Top pharma players have disclosed federal investigations into their patient assistance contributions, but only United Therapeutics has said it's working on a settlement. That company’s set-aside of $210 million to wrap up its kickbacks probe likely “sends shock waves” through the industry as a host of other companies assess their legal options, a legal expert said.
In a recent quarterly filing with the SEC, United Therapeutics disclosed that it had set aside $210 million for a potential settlement with the government over its contributions to copay assistance charities. James Young, an attorney for Morgan & Morgan, wrote that the announcement “shines a light on the potentially unlawful conflicts created by such” financial support to the groups.
“The announcement and prospective settlement likely sends shock waves throughout the pharmaceutical sector as the OIG-HHS concludes that payments which ultimately impact drug choices of government insured patients are in violation of anti-kickback laws,” Young wrote in an email to FiercePharma, referring to the Department of Health and Human Services’ Office of Inspector General.
“Specifically, OIG seems focused on patient charities with narrowly defined diseases that allow companies with relevant products to sidestep the independence required to avoid anti-kickback violations,” the attorney wrote.
Aside from United Therapeutics, top drugmakers such as Johnson & Johnson, Pfizer, Biogen, Gilead and Celgene have disclosed similar investigations. Pfizer, Gilead and United Therapeutics declined to comment for this story, while the others didn’t immediately respond to requests for comment. Celgene also faces a whistleblower suit claiming the company worked to “game the system” with contributions to steer charities toward its drugs. The company denied the charge.
Valeant Pharmaceuticals was the first pharma company to disclose a Department of Justice inquiry about its patient-assistance activities back in October 2015 amid harsh criticism of its price hikes and a separate investigation into its ties with specialty pharmacies. Horizon Pharmaceuticals, another specialty pharma, announced its own subpoena last March.
Most drug companies offer their own copay assistance programs, but the initiatives are limited to patients with commercial insurance. Federal law prohibits drugmakers from pitching in on drug costs for patients on government insurance programs such as Medicare and Medicaid.
Charities face no such restrictions, and pharma companies have been contributing to those organizations for years. The federal investigation appears to have been prompted by concerns that those donations come with tacit earmarks for the company’s own drugs—which is against the rules. The charities and drugmakers have denied linking donations with particular products.
According to Young, there are “ways companies can contribute to patient assistance programs, the key to which is the independent or blind allocation of the financial assistance to patients.” He believes United's settlement “made business sense to avoid further litigation.” Other settlements are likely to be announced, he added.
In its SEC filing, United said it received a DOJ subpoena in the matter in May last year. The deal could include a corporate integrity agreement, according to the drugmaker.
For their part, J&J and Pfizer each disclosed subpoenas back in February, joining a host of other companies pulled into the matter since federal investigators started looking into those contributions back in 2015.
Of course, the timing for other Justice Department settlements is “purely within the control and knowledge of the government,” Young said. Other deal values will depend on the companies' level of cooperation with the probe, smoking gun evidence and corporate compliance programs.