Legal, Pricing

Accused of milking the CMS with co-pay kickbacks, J&J’s Actelion settles case for $310M

As the Trump administration continues to pump out new proposals to guard the Centers of Medicare and Medicaid Services against high drug prices, its law enforcement arm has also been busy rounding up biopharma companies that it says have essentially bought their ways into reimbursement for their ever-more-expensive therapies.

Actelion has been made the latest example, having agreed to pay $360 million to resolve kickback allegations.

Jean-Paul Clozel

The scheme — which violated the False Claims Act, according to the US Attorney’s Office — allegedly took place between 2014 and 2015, when Jean-Paul Clozel was still in charge and before J&J began engaging in a bid that culminated in a $30 billion buyout in 2017.

Per the allegations, Actelion used an assistance foundation to cover co-pays for thousands of Medicare patients taking its drugs for pulmonary arterial hypertension, including Tracleer, Ventavis, Veletri and Opsumit. By footing these required payments, the government says, the company was inducing patients to purchases drugs with otherwise prohibitive high prices — and piling up bills for Medicare.

Actelion also allegedly directed Medicare patients who qualified for its own free drug program to the foundation instead, further milking government reimbursement.

Importantly, the government added, Actelion budgeted its donations to the foundation carefully to make sure that its contribution would not cover patients taking rival PAH drugs. It did so by keeping close track of the number of patients the foundation helped and the amount spent on them.

Joseph Hunt

“Pharmaceutical companies cannot have it both ways — they cannot continue to increase drug prices while engaging in conduct designed to defeat the mechanisms that Congress designed to check such prices and then expect Medicare to pay for the ballooning costs,” said Assistant Attorney General Joseph Hunt of the Department Justice’s Civil Division in a statement.

During the period covered in the settlement, US Attorney Andrew Lelling noted, “Actelion raised the price of its main PAH drug, Tracleer, by nearly 30 times the rate of overall inflation in the United States.”

Caring Voice Coalition, the medical charity involved in the scheme, got into troubles of its own late last year when the government revoked its rights to provide such co-pay assistance to patients, due to concerns about improper influence from drugmakers.

United Therapeutics, another PAH drugmaker, settled a similar probe a month later for $210 million, one of the first to emerge from an industry-wide investigation.

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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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