Jazz, Lund­beck and Alex­ion pay $122M+ to re­solve DoJ claims of us­ing char­i­ties as 'con­duit­s' to stim­u­late use of their drugs

Three drug­mak­ers — Jazz Phar­ma, Lund­beck and Alex­ion — are pay­ing a to­tal $122.6 mil­lion to re­solve al­le­ga­tions that they em­ployed char­i­ta­ble foun­da­tions to help cov­er Medicare out-of-pock­et costs for their own drugs to en­cour­age the use of their own med­i­cines.

An­drew Lelling

The US De­part­ment of Jus­tice has charged the tri­fec­ta as part of a wider probe ac­cus­ing bio­phar­ma com­pa­nies of vi­o­lat­ing the “an­ti-kick­back statute,” which for­bids them from of­fer­ing or pay­ing di­rect­ly or in­di­rect­ly any re­mu­ner­a­tion — in­clud­ing co­pays — to in­duce Medicare or Civil­ian Health and Med­ical Pro­gram (Cham­p­VA) pa­tients to pur­chase the com­pa­ny’s drugs.

The in­ves­ti­ga­tion comes at a time when soar­ing pre­scrip­tion drug prices have sparked pub­lic furor — co­pays, which im­pose a por­tion of the list price of the drug on to the pa­tient, were in­tro­duced by Con­gress to part­ly serve as a check on health care costs. In this case, the trio of com­pa­nies have been al­leged­ly us­ing “in­de­pen­dent” fi­nan­cial as­sis­tance char­i­ties to serve as “con­duits” for the the com­pa­nies to sub­si­dize the co­pays of their own drugs — in ef­fect, il­le­gal­ly pro­mot­ing the use of their treat­ments.

Jazz $JAZZ was ac­cused of im­prop­er­ly en­cour­ag­ing the use of two of its prod­ucts us­ing char­i­ties: its nar­colep­sy drug Xyrem and its painkiller Pri­alt, and has agreed to pay $57 mil­lion to re­solve the gov­ern­ment’s al­le­ga­tions, with­out ad­mit­ting any wrong­do­ing.

  • In 2011, Jazz asked a foun­da­tion to cre­ate a fund that would pay the co­pays of Xyrem Medicare pa­tients and that the foun­da­tion agreed to es­tab­lish a “Nar­colep­sy Fund,” to which Jazz be­came the sole donor, the DoJ al­leged, adding that Jazz made Medicare pa­tients in­el­i­gi­ble for Jazz’s free drug pro­gram and in­stead re­ferred Xyrem Medicare pa­tients to the foun­da­tion. Mean­while, Jazz raised the price of Xyrem by over 150 per­cent from 2011 through the end of the rel­e­vant time pe­ri­od, the DoJ not­ed.
  • Jazz asked the same foun­da­tion to cre­ate a fund os­ten­si­bly to as­sist pa­tients with the co-pays of any se­vere chron­ic pain drugs, but which, in prac­tice, al­most ex­clu­sive­ly paid Pri­alt Medicare co­pays, the DoJ said, adding that short­ly af­ter cre­at­ing the fund, the foun­da­tion al­leged­ly told Jazz that when se­vere chron­ic pain pa­tients seek­ing as­sis­tance with oth­er drugs con­tact­ed the foun­da­tion, it would re­fer them else­where.

Lund­beck was ac­cused of en­gag­ing in a sim­i­lar scheme to in­vig­o­rate sales of its Hunt­ing­ton’s dis­ease drug Xe­nazine, and the Dan­ish drug­mak­er has agreed to fork over $52.6 mil­lion to set­tle the claims.

Lund­beck was the sole donor and made mil­lions in pay­ments to a fund at a foun­da­tion that os­ten­si­bly pro­vid­ed fi­nan­cial sup­port on­ly for pa­tients with Hunt­ing­ton’s dis­ease, but the com­pa­ny re­ferred Xe­nazine pa­tients with oth­er con­di­tions to this foun­da­tion, the DoJ said. In ad­di­tion, Lund­beck does not per­mit Medicare and Cham­p­VA pa­tients to par­tic­i­pate in its free drug pro­gram for Xe­nazine — in­stead, in or­der to in­duce Medicare and Cham­p­VA to pur­chase Xe­nazine, Lund­beck re­ferred fi­nan­cial­ly needy non-Hunt­ing­ton’s Dis­ease Xe­nazine pa­tients to the foun­da­tion, the DoJ al­leged.

Alex­ion $ALXN trig­gered the DoJ’s in­ter­est in re­la­tion to its pricey rare blood dis­or­der drug, Soliris, which costs more than half a mil­lion US dol­lars an­nu­al­ly. The drug­mak­er agreed to pay $13 mil­lion for its al­leged penal­ties.

Alex­ion made do­na­tions to a “Com­ple­ment-Me­di­at­ed Dis­ease” (CMD) fund at a foun­da­tion to pay the Medicare co­pay oblig­a­tions of pa­tients tak­ing Soliris and to in­duce those pa­tients’ pur­chas­es of Soliris know­ing that its price was a bar­ri­er, the DoJ claimed, adding that as the sole donor to the fund, Alex­ion al­leged­ly un­der­stood that the foun­da­tion’s pro­vi­sion of fi­nan­cial as­sis­tance was con­tin­gent on the pa­tient tak­ing Soliris. In ad­di­tion, Alex­ion had a gen­er­al prac­tice of not per­mit­ting Medicare pa­tients to par­tic­i­pate in its free drug pro­gram, in­stead Alex­ion re­ferred Medicare pa­tients pre­scribed Soliris to the foun­da­tion via a re­fer­ral por­tal, the DoJ al­leged.

Over­all, Jazz and Lund­beck were made to al­so sign five-year cor­po­rate in­tegri­ty agree­ments as part of their set­tle­ments, re­quir­ing them to im­ple­ment mea­sures and con­trols to pro­mote in­de­pen­dence from any pa­tient as­sis­tance pro­grams to which they do­nate. Alex­ion did not suf­fer the same fate, since it has al­ready made “sweep­ing and fun­da­men­tal or­ga­ni­za­tion­al changes” to its or­ga­ni­za­tion­al make­up, in­clud­ing hir­ing a new eight-mem­ber ex­ec­u­tive lead­er­ship team and chang­ing half of the mem­bers of its board, the DoJ said.

“This mis­con­duct is wide­spread, and en­force­ment will con­tin­ue un­til phar­ma­ceu­ti­cal com­pa­nies stop cir­cum­vent­ing the an­ti-kick­back laws to ar­ti­fi­cial­ly bol­ster high drug prices, all at the ex­pense of Amer­i­can tax­pay­ers,” said US At­tor­ney An­drew Lelling in a state­ment.

Im­age: Shut­ter­stock

Has the mo­ment fi­nal­ly ar­rived for val­ue-based health­care?

RBC Capital Markets’ Healthcare Technology Analyst, Sean Dodge, spotlights a new breed of tech-enabled providers who are rapidly transforming the way clinicians deliver healthcare, and explores the key question: can this accelerating revolution overturn the US healthcare system?

Key points

Tech-enabled healthcare providers are poised to help the US transition to value, not volume, as the basis for reward.
The move to value-based care has policy momentum, but is risky and complex for clinicians.
Outsourced tech specialists are emerging to provide the required expertise, while healthcare and tech are also converging through M&A.
Value-based care remains in its early stages, but the transition is accelerating and represents a huge addressable market.

Lat­est on ul­tra-rare dis­ease ap­proval; Pos­i­tive, if mixed, signs for Bio­gen's ALS drug; Clay Sie­gall finds a new job; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

Over the last four years, we’ve honored 80 women whose extraordinary accomplishments have changed the game in biopharma R&D. You can now nominate someone to be highlighted in this year’s special report. Details are here.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 163,600+ biopharma pros reading Endpoints daily — and it's free.

FDA spells out how can­cer drug de­vel­op­ers can use one tri­al for both ac­cel­er­at­ed and full ap­provals

The FDA’s Oncology Center of Excellence has been a bright spot within the agency in terms of speeding new treatments to patients. That flexibility was on full display this morning as FDA released new draft guidance spelling out exactly how oncology drug developers can fulfill both the accelerated and full approval’s requirements with just a single randomized controlled trial.

While Congress recently passed legislation that will allow FDA to require confirmatory trials to be recruiting and ongoing prior to granting an accelerated approval, the agency is now making clear that the initial trial used to win the AA, if designed appropriately, can also serve as the trial for converting the accelerated approval into a full approval.

FDA ad­vi­sors unan­i­mous­ly rec­om­mend ac­cel­er­at­ed ap­proval for Bio­gen's ALS drug

A panel of outside advisors to the FDA unanimously recommended that the agency grant accelerated approval to Biogen’s ALS drug tofersen despite the drug failing the primary goal of its Phase III study, an endorsement that could pave a path forward for the treatment.

By a 9-0 vote, members of the Peripheral and Central Nervous System Drugs Advisory Committee said there was sufficient evidence that tofersen’s effect on a certain protein associated with ALS is reasonably likely to predict a benefit for patients. But panelists stopped short of advocating for a full approval, voting 3-5 against (with one abstention) and largely citing the failed pivotal study.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 163,600+ biopharma pros reading Endpoints daily — and it's free.

No­vo Nordisk oral semaglu­tide tri­al shows re­duc­tion in blood sug­ar, plus weight loss

Novo Nordisk is testing higher levels of its oral version of its GLP-1, semaglutide, and its type 2 diabetes trial results released today show reductions in blood sugar as well as weight loss.

In the Phase IIIb trial, Novo compared its oral semaglutide in 25 mg and 50 mg doses with the 14 mg version that’s currently the maximum approved dose. The trial looked at how the doses compared when added to a stable dose of one to three oral antidiabetic medicines in people with type 2 diabetes who were in need of an intensified treatment.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 163,600+ biopharma pros reading Endpoints daily — and it's free.

Ly­me vac­cine test com­ple­tion is pushed back by a year as Pfiz­er, Val­ne­va say they'll ad­just tri­al

Valneva and Pfizer have adjusted the end date for the Phase III study of their investigational Lyme disease vaccine, pushing it back by a year after issues at a contract researcher led to thousands of US patients being dropped from the test.

In a March 20 update to clinicaltrials.gov, Valneva and Pfizer moved the primary completion date on the trial, called VALOR, from the end of 2024 to the end of 2025.

Endpoints Premium

Premium subscription required

Unlock this article along with other benefits by subscribing to one of our paid plans.

Clay Siegall, Morphimmune CEO

Up­dat­ed: Ex-Seagen chief Clay Sie­gall emerges as CEO of pri­vate biotech

Clay Siegall will be back in the CEO seat, taking the helm of a private startup working on targeted cancer therapies.

It’s been almost a year since Siegall resigned from Seagen, the biotech he co-founded and led for more than 20 years, in the wake of domestic violence allegations by his then-wife. His eventual successor, David Epstein, sold the company to Pfizer in a $43 billion deal unveiled last week.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 163,600+ biopharma pros reading Endpoints daily — and it's free.

Eu­ro­pean doc­tors di­al up dig­i­tal com­mu­ni­ca­tion with phar­mas, but still lean to­ward in-per­son med meet­ings, study finds

As in-person sales rep access declines in the big five European countries, a corresponding uptick in virtual rep access is happening. It’s not surprising, but it does run counter to pharma companies’ assessment – along with long-held sales rep sway in Europe – that in-person access hadn’t changed.

CMI Media Group and Medscape’s recent study reports that 75% of physicians in the EU5 countries of Spain, Germany, Italy, France and the UK already limit engagements with pharma sales reps, and 25% of those surveyed plan to decrease time with reps.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 163,600+ biopharma pros reading Endpoints daily — and it's free.

Judge al­lows ex­pert tes­ti­mo­ny in GSK tri­al al­leg­ing Zan­tac link to can­cer

A California judge will allow a plaintiff in a state court case to introduce expert testimony connecting a potential carcinogen in former blockbuster medicine Zantac to cancer.

The order was handed down on Thursday from state judge Evelio Grillo, who is now allowing both parties to introduce expert testimony in an upcoming trial after what’s known as a Sargon hearing, where a judge determines the admissibility of expert witnesses and expert opinions.