Recently, the United States Attorney’s Office for the District of Massachusetts filed a complaint under the False Claims Act (FCA) against Teva Pharmaceuticals USA, Inc. and Teva Neuroscience, Inc., the makers of Copaxone, a drug used to treat multiple sclerosis (MS).
Complaint
According to the complaint, Teva conspired with a specialty pharmacy – Advanced Care Scripts, Inc. (ACS) – and two independent foundations – Chronic Disease Fund (CDF) and The Assistance Fund (TAF) – to violate the Anti-Kickback Statute and FCA by using the foundations as conduits to subsidize Medicare copays for Copaxone, while continuing to raise the price of the drug.
The government alleges that from 2006 through at least 2015, Teva paid CDF and TAF tens of millions of dollars annually (totaling more than $300 million during the covered period) with the intent (and understanding) that the foundations would use those “donations” to cover Medicare copays of patients taking Copaxone. In the complaint, the government also takes issue with the fact that during that same time period, Teva raised the price of Copaxone from roughly $17,000 to more than $73,000 annually. However, because of the “charitable donations” that covered Medicare patient copays, Medicare patients and their doctors had no reason to consider the increasing cost and whether to continue using the drug or switch to something more affordable. This meant that Medicare was often being saddled with increasing drug costs for Copaxone.
When it comes to the scheme, according to the complaint, Teva referred most of its Copaxone patients with Medicare copays to ACS, who in turn, arranged for the patients to obtain Medicare copay coverage from either CDF or TAF. ACS would regularly report to Teva how many Copaxone patients were receiving copay assistance from each foundation. Then, at the end of every year, Teva would use that information to determine how much money to “donate” to each charity the following year to cover the Medicare copays of existing Copaxone patients.
Additionally, at the beginning of each new year when the foundations’ MS funds were usually closed to new patients due to funding allocations already being made, ACS would allegedly provide periodic reports to Teva on the number of new Copaxone patients waiting for Medicare copay assistance. Once the list of patients awaiting assistance grew to a significant number, Teva would send a payment to the foundation that covered the patient copays (calculated by multiplying the number of waiting patients by the average grant for Copaxone patients) and the foundation’s nine percent administrative fee. Just before Teva sent the payment in, it would alert ACS, which would then send over a batch of applications to the foundation for the waiting Copaxone patients. This ensured that the foundation would act on those applications as soon as the fund re-opened with additional funding and resulted in Copaxone patients receiving the vast majority of the copay grants made by the foundation when the MS funds were reopened with money from Teva.
The complaint does indicate that Teva did have a special review process for charitable donations, but that review process was not used when payments were made to CDF and TAF.
The filed complaint was accompanied by forty-nine exhibits, an unusually high number of exhibits to be filed with an FCA and Anti-Kickback case.
Reactions
“The government’s complaint today alleges that Teva used ostensibly independent charitable foundations as vehicles to pay hundreds of millions of dollars in kickbacks, all while raising the price of its drug, Copaxone, at a rate over 19 times the rate of inflation,” said Andrew E. Lelling, United States Attorney for the District of Massachusetts. “Teva’s alleged kickbacks undermined the Medicare program’s co-pay structure, which Congress created as a safeguard against inflated drug prices.”
Teva has said it will vigorously defend itself, saying the lawsuit “only seeks to further restrict patients’ access to important medicines and healthcare.”
The government is seeking treble damages, restitution, and civil penalties against Teva. This suit against Teva follows settlement agreements made with ACS ($3.5 million), TAF ($4 million), and CDF ($2 million).