Amgen and Astellas pay $125.75 Million to Settle Allegations of Providing Illegal Kickbacks Through Patient Assistance Programs

On April 25, 2019,  Astellas Pharma US Inc. (“Astellas”) and Amgen Inc. (“Amgen”) agreed to pay a combined $125.75 million to resolve False Claims Act (“FCA”) allegations that they each paid illegal kickbacks to Medicare patients using copay assistance foundations as conduits. The Astellas drug involved in the allegations is Xtandi, used to treat prostate cancer. The Amgen drugs involved in the allegations are Sensipar, used to treat secondary hyperparathyroidism, and Kyprolis, used to treat multiple myeloma.

These cases relate to charity patient assistance programs (“PAPs”), which are foundations that provide financial assistance to patients who cannot afford their cost-sharing obligations (i.e., copays) for prescription drugs. The Department of Health and Human Services (“HHS”) has issued two advisory bulletins – the first in 2005 and a supplement in 2014 – that address how beneficiaries of Federal health care programs can lawfully receive assistance from these programs. The HHS recognizes that PAPs provide an important safety net to patients, but points out that “[m]any PAPs also present a risk of fraud, waste, and abuse with respect to Medicare and other Federal health care programs.” Specifically, the concern is that the availability of copay assistance will induce a patient to use a certain prescription drug, the cost of which will then be reimbursed by Medicare. This then constitutes an illegal kickback under the FCA, which prohibits the payment of remuneration “purposefully to induce or reward referrals of items or services payable by a Federal health care program.”

In the 2005 and 2014 advisory bulletins, HHS provides guidance on how PAPs can lawfully provide assistance to beneficiaries of Federal health care programs. The guidance states that pharmaceutical companies can “effectively contribute to the safety net by making cash donations to independent, bona fide” PAPs. The HHS guidance provides a number of factors that are necessary for properly structured PAPs, with many of those factors centering around the independence of the charity. HHS specifically prohibits against PAPs that establish “narrowly defined disease funds … covering a limited number of drugs within those funds,” and further, that “PAP[s] must not function as a conduit for payments or other benefits from the … manufacturers to patients and must not impermissibly influence … drug choices.”

In this case, the DOJ alleged that Astellas and Amgen “conspired with two copay foundations to create funds that functioned almost exclusively to benefit patients taking Astellas and Amgen drugs.” As a result, the companies’ payments to the PAP foundations were kickbacks in violation of the FCA. In the case of Astellas, the DOJ specifically alleged that Astellas worked with two copay foundations to provide assistance to patients taking Xtandi, but not for other prostate cancer drugs. The DOJ also alleged that Astellas promoted the Xtandi copay assistance program to health care providers in an effort to induce the providers to prescribe Xtandi. In the case of Amgen, the DOJ similarly alleged that Amgen worked with PAP foundations to provide assistance to multiple myeloma patients only taking Kyprolis, or to secondary hyperparathyroidism patients only taking Sensipar.

To resolve the cases, Amgen and Astellas agreed to pay a combined $124.75 million in fines, and each entered into Corporate Integrity Agreements (“CIA”s) with the OIG, but did not admit to wrongdoing. The CIAs, each of which are for a term of five years, require the companies to “implement measures, controls, and monitoring designed to promote independence” from PAPs to which they donate – that is, they have to comply with the 2005 and 2014 HHS advisory bulletin requirements. In addition, the companies agreed to “implement risk assessment programs and to obtain compliance-related certifications from company executives and Board members.” However, had the companies simply followed the 2005 and 2014 advisory bulletins guidance to begin with, they would not have found themselves in trouble with HHS.

The Amgen and Astellas settlements and Corporate Integrity Agreements will be explored in depth in an upcoming issue of Policy and Medicine Compliance Update.