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

Martin Shkreli [via Getty]

Pris­on­er #87850-053 does not get to add drug de­vel­op­er to his list of cred­its

Just days after Retrophin shed its last ties to founder Martin Shkreli, the biotech is reporting that the lead drug he co-invented flopped in a pivotal trial. Fosmetpantotenate flunked both the primary and key secondary endpoints in a placebo-controlled trial for a rare disease called pantothenate kinase-associated neurodegeneration, or PKAN.

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We­bi­nar: Re­al World End­points — the brave new world com­ing in build­ing fran­chise ther­a­pies

Several biopharma companies have been working on expanding drug labels through the use of real world endpoints, combing through the data to find evidence of a drug’s efficacy for particular indications. But we’ve just begun. Real World Evidence is becoming an important part of every clinical development plan, in the soup-through-nuts approach used in building franchises.

I’ve recruited a panel of 3 top experts in the field — the first in a series of premium webinars — to look at the practical realities governing what can be done today, and where this is headed over the next few years, at the prodding of the FDA.

ZHEN SU — Merck Serono’s Senior Vice President and Global Head of Oncology
ELLIOTT LEVY — Amgen’s Senior Vice President of Global Development
CHRIS BOSHOFF — Pfizer Oncology’s Chief Development Officer

A premium subscription to Endpoints News is required to attend this webinar. Please upgrade to either an Insider or Enterprise plan for access. Already have Endpoints Premium? Please sign-in below. You can contact our Subscriptions team at help@endpointsnews.com with any issues.

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Hal Barron. GSK

GSK's Hal Bar­ron her­alds their sec­ond pos­i­tive piv­otal for cru­cial an­ti-BC­MA ther­a­py, point­ing to a push for quick OKs in a crowd­ed field

Hal Barron has his second positive round of Phase III data in hand for his anti-BCMA antibody drug conjugate belantamab mafodotin (GSK2857916). And GSK’s research chief says the data paves the way for their drive in search of an FDA approval for treating multiple myeloma.

It’s hard to overestimate the importance of this drug for GSK, a cornerstone of Barron’s campaign to make a dramatic impact on the oncology market and provide some long-lost excitement for the pharma giant’s pipeline. They’re putting this BCMA program at the front of that charge — looking to lead a host of rivals all aimed at the same target.

We don’t know what the data are yet, but DREAMM-2 falls on the heels of a promising set of data delivered 5 months ago for DREAMM-1. There investigators noted that complete responses among treatment-resistant patients rose to 15% in the extra year’s worth of data to look over, with a median progression-free survival rate of 12 months, up from 7.9 months reported earlier. The median duration of response was 14.3 months.

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Brian Kaspar. AveXis via Twitter

AveX­is sci­en­tif­ic founder fires back at No­var­tis CEO Vas Narasimhan, 'cat­e­gor­i­cal­ly de­nies any wrong­do­ing'

Brian Kaspar’s head was among the first to roll at Novartis after company execs became aware of the fact that manipulated data had been included in its application for Zolgensma, now the world’s most expensive therapy.

But in his first public response, the scientific founder at AveXis — acquired by Novartis for $8.7 billion — is firing back. And he says that not only was he not involved in any wrongdoing, he’s ready to defend his name as needed.

I reached out to Brian Kaspar after Novartis put out word that he and his brother Allen had been axed in mid-May, two months after the company became aware of the allegations related to manipulated data. His response came back through his attorneys.

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Why would Am­gen want to buy Alex­ion? An­a­lysts call hot­ly ru­mored takeover un­like­ly, but seize the mo­ment

A rumor that Amgen is closing in on buyout deal for Alexion has sparked a guessing game on just what kind of M&A strategy Amgen is pursuing and how much Alexion is worth.

Mizuho analyst Salim Syed first lent credence to the report out of the Spanish news outlet Intereconomía, which said Amgen is bidding as much as $200 per share. While the source may be questionable, “the concept of this happening doesn’t sound too crazy to me,” he wrote.

FDA asks why No­var­tis took two months to launch for­mal in­ter­nal probe, af­ter AveX­is flagged da­ta ma­nip­u­la­tion

And the plot thickens. Novartis $NVS officials are reportedly now scrambling to explain to the FDA why it took them two months to open an internal investigation into data discrepancies for their $2.1 million gene-therapy for spinal muscular dystrophy — the world’s most expensive drug.

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Build­ing on suc­cess­ful PD-1 pact, Eli Lil­ly li­cens­es di­a­betes drug to Chi­nese part­ners at In­novent

Eli Lilly is expanding its partnership with China’s Innovent in a deal involving a diabetes drug sitting in its Phase I reserves.

The two companies had jointly developed one of China’s first homegrown PD-1 agents, scoring an approval for Tyvyt (sintilimab) late last year for relapsed/refractory classical Hodgkin’s lymphoma. This time around, Lilly is out-licensing a piece of its diabetes pipeline, a leading franchise that has historically produced the top-selling Trulicity and Humalog.

UP­DAT­ED: An em­bold­ened As­traZeneca splurges $95M on a pri­or­i­ty re­view vouch­er. Where do they need the FDA to hus­tle up?

AstraZeneca is in a hurry.

We learned this morning that the pharma giant — not known as a big spender, until recently — forked over $95 million to get its hands on a priority review voucher from Sobi, otherwise known as Swedish Orphan Biovitrum.

That marks another step down on price for a PRV, which allows the holder to slash 4 months off of any FDA review time.

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Bob Smith, Pfizer

Pfiz­er is mak­ing a $500M state­ment to­day: Here’s how you be­come a lead play­er in the boom­ing gene ther­a­py sec­tor

Three years ago, Pfizer anted up $150 million in cash to buy Bamboo Therapeutics in Chapel Hill, NC as it cautiously stuck a toe in the small gene therapy pool of research and development.

Company execs followed up a year later with a $100 million expansion of the manufacturing operations they picked up in that deal for the UNC spinout, which came with $495 million in milestones.

And now they’re really going for it.

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