Two charities to pay $6 million to resolve U.S. pharma kickback probe

BOSTON (Reuters) – Two charities will pay $6 million to resolve claims they operated as pass-throughs for seven pharmaceutical companies to pay kickbacks to Medicare patients using their high-priced medications, the U.S. Justice Department said on Friday.

The settlements with the patient assistance charities Good Days and Patient Access Network Foundation were the first with foundations linked to an industry-wide probe that has resulted in $840 million in settlements with drugmakers.

Both foundations provide assistance to patients seeking to pay out-of-pocket costs for medications. Good Days agreed to pay $2 million while PAN Foundation agreed to pay $4 million. Neither admitted wrongdoing.

Good Days in a statement said the settlement will allow it to concentrate on providing help to people in need of life-saving medications. PAN said the settlement involved “legacy matters” rather than its current operations.

Drug companies are prohibited from subsidizing co-payments for patients enrolled in the government’s Medicare healthcare program for those aged 65 and older. Companies may donate to non-profits providing co-pay assistance as long as they are independent.

But the government has alleged that various drugmakers have used charities like Good Days and PAN as means to improperly pay the co-pay obligations of Medicare patients using their drugs, in violation of the Anti-Kickback Statute.

The department said Good Days, previously known as the Chronic Disease Fund, from 2010 to 2014 conspired with companies including Novartis AG, Astellas and Questcor, now owned by Mallinckrodt Plc, to pay kickbacks to Medicare patients using their drugs.

Those drugs included H.P. Acthar Gel, an expensive treatment for a rare infant seizure disorder and multiple sclerosis that is subject of a related lawsuit by the government against Mallinckrodt over Questcor’s donations to the charity.

The Justice Department said Questcor from 2010 to 2014 used the charity as a conduit to improperly subsidize patients’ copays, allowing it to keep raising prices for Acthar, whose price increased from $50 per vial in 2001 to $32,200 in 2014.

Mallinckrodt declined to comment. It has said it believed its actions were lawful.

PAN similarly permitted Bayer AG, Astellas, Dendreon Pharmaceuticals and Amgen Inc to use it as a conduit to pay patients kickbacks, according to the government’s allegations.

Astellas and Amgen in April agreed to pay $100 million and $24.75 million, respectively, to resolve related claims.

Dendreon said it takes compliance seriously. Novartis declined to comment. The other companies’ representatives did not respond to requests for comment.