DoJ expands crackdown on Medicare kickback schemes — Astellas and Amgen to pay nearly $125M to resolve allegations

Weeks after Jazz Pharma, Lundbeck and Alexion were disciplined by the US Department of Justice for allegedly employing charitable foundations to help cover Medicare out-of-pocket costs to urge the use of their own medicines, two other drugmakers — Astellas and Amgen — are in trouble for purportedly engaging in similar kickback schemes.

The two companies have agreed to pay the DoJ a combined $124.75 million to resolve the allegations and signed to five-year corporate integrity agreements, which require them to set up measures to promote independence from any patient assistance programs to which they donate, and to procure compliance-related certifications from company executives and board members.

Andrew Lelling

“(T)he companies’ payments to the foundations were not ‘donations,’ but rather were kickbacks that undermined the structure of the Medicare program and illegally subsidized the high costs of the companies’ drugs at the expense of American taxpayers,” said United States Attorney Andrew Lelling in a statement.

Astellas, with partner Pfizer $PFE, sells an androgen receptor inhibitor (ARI) called Xtandi to treat certain patients with prostate cancer (the drug generated 2018 sales of nearly $3 billion); no other therapeutic used to treat the condition is an ARI. The government has accused Astellas in 2013 of convincing two foundations to open ARI-only copay funds, in which the Japanese drugmaker came to be the sole donor. Medicare patients taking Xtandi received nearly all of the copay assistance from the two ARI funds, the government said, alleging that Astellas promoted the existence of the funds as a competitive advantage for Xtandi over rival drugs to encourage the adoption of the treatment by medical providers. Astellas has agreed to pay $100 million to resolve the allegations.

Meanwhile, Amgen $AMGN is in trouble for two of its medicines: the secondary hyperparathyroidism drug Sensipar (which generated $1.78 billion in 2018 sales) and the multiple myeloma drug Kyprolis (which raked in $968 million last year).

In late 2011, Amgen halted donations to a foundation that provided financial support to patients taking any of several secondary hyperparathyroidism drugs and approached a new foundation about creating a “Secondary Hyperparathyroidism” fund that would support only Sensipar patients, the government alleged. The drugmaker — which then came to be the sole donor to the new fund — allegedly made payments to the fund even though the cost of these payments exceeded the cost to Amgen of providing free Sensipar to financially needy patients (although by indirectly funding the copays of Medicare beneficiaries, Amgen caused claims to be submitted to Medicare and generated revenue for itself).

Amgen gained access to Kyprolis when it swallowed Onyx Pharmaceuticals in 2013. The latter had already asked a foundation to create a fund that ostensibly would cover health care related travel expenses for patients taking any multiple myeloma drug, but was used almost exclusively to cover such expenses for patients taking Kyprolis, which must be infused at certain health care facilities, the government alleged. Onyx was the sole donor to this travel fund and Amgen — after integrating Onyx into its operations in 2015 — continued to donate to the fund, the government said. The fund also operated a second fund to cover copays for multiple myeloma drugs — but Onyx tailored its donations to just the amount needed to cover the copays of Kyprolis patients, the government added. Amgen has agreed to pay $24.75 million to resolve the allegations.

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