More than a year after starting a probe into pharma's ties with patient assistance charities, the feds have secured their first sizable settlement. On Wednesday, United Therapeutics agreed to fork over $210 million to resolve kickback allegations in a scheme with charity Caring Voice Coalition that authorities say illegally boosted the company's pulmonary arterial hypertension drug sales.
As laid out in a settlement agreement
(PDF), the Justice Department contends United Therapeutics "made donations to CVC’s PAH fund and used it as a conduit to pay the copay obligations of thousands of Medicare patients ... to eliminate price sensitivity of patients purchasing or physicians prescribing the subject drugs, and to induce those patients’ purchases."
In other words, the DOJ alleged the company paid kickbacks. And according to one attorney, scrutiny in this case will likely reverberate around the industry, as many top drugmakers face similar inquiries about their charity donations.
Pharma companies can give to patient assistance charities, which help the needy cover the costs of their medications, on the condition that the money isn't tied to support for specific products. But the DOJ said United and CVC engineered a way to make sure the money flowed to its drugs.
Because the company itself couldn't legally offer copay assistance to Medicare patients, it directed needy patients to CVC instead, the Justice Department alleged. CVC then provided United with data about the patients receiving financial help and United analyzed the data to determine how much to donate. The revenue boost "far exceeded the amount of UT’s donations to CVC," according to the government's complaint
The feds have been digging into other drugmakers looking for similar evidence, and United's case is closely watched. After the company disclosed this summer that it had set aside $210 million for a potential settlement, James Young, an attorney for Morgan & Morgan, wrote to FiercePharma that the news would likely send "shock waves” through the industry as a host of other companies in the probe assessed their legal options.
Authorities seemed "focused on patient charities with narrowly defined diseases that allow companies with relevant products to sidestep the independence required to avoid anti-kickback violations," Young said.
So far, the list of companies that have disclosed they're under investigation for patient assistance charity contributions include Johnson & Johnson, Pfizer, Astellas, Gilead Sciences, Celgene, Biogen and others. Aegerion had previously struck a settlement agreement worth $36 million, partly for its charity contributions, but a judge recently rejected the deal
and sent the case to trial.
In a statement (PDF) accompanying the United deal, Chad A. Readler, the principal deputy assistant attorney general at the DOJ's civil division, said the "settlement shows that the government will hold accountable drug companies that attempt to use illegal kickbacks to defeat mechanisms Congress designed to act as a check on drug pricing and healthcare costs."
Caring Voice Coalition recently came under scrutiny itself at the Department of Health and Human Services' Office of Inspector General. In a redacted letter posted last month, officials revoked a previous positive opinion on the charity. Its CEO told FiercePharma the charity was "disappointed" and was working to "determine the most appropriate path forward." The group received $153 million in corporate contributions in 2016, up from $131 million in 2015, according to its financial statements.
United sells PAH drugs including Adcirca, Remodulin, Tyvaso, and Orenitram; the drugmaker brought in a total of $1.6 billion in sales last year. As part of the settlement, the company has agreed to a five-year corporate integrity agreement with the HHS-OIG.