 and July 17, 2012, as part of a coordinated effort by TAF and Biogen to use Biogen’s money to cover Medicare co-pays for Tysabri patients. TAF knew that, when the fund opened after each of these two Biogen payments, ACS immediately would send a “batch file” of Medicare co-pay assistance applications for Tysabri patients. As a result, when TAF’s MS fund opened after Biogen’s payments on May 24 and July 17, 2012, Tysabri patients received a disproportionate share of the grants that the fund provided. During the course of this scheme, a TAF co-founder e-mailed a Biogen vice president and referred to the scheme as the “TYS[abri] project.” The e-mail confirmed that the scheme had succeeded in funneling money from Biogen to Tysabri patients through TAF’s MS fund. 

TAF’s coordination with Novartis. Beginning in October 2012, TAF and Novartis began to coordinate on a means of ensuring that Novartis’s next payment to TAF’s MS fund would go almost exclusively to Gilenya patients. Ultimately, TAF and Novartis agreed that Novartis would pay TAF’s MS fund $1,418,000 and that TAF would open the fund at 6:00 p.m. on Friday, December 14, 2012. At the time, TAF knew that Novartis had arranged for staff from Novartis’s vendor, Express Scripts, to work overtime that night and the following morning to refer Gilenya patients to TAF’s MS fund for Medicare co-pay assistance. Express Scripts and TAF referred to this effort as their “12/15 Saturday project.” TAF knew that the timing of the opening of the fund, and the readiness of Express Scripts to submit applications on behalf of Gilenya patients at that time, would result in Gilenya patients receiving a disproportionate share of the grants from the fund while it was open. After the fund closed on Saturday, December 15, 2012, TAF confirmed that, during the brief period the fund had been open, TAF used Novartis’s money to provide Medicare co-pay grants to 374 Gilenya patients and 6 non-Gilenya patients for 2013.

TAF’s discrimination against Tysabri patients in 2014. In late December 2012, Biogen provided TAF’s MS fund with funding that TAF understood was to cover grant renewals in 2013 for patients on Biogen’s MS drugs, Tysabri and Avonex. During 2013, TAF applied that Biogen funding to grants for patients on those two Biogen drugs. In late 2013, TAF learned that Biogen did not intend to support TAF’s MS fund for 2014. At the time, TAF also knew that the Medicare co-pay for Tysabri was significantly higher than the Medicare co-pays for the other MS drugs TAF’s MS fund covered. Because Biogen would not support TAF’s MS fund in 2014, and because the co-pays for Tysabri were higher than for other MS drugs, TAF decided not to renew co-pay assistance grants to a number of Tysabri patients in 2014. This thereby increased the available funding for assistance to patients taking drugs made by companies such as Teva that were continuing to finance TAF’s MS fund.

 

Topic(s): 
Health Care Fraud
Component(s): 
Updated November 20, 2019