Regulatory Focus™ > News Articles > 5 > Kickback Allegation Settlements Pile Up for Pharmaceutical Companies

Kickback Allegation Settlements Pile Up for Pharmaceutical Companies

Posted 24 May 2018 | By Zachary Brennan 

Kickback Allegation Settlements Pile Up for Pharmaceutical Companies

Fresh off the Novartis scandal, in which the company paid President Donal Trump's lawyer, the Department of Justice (DOJ) on Thursday announced that Pfizer agreed to pay $23.85 million to resolve claims that it used a foundation as a conduit to help pay the copays of Medicare patients using three of its drugs. But Pfizer is just one of many pharmaceutical companies paying tens or even hundreds of millions to settle these allegations.

In explaining why a company would help pay a patient’s copays, the DOJ explains how the payments can encourage patients to continue purchasing a company’s products. But under the Anti-Kickback Statute, DOJ says a pharmaceutical company is prohibited from “offering, directly or indirectly, any remuneration—which includes paying patients’ copay obligations—to induce Medicare patients to purchase the company’s drugs.”

The DOJ alleged in the Pfizer case that in order to generate revenue, and instead of giving its drugs Sutent (sunitinib malate) and Inlyta (axitinib) to Medicare patients who met the financial qualifications of Pfizer’s existing free drug program, Pfizer “used a third-party specialty pharmacy to transition certain patients to the foundation, which covered the patients’ Medicare copays.” 

With respect to Tikosyn (dofetilide), DOJ alleged that Pfizer raised the wholesale acquisition cost of a package of forty .125 mg capsules of the drug by more than 40% in the last three months of 2015.  The company knew the price increase would also increase Medicare copay obligations so Pfizer allegedly worked with the foundation to create and finance a fund for Medicare patients suffering from the condition treated by Tikosyn. 

“For the next nine months, Tikosyn patients accounted for virtually all of the beneficiaries whose copayments were paid by the fund,” the DOJ said.

Pfizer said in a statement that it was among a number of companies that received subpoenas in 2017 in connection with a government inquiry related to organizations that provide financial assistance to Medicare patients.

Other Settlements

In addition to Pfizer, Jazz Pharmaceuticals earlier this month said it agreed to pay $57 million to resolve a similar DOJ investigation, while United Therapeutics paid $210 million to resolve similar allegations last December.

Also in 2017, Shire agreed to pay $350 million to settle allegations that it used kickbacks and other unlawful methods to induce clinics and physicians to use or overuse its product Dermagraft, which is a human skin substitute approved by FDA for the treatment of diabetic foot ulcers. Galena Biopharma also paid more than $7 million to resolve allegations that it paid kickbacks to doctors to induce them to prescribe its fentanyl-based drug Abstral, the Department of Justice announced today.

In addition, Valeant Pharmaceuticals’ Salix unit in 2016 paid $54 million to resolves claims that it violated the federal Anti-Kickback Statute and False Claims Act by using its “speaker programs” as a mechanism to pay kickbacks to doctors to induce them to prescribe Salix drugs and medical devices that were reimbursed by federal health care programs.

Omnicare, a nursing home pharmacy, also in 2016 agreed to pay $28.125 million to resolve allegations that it solicited and received kickbacks from Abbott Laboratories in exchange for promoting the company’s drug Depakote (valproic acid) for nursing home patients. 

Forest Pharmaceuticals in 2016 also paid $38 million to resolve allegations that it paid kickbacks to induce physicians to prescribe the drugs Bystolic (nebivolol), Savella (milnacipran HCl) and Namenda (memantine HCl).

In 2015, Novartis paid $390 million to settle claims that it gave kickbacks to specialty pharmacies in return for recommending two of its drugs, Exjade (deferasirox) and Myfortic (mycophenolic acid). And Daiichi Sankyo paid $39 million to settle similar allegations in 2015.

Categories: Regulatory News

Regulatory Focus newsletters

All the biggest regulatory news and happenings.

Subscribe