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Back in May,
we wrote about substantial settlements totaling $125 million to
resolve Department of Justice (DOJ) allegations that money donated
by Astellas Pharma US, Inc. and Amgen Inc. to drug co-pay charities
constituted illegal kickbacks under the False Claims Act
(FCA). At the time, we noted that the settlements were the
seventh and eighth such resolutions in the District of
Massachusetts since December 2017, with a total settlement amount
of over $840 million. As we said at that time, these cases
arose out of the reality that, in certain situations, Medicare
recipients often have to pay for a portion of their prescription
drugs. The foundations in question provided assistance to
Medicare recipients to help pay those costs. According to the
government, the companies made donations to these co-pay
foundations, and the co-pay foundations, in turn, provided payment
assistance for drugs manufactured by the pharmaceutical
companies.
Since we wrote on this topic in May, DOJ's pursuits have
only continued, and now, it is the charities' turn. The
United States Attorney for the District of Massachusetts recently announced settlements totaling $6
million with two drug co-pay foundations. According to the
DOJ, the two charities – Patient Access Network Foundation
and Good Days – "functioned not as independent
charities, but as pass-throughs for specific pharmaceutical
companies to pay Medicare patients taking their drugs."
From the government's perspective, the illegality of this
arrangement is simple to explain: drug makers who sell to customers
on Medicare cannot line the pockets of those patients with cash
bonuses for buying drugs, and they also cannot get a third-party
charity to do it for them. But drug co-pay foundations serve
an important purpose in delivering needed medication to people who
cannot afford to pay, and drug companies are right to act
charitably towards arguably their most critical constituents, the
patients they serve. As one of the pharma companies said in
response to DOJ's announcement regarding the settlements with
co-pay foundations, the company "takes compliance very
seriously and believes all patients deserve access to
life-extending medicines prescribed by their physicians."
The lessons in these cases continue to be that it is not always
easy to spot what the government might later call fraud or illegal
kickbacks, and therefore, an ounce of competent advice going into
an arrangement is worth well more than the pounds of trouble an
organization may face if the government comes calling later
on. Indeed, the charities involved in this latest settlement
not only had to pay substantial cash amounts to resolve DOJ's
allegations, they now face three years of mandated "integrity
agreements," under which they have to take specific steps to
ensure relationships with drug companies comply with the law.
Better to get a dose of good advice ahead of time than to have
several years of government-mandated compliance monitoring down the
road.
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The New England Electricity Restructuring Roundtable has been meeting bimonthly since 1995 to discuss current topics related to important changes in the electric power industry in Massachusetts and throughout New England.
The New England Electricity Restructuring Roundtable has been meeting bimonthly since 1995 to discuss current topics related to important changes in the electric power industry in Massachusetts and throughout New England.
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