Drug company settles government claims of kickbacks from charity for $360 million
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Drug company settles government claims of kickbacks from charity for $360 million

A Johnson & Johnson pharmaceutical company, Actelion Pharmaceuticals US, Inc., settled with the US government for $360 million Thursday to resolve claims of illegally using a charity to receive kickbacks on Medicare patients.

By donating to Caring Voice Coalition (CVC), the government alleges that Actelion induced patients to purchase company drugs and defrauded the Centers for Medicare & Medicaid Services program.

CVC is a non-profit organization that operates a fund devoted to paying patient co-pays for those suffering from pulmonary arterial hypertension (PAH). Actelion currently markets multiple drugs that are approved treatments of PAH. The prices of these drugs are considerable and most patients cannot receive them without government assistance.

The government claims that Actelion made donations to CVC that were valued to cover the co-pays of all patients receiving their drug specifically. By donating the value of the co-pays only, Actelion still substantially profits, as they bill Medicare for the full price of the drug.

Pharmaceutical companies are prohibited from any exchange of remuneration (anything of value) to induce or provide referrals for drugs payable by a federal program via the Anti-Kickback Statute. Actelion is accused of receiving data from CVC detailing the number of patients using their PAH drugs. This information allowed Actelion to determine the specific donation amount needed to cover the copays of their drugs only. After Actelion’s donation, CVC paid patients’ copays, Actelion received a profit, or “kickback,” once the government paid the drug’s true price.

In addition to the alleged violation of federal Anti-Kickback regulations, the government also cites violation of the False Claims Act. Actelion’s conduct in receiving kickbacks induced patients to request their drugs even if an alternative could have been prescribed. As a result, the government suggests caused false claims to be submitted to Medicare.

The settlement resolves all accusations regarding Actelion’s involvement with CVC and closes one of many probes currently occurring regarding pharmaceutical companies’ donations to charities. While receiving kickbacks and causing false claims are illegal, drug companies are still able to donate to non-profits so as long as they are independent from remuneration. Per a press release by the Department of Justice, the settlement is a victory in maintaining the integrity of the Medicare program and true donations to independent non-profits.