Drug Company Lundbeck Settles Charity Probe for $52.6M

Just weeks after drugmaker Pfizer announced that it would pay millions of dollars to settle a charity investigation, the Justice Department has reached a tentative agreement with another drug company: H. Lundbeck A/S.

The Danish drugmaker, which develops drugs for psychological and neurological illnesses, announced that its U.S. subsidiary Lundbeck LLC reached an agreement in principle to settle the U.S. DOJ’s investigation into its relationship with and donations to charitable foundations. The deal would require the company to pay $52.6 million, but Lundbeck will not admit fault.

The deal is subject to further negotiation.

Lundbeck is the latest drug company to settle an investigation with the DOJ over donations and relationships with charitable foundations that assist patients in paying for out-of-pocket drug costs. It is illegal for drug companies to subsidize co-payments for patients enrolled in Medicare. Companies can donate to charities that offer co-pay assistance provided that the charities remain independent.

In Lundbeck’s most recent annual report, the company announced that it had been subpoenaed in May 2016 by the U.S. Attorney’s Office in Boston. The subpoena was part of an ongoing investigation into marketing practices and charity groups.

Pfizer announced last month that it had reached an agreement to pay $23.8 million to settle the investigation. It was alleged that Pfizer used a purportedly independent charity to act as a conduit to pay kickbacks to Medicare patients.

Jazz Pharmaceuticals said they reached an agreement worth $57 million. Late last year, United Therapeutics agreed to pay $210 million to resolve its probe. The company was accused of improperly using a charity to cover co-payments.

In a press release, Lundbeck said the charge would be listed as Other operating items as part of the second quarter.

Authorities are looking into at least one charity. Last year, Good Days was investigated by the IRS to determine whether it was being used as a conduit for the drug industry to increase sales.