At the end of last year, Biogen, Inc. reached a $22 million settlement with the United States Department of Justice (DOJ) to resolve claims that it violated the False Claims Act and the Anti-Kickback Statute. According to the terms of the settlement, Biogen allegedly illegally used foundations to pay the copays of Medicare patients that were prescribed two of its multiple sclerosis (MS) drugs – Avonex and Tysabri.
The Anti-Kickback Statute prohibits companies from offering or paying (both directly and indirectly) any kind of remuneration to induce Medicare patients to purchase the company’s drugs. This includes paying copay obligations on behalf of patients.
According to the DOJ, Biogen employed a kickback scheme by using two 501(c)(3) foundations as channels to pay the copay obligations of Medicare patients, in an effort to induce those patients to purchase Avonex and Tysabri prescriptions. As part of the scheme, Biogen identified certain patients in its Avonex or Tysabri free drug program for Advanced Care Scripts (ACS). Biogen then worked with ACS to transfer these patients from the free drug program to the foundations, which received contemporaneous payments from Biogen and covered the costs of Medicare copays for most or all of these patients. Medicare would then pay the remaining portion of the patients’ Avonex or Tysabri prescription cost. The government alleged that Biogen engaged in this conduct in the first quarter of 2011 for certain Avonex patients, and in the second and third quarters of 2012 and 2013 for certain Tysabri patients.
ACS has agreed to pay $1.4 million for its involvement, as outlined above. Biogen has denied any wrongdoing and has said that the payments were legitimate donations to the foundations. “Biogen continues to believe that independent charitable assistance programs help patients lead healthier lives,” Biogen said in a statement. “Donations to these organizations provide significant assistance to patients with their copayments for prescriptions.”
“Biogen coordinated with ACS to game the foundation system by timing its payments to two foundations with its transfer of financially needy free drug patients, all so that Biogen could obtain significant financial rewards,” said First Assistant United States Attorney Nathaniel R. Mendell. “By treating the foundations simply as conduits to pay the co-pays of its own patients, Biogen violated the anti-kickback statute and undermined Medicare’s co-pay structure, which Congress intended as a safeguard against inflated drug prices. We commend ACS for resolving this matter expeditiously and Biogen for resolving this matter on a cooperative basis.”
The Foundations
The two foundations Biogen allegedly used to further this scheme were the Chronic Disease Fund and The Assistance Fund. Both of the foundations previously reached individual settlements with the DOJ in late 2019 relating to the allegations of their roles in enabling certain pharmaceutical companies to pay kickbacks to Medicare patients in the form of copay assistance.