In a recently announced settlement, Actelion Pharmaceuticals US, Inc. has agreed to pay $360 million to resolve allegations that the pharmaceutical company illegally made payments in 2014 and 2015 to a fund set up by Caring Voice Coalition that was meant to assist Medicare patients taking its pulmonary arterial hypertension drugs.

When a Medicare beneficiary receives a prescription drug covered by Medicare, the beneficiary may be required to make a partial payment referred to as a “copay”.  Expensive medications might carry substantial copay obligations. Congress included copay requirements in the Medicare program, 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 to induce Medicare patients to purchase the company’s drugs.

Actelion sells a variety of pulmonary arterial hypertension drugs including Tracleer, Ventavis, Veletri, and Opsumit (the “Subject Drugs”). The government alleged that the pharmaceutical company used a foundation, Caring Voice Coalition, as a conduit to pay the copay obligations of thousands of Medicare patients taking the Subject Drugs. Actelion knew this particular class of drugs might pose a financial burden, and used the foundation as a means to induce patients to purchase them. The pharmaceutical company allegedly obtained data from the foundation detailing how much the foundation had spent for patients on each Subject Drug; and from 2014 to 2015, it used this information to decide how much to donate in order to sufficiently cover the copays of only patients taking the Subject Drugs. The Government further alleged that Actelion engaged in this practice even though the foundation had warned the company against receiving such information.  Meanwhile, Actelion had a policy of not accepting Medicare patients to participate in its free drug program, even if those Medicare patients could not afford their copays for the Subject Drugs. In order to generate revenue from Medicare and induce purchases of the Subject Drugs, Actelion allegedly referred such Medicare patients to the foundation, which allowed the patients copays to be paid and resulted in claims to Medicare for the remaining cost.

Healthcare fraud can come in many different forms and remains one of the most active areas of false claims litigation. The False Claims Act has been an important tool in the fight against government programs fraud since it was first enacted to combat war profiteering during the Civil War. But the system depends on whistleblowers telling their story with the help of an experienced False Claims Act attorney.

“Using data from CVC that it knew it should not have, Actelion effectively set up a proprietary fund to cover the co-pays of just its own drugs,” said United States Attorney Andrew E. Lelling for the District of Massachusetts in a press release. As he explained, “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, Actelion raised the price of its main PAH drug, Tracleer, by nearly 30 times the rate of overall inflation in the United States.”