Actelion Pharmaceuticals, a division of Johnson & Johnson, has agreed to pay $360 million to settle kickback claims. The company allegedly used a foundation illegally to pay copay payments for Medicare patients who were taking the company’s pulmonary arterial hypertension (PAH) drugs.
The U.S. Department of Justice (DOJ) says the illegal use of the foundation to cover copay costs violates the False Claims Act. The law prevents pharmaceutical companies from financing coverage of copay payments.
Actelion, according to the DOJ, used the non-profit foundation “as an illegal conduit to pay the copay obligations of thousands of Medicare patients” who were taking Ventavis, Traceleer, Opsumit, Veletri and other drugs.
The Department of Justice said Acetlion had a policy of not allowing Medicare patients to participate in its free drug program, even if the patients could not afford their copays for the PAH drugs. The free drug program, however, was open to other patients.
To generate revenue from Medicare and sales for their PAH drugs, the government says Actelion referred patients to the non-profit foundation. The strategy allowed the patients’ copays to be covered and claims sent to Medicare for the remaining cost.
U.S. Attorney Andrew E. Lelling said that Acetlion “effectively set up a proprietary fund” to cover copays of its drugs. Lelling said Actelion’s strategy violated the False Claims Act and undermined the Medicare copay structure.
During the time covered in the settlement, Actelion also raised the price of its main PAH drug by 30 times the rate of overall inflation in the U.S.
Assistant Attorney General Jody Hunt of the DOJ’s Civil Division said the $360 million settlement sends a message that the government will hold pharmaceutical companies accountable for participating in illegal kickback schemes.
“Pharmaceutical companies cannot increase drug prices while engaging in conduct designed to defeat mechanisms put in place to check such prices and then expect Medicare to pay for the ballooning costs,” said Hunt in a statement.