Recently, Gilead Sciences, Inc. reached a settlement agreement with the United States Department of Justice (DOJ) to resolve claims that it violated the False Claims Act by illegally using a foundation as a conduit to pay copays of thousands of Medicare patients.
According to the DOJ, from 2007 through 2010, Gilead made payments to Caring Voice Coalition (CVC), a 501(c)(3) foundation, which would then in turn, use those payments from Gilead to pay copays of patients who were prescribed Letairis, a drug approved for treatment of pulmonary arterial hypertension. The DOJ alleges that Gilead used the foundation and its copay assistance as a way to induce patients to purchase Letairis because Gilead knew the prices it had set for the drug could otherwise pose a cost barrier for patients trying to access the drug.
The government further alleged that in pursuit of this scheme, Gilead would routinely get data from CVC that detailed how much the foundation had spent for patients on Letairis and would then use that information to determine how much to pay the foundation. Gilead would also take the extra step and confirm that its payments were sufficient to cover the copays of patients taking Letairis – and only Letairis.
Going a step further, the government also alleged that Gilead would refer Medicare patients to the foundation, which helped to generate revenue from Medicare and induce further purchases of the drug, and also resulted in claims to Medicare to cover the cost of Letairis.
Not the First…Will it Be the Last?
To date, the Department of Justice has collected over $1 billion from eleven pharmaceutical companies (United Therapeutics, Pfizer, Actelion, Jazz, Lundbeck, Alexion, Astellas, Amgen, Sanofi, Novartis, and now Gilead) that allegedly used third-party foundations as kickback vehicles. The Department also has reached settlements with four foundations (Patient Access Network Foundation, Chronic Disease Fund, The Assistance Fund, and Patient Services, Inc.) and a pharmacy (Advanced Care Scripts, Inc.) that allegedly conspired or coordinated with pharmaceutical companies on these kickback schemes.
Gilead Reaction
In a statement, Gilead indicated that it does not believe it violated the law and “had no intention of doing so,” saying, “Gilead made its donations following guidance issued by the U.S. Department of Health and Human Services (HHS) that permits companies to make donations to assist patients with their required co-pays for medications.” At the close of its statement, Gilead renewed its commitment to “compliant charitable giving” and will continue working to “ensure that no patient is denied access to necessary medications due to financial considerations.”
Government Reaction
“Like its competitors, Actelion and United Therapeutics, Gilead used data from CVC that it knew it should not have, and effectively set up a proprietary fund within CVC to cover the co-pays of just its own drug,” said United States Attorney Andrew E. Lelling. “Such conduct not only violates the anti-kickback statute, it also undermines the Medicare program’s co-pay structure, which Congress created as a safeguard against inflated drug prices. During the period covered by today’s settlement, Gilead raised the price of Letairis by over seven times the rate of overall inflation in the United States.”
“Health care fraud costs our country tens of billions of dollars each year because of unscrupulous schemes like the one Gilead orchestrated that dangled kickbacks disguised as copay assistance in front of Medicare patients,” said Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigations, Boston Division. “Today’s $97 million settlement ensures Gilead pays for defrauding a government insurance program and reaffirms the FBI’s resolve to pursue investigations and exhaust all efforts to uncover these schemes.”