In July 2020, CG attorneys discussed two settlements by Novartis Pharmaceuticals Corporation for $729 million involving allegations that Novartis paid kickbacks to doctors and patients. One settlement involved Novartis agreeing to pay $51.25 million to resolve federal False Claim Act (“FCA”) allegations that Novartis coordinated with and funneled money to charitable foundations to pay the co-pay for patients who otherwise could not afford Novartis’ drugs.
The government’s scrutiny of charitable patient assistance programs continues. On December 17, 2020, the Department of Justice (“DOJ”) published a press release announcing that Biogen, Inc., a Massachusetts-based pharmaceutical company, agreed to pay $22 million to settle alleged FCA and federal Anti-Kickback Statute (“AKS”) violations. The alleged violations stem from subsidized co-pays through charitable patient assistance programs created by Biogen. The AKS prohibits, among other things, knowingly and willfully paying or receiving, remuneration in exchange for federal healthcare program referrals, or as related to Biogen, the purchase of company drugs. Remuneration is defined broadly and includes anything of value, like co-pay coverage.
Biogen’s alleged scheme involved coordination with its vendor Advanced Care Scripts (“ACS”). As part of this scheme, Biogen allegedly identified specific patients in Biogen’s free drug program for ACS. ACS transferred the identified patients to Biogen’s nonprofit foundations. These foundations were used to pay the co-pay obligations of the patients to induce those patients to purchase Medicare-reimbursed Avonex and Tysabri prescriptions, according to the press release. “By treating the foundations simply as conduits to pay the co-pays of its own patients, Biogen violated the anti-kickback statute and undermined Medicare’s co-pay structure, which Congress intended as a safeguard against inflated drug prices,” explained First Assistant United States Attorney Nathaniel R. Mendell. For its involvement, ACS agreed to pay $1.4 million in a separate settlement.
The Biogen settlement resolved the lawsuit captioned United States ex rel. Nee vs. Biogen et. al., Case No. 17-CV-10192-MLW (D. Mass.), filed under the qui tam (whistleblower) provisions of the FCA. The qui tam provision allows private parties to file FCA lawsuits on behalf of the government. The government may intervene in a qui tam action, as the government did in Biogen. Also, under the qui tam provision, a whistleblower may receive anywhere between 15 and 30 percent of the government’s recovery. The whistleblower in Biogen will receive approximately $3.96 million from the settlement, according to the press release.
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with False Claims Act investigations and qui tam litigation. If you need assistance with such a matter, please contact us today.