Two large drugmakers will pay the government almost $125 million in settlements around allegations that they illegally covered Medicare copays for their drugs through purportedly independent nonprofit foundations.
The Department of Justice said Thursday that Thousand Oaks, California-based Amgen and Japanese drugmaker Astellas would pay a combined $124.75 million to settle the allegations, including $100 million from Astellas and $24.75 million from Amgen. The deal follows similar settlements the department reached on April 4 with Danish drugmaker Lundbeck, Dublin-headquartered Jazz Pharmaceuticals and New Haven, Connecticut-based Alexion Pharmaceuticals, with those three companies agreeing to pay a total of $122.6 million.
While copay assistance programs are common, particularly for drugs for which patients must pay high out-of-pocket costs, the Department of Justice alleges that all five companies approached foundations and made deals whereby they would create new copay assistance programs the companies would fund, which would then exclusively or almost exclusively cover the companies’ own drugs, not competitors’ products. The Anti-Kickback Statute prohibits drugmakers from offering or paying any remuneration to induce Medicare patients to purchase its drugs, including paying patients’ copays.
In a statement Thursday, Astellas denied any wrongdoing, while Alexion acknowledged its settlement on April 4. Jazz Pharmaceuticals also denied any wrongdoing in an April 4 Securities and Exchange Commission filing acknowledging its settlement with the department.
The drugs involved were Astellas’ Xtandi (enzalutamide) for prostate cancer; Amgen’s Sensipar (cinacalcet) for hyperparathyroidism and Kyprolis (carfilzomib) for multiple myeloma; Jazz’s Xyrem (sodium oxybate) for narcolepsy and Prialt (ziconotide) for severe chronic pain; Lundbeck’s Xenazine (tetrabenazine) for chorea associated with Huntington’s disease; and Alexion’s Soliris (eculizumab) for paroxysmal nocturnal hemoglobinuria and atypical hemolytic uremic syndrome.
“When pharmaceutical companies use foundations to create funds that are used improperly to subsidize the copays of only their own drugs, it violates the law and undercuts a key safeguard against rising drug costs,” Assistant Attorney General Jody Hunt said in a statement. “These enforcement actions make clear that the government will hold accountable drug companies that directly or indirectly pay illegal kickbacks.”
Lundbeck also allegedly referred patients without Huntington’s disease to the same foundation, which then covered Xenazine copays for uses not approved by the Food and Drug Administration. The foundation then decided in June 2014 that the fund would no longer cover the drug for non-Huntington’s patients, and it allegedly began paying for off-label uses out of a new “general fund.”
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