Atlas EnergyThe U.S. Department of Justice recently announced that Astellas Pharma US Inc. (Astellas) and Amgen Inc. (Amgen) will pay a combined total of almost $125 million to settle various allegations that the companies illegally paid Medicare copays for their own products in violation of the federal False Claims Act (FCA) and Anti-Kickback Statute (AKS).

Medicare’s prescription drug plan sometimes requires beneficiaries to partially pay for prescription products via copayments, coinsurance, or a deductible. The AKS prohibits pharmaceutical companies from offering to make such payments on behalf of Medicare beneficiaries.

The DOJ investigated Astellas and Amgen for allegedly conspiring with two copay foundations to create funds that functioned to benefit patients taking drugs made by the two companies. The alleged scheme involved two purportedly independent copay foundations that received charitable donations that it then provided to Medicare beneficiaries to assist with prescription copays. However, the DOJ alleged that Astellas and Amgen really just paid kickbacks to the foundations that were disguised as donations. The government alleged that the purpose of the arrangement was to illegally subsidize the copays for Medicare beneficiaries both so that such copays would not discourage patients from obtaining the products and so the companies could ultimately charge Medicare higher prices.

In addition to this multi-million dollar civil settlement, both Astellas and Amgen have entered five-year corporate integrity agreements (CIAs) with the Department of Health and Human Services Office of Inspector General (OIG). Under the CIAs, both companies are required to implement extensive compliance measures, conduct thorough internal monitoring of its operations, and submit regular reports to the OIG demonstrating they have maintained independence from any patient assistance programs to which they donate.