The United States Department of Justice (DOJ) recently announced that Teva Pharmaceuticals USA Inc. and Teva Neuroscience Inc. will pay $450 million to resolve allegations of violating the Anti-Kickback Statute (AKS) and the False Claims Act (FCA). The settlement represents a significant enforcement action under these statutes and may have broader implications for compliance across the pharmaceutical industry.
Overview of the Allegations
Teva faced two primary claims centered on allegations that the company engaged in illegal kickback schemes to increase sales of its multiple sclerosis drug, Copaxone. The first claim, filed in the District Court of Massachusetts, focused on the period from 2006 through 2017. The complaint alleged that Teva conspired with a specialty pharmacy and two copay assistance foundations to cover Medicare patients’ copayments for Copaxone prescriptions, effectively using donations to these foundations as a means to offset patient costs and increase drug usage. According to the DOJ, Teva made these donations intending to ensure that Medicare patients prescribed Copaxone could access it without out-of-pocket expenses, thus preserving demand and supporting the drug’s high price point.
Details of the Settlement Agreements
The $450 million settlement was divided between two separate claims: one in the District of Massachusetts and another in the Eastern District of Pennsylvania. Under the agreements, Teva admitted no wrongdoing; however, the settlements reflect the DOJ’s commitment to combating practices it views as exploitative of federal healthcare programs, particularly when companies use charitable foundations to subsidize drug costs and sidestep the Anti-Kickback Statute.
The AKS prohibits offering or paying any form of remuneration to induce referrals for items or services covered by federal healthcare programs. Violating this statute also often leads to breaches of the FCA, as companies submitting claims for such services are, by extension, submitting false claims. The DOJ argued that Teva’s actions, in essence, amounted to paying kickbacks to Medicare beneficiaries by covering their out-of-pocket costs for Copaxone.
Implications for Other Pharmaceutical Companies
This case underscores the risks pharmaceutical companies face when working with charitable foundations, particularly when donations align closely with patient copay assistance for the company’s own drugs. The DOJ has increasingly scrutinized these arrangements, and the Teva settlement serves as a strong reminder of the importance of AKS and FCA compliance. Pharmaceutical companies should be vigilant about avoiding practices that could be interpreted as inducing purchases or subsidizing drug costs for patients covered by federal healthcare programs.
The implications of this settlement extend beyond Teva; similar cases have emerged involving other drugmakers accused of using third-party foundations to shield patients from drug costs while circumventing AKS compliance. Moving forward, pharmaceutical companies may need to exercise increased caution with donations, ensuring they are not earmarked in ways that benefit specific drugs or programs. This settlement reinforces the DOJ’s stance that any donations perceived as intended to boost product demand among federally insured patients may lead to significant penalties.
Conclusion
The Teva case reflects the DOJ’s ongoing effort to clamp down on practices that increase healthcare costs for the government while benefiting pharmaceutical companies. With $450 million in fines, this settlement underscores the financial and reputational risks associated with failing to comply with AKS and FCA standards. Pharmaceutical companies should closely monitor their interactions with specialty pharmacies and copay assistance programs, prioritizing transparent practices that minimize exposure to legal and regulatory consequences.
This settlement will likely influence compliance departments across the industry to re-evaluate relationships with charitable foundations and specialty pharmacies, reaffirming the importance of strict adherence to federal healthcare program regulations.
Teva DOJ Settlement Source Documents
DOJ Press Release Settlement Summary: https://www.justice.gov/opa/pr/drug-maker-teva-pharmaceuticals-agrees-pay-450m-false-claims-act-settlement-resolve-kickback
DOJ Press Release 425 million: https://www.justice.gov/usao-ma/pr/teva-pharmaceuticals-agrees-pay-425-million-resolve-kickback-allegations
DOJ Press Release 25 million: https://www.justice.gov/usao-edpa/pr/generic-pharmaceutical-company-pays-25-million-resolve-false-claims-act-liability
EDPA Settlement: https://www.justice.gov/opa/media/1373086/dl
DMA Settlement: https://www.justice.gov/opa/media/1373081/dl