DOJ issues subpoena to Celgene as feds cast a wider net in assistance-program probe

The U.S. Justice Department has pulled yet another Big Biotech into its probe of pharma’s ties to patient assistance programs. Revlimid maker Celgene disclosed last week that it had received a federal subpoena about its relationships with the charities, which help cover patients’ expenses for the company’s pricey therapies.

And as Bloomberg reports, the subpoena disclosure came as a related whistleblower lawsuit is heating up. Filed by a former sales rep, Beverly Brown, and joined by the Justice Department, the suit claims that Celgene ($CELG) donated large sums to patient-assistance charities to help boost sales of Revlimid, the megablockbuster blood cancer med.

Valeant Pharmaceuticals ($VRX) was the first drugmaker to disclose a DOJ inquiry about its patient-assistance activities; last October, amid harsh criticism of its price hikes and a separate investigation into its ties with specialty pharmacies, Valeant said it had received subpoenas for materials related to its patient-assistance programs. Since then, biotech giants Gilead Sciences ($GILD) and Biogen ($BIIB), as well as a smaller biotech, Jazz Pharmaceuticals ($JAZZ), and the specialty pharma Horizon Pharmaceuticals ($HZNP), have all disclosed subpoenas or other DOJ demands related to patient charities.

Celgene, like its fellow drugmakers, says that its support for patient-assistance programs is a charitable activity, not a marketing ploy. Its donations--which amounted to between $50 million and $100 million per year, according to a Celgene expert witness in the Brown lawsuit, come with no strings attached, the company says.

“Celgene donates money to fund these charitable organizations because, without this service, many cancer patients would be denied access to essential medical care simply because they cannot afford the treatment,” the company’s lawyers have said in court documents.

Government regulations prohibit drugmakers from trying to correlate their donations with support for their own drugs, because that would indicate that donors were trying to channel financial support in ways that could violate antikickback laws, court documents contend. But recent filings in the suit paint a different picture.

“Celgene routinely communicated with foundations to game the system to make donations needed to assure patients (and investors)” that the foundations’ copay help “would be available for all Celgene drug patients,” a document filed last week states.

In a previous filing, one expert witness said that Celgene would continually top up its donations to assistance groups to make sure that copay funding would be available. And another said that at least two particular patient-support organizations reported back to Celgene about their level of copay assistance for the company’s meds.

Contract language “strongly indicates that [Chronic Disease Fund] and [Patient Access Network Foundation] provided Celgene with the information it needed to be sure it would fully fund all copays needed for its products and that it successfully aligned its funding to achieve this goal,” expert witness Joel Hay wrote in a report filed with the lawsuit (as quoted by Bloomberg).

The two sides are fighting over Hay’s report--and those of other expert witnesses--so the whistleblower case is far from resolved. And Celgene itself maintains that the foundations are independent.

“The money Celgene donates is not earmarked for Celgene’s products, and can and is used to cover the copay for a competitor’s drugs,” court documents state.

Meanwhile, the DOJ investigation continues, and could well broaden even further. Big Pharma and Big Biotech companies commonly fund patient-assistance charities.

- see one recent court filing (PDF)
- check out Celgene’s disclosure
- see the Bloomberg story

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