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

Nick Leschly via Getty

UP­DAT­ED: Blue­bird shares sink as an­a­lysts puz­zle out $1.8M stick­er shock and an un­ex­pect­ed de­lay

Blue­bird bio $BLUE has un­veiled its price for the new­ly ap­proved gene ther­a­py Zyn­te­glo (Lenti­Glo­bin), which came as a big sur­prise. And it wasn’t the on­ly un­ex­pect­ed twist in to­day’s sto­ry.

With some an­a­lysts bet­ting on a $900,000 price for the β-tha­lassemia treat­ment in Eu­rope, where reg­u­la­tors pro­vid­ed a con­di­tion­al ear­ly OK, blue­bird CEO Nick Leschly said Fri­day morn­ing that the pa­tients who are suc­cess­ful­ly treat­ed with their drug over 5 years will be charged twice that — $1.8 mil­lion — on the con­ti­nent. That makes this drug the sec­ond most ex­pen­sive ther­a­py on the plan­et, just be­hind No­var­tis’ new­ly ap­proved Zol­gens­ma at $2.1 mil­lion, with an­a­lysts still wait­ing to see what kind of pre­mi­um can be had in the US.

Gene ther­a­pies seize the top of the list of the most ex­pen­sive drugs on the plan­et — and that trend has just be­gun

Anyone looking for a few simple reasons why the gene therapy field has caught fire with the pharma giants need only look at the new list of the 10 most expensive therapies from GoodRx.

Two recently approved gene therapies sit atop this list, with Novartis’ Zolgensma crowned the king of the priciest drugs at $2.1 million. Right below is Luxturna, the $850,000 pioneer from Spark, which Roche is pushing hard to acquire as it adds a gene therapy group to the global mix.

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News­mak­ers at #EHA19: Re­gen­eron, Ar­Qule track progress on re­sponse rates

Re­gen­eron’s close­ly-watched bis­pe­cif­ic con­tin­ues to ring up high re­sponse rates

Re­gen­eron’s high-pro­file bis­pe­cif­ic REGN1979 is back in the spot­light at the Eu­ro­pean Hema­tol­ogy As­so­ci­a­tion sci­en­tif­ic con­fab. And while the stel­lar num­bers we saw at ASH have erod­ed some­what as more blood can­cer pa­tients are eval­u­at­ed, the re­sponse rates for this CD3/CD20 drug re­main high.

A to­tal of 13 out of 14 fol­lic­u­lar lym­phomas re­spond­ed to the drug, a 93% ORR, down from 100% at the last read­out. In 10 out of 14, there was a com­plete re­sponse. In dif­fuse large B-cell lym­phoma the re­sponse rate was 57% among pa­tients treat­ed at the 80 mg to 160 mg dose range. They were all com­plete re­spons­es. And 2 of these Cars were for pa­tients who had failed CAR-T ther­a­py.

Ted Love. HAVERFORD COLLEGE

Glob­al Blood Ther­a­peu­tics poised to sub­mit ap­pli­ca­tion for ac­cel­er­at­ed ap­proval, with new piv­otal da­ta on its sick­le cell dis­ease drug

Global Blood Therapeutics is set to submit an application for accelerated approval in the second-half of this year, after unveiling fresh data from a late-stage trial that showed just over half the patients given the highest dose of its experimental sickle cell disease drug experienced a statistically significant improvement in oxygen-wielding hemoglobin, meeting the study's main goal.

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In a boost to Rit­ux­an fran­chise, Roche nabs quick ap­proval for po­latuzum­ab ve­dotin

Roche’s lat­est an­ti­body-drug con­ju­gate has crossed the FDA fin­ish line, gain­ing an ac­cel­er­at­ed ap­proval a full two months ahead of sched­ule.

Po­livy, or po­latuzum­ab ve­dotin, is a first-in-class drug tar­get­ing CD79b — a pro­tein promi­nent in B-cell non-Hodgkin lym­phoma. It will now be mar­ket­ed for dif­fuse large B-cell lym­phoma as part of a reg­i­men that al­so in­cludes the chemother­a­py ben­damus­tine and a ver­sion of rit­ux­imab (Rit­ux­an).

J&J gains an en­thu­si­as­tic en­dorse­ment from Pres­i­dent Don­ald Trump for their big new drug Spra­va­to

Pres­i­dent Don­ald Trump has lit­tle love for Big Phar­ma, but there’s at least one new drug that just hit the mar­ket which he is en­am­ored with.

Trump, ev­i­dent­ly, has been read­ing up on J&J’s new an­ti-de­pres­sion drug, Spra­va­to. And the pres­i­dent — who of­ten likes to break out in­to a full-throat­ed at­tack on greedy drug­mak­ers — ap­par­ent­ly en­thused about the ther­a­py in a meet­ing with of­fi­cials of Vet­er­ans Af­fairs, which has long grap­pled with de­pres­sion among vet­er­ans.

An in­censed Cat­a­lyst Phar­ma sues the FDA, ac­cus­ing agency of bow­ing to po­lit­i­cal pres­sure and break­ing fed­er­al law

Af­ter hint­ing it was ex­plor­ing the le­gal­i­ty of the FDA’s ap­proval of a ri­val drug from fam­i­ly-run com­pa­ny Ja­cobus Phar­ma­ceu­ti­cals, Cat­a­lyst Phar­ma­ceu­ti­cals on Wednes­day filed a law­suit against the health reg­u­la­tor — ef­fec­tive­ly ac­cus­ing the agency of bow­ing to po­lit­i­cal pres­sure sur­round­ing sky­rock­et­ing drug prices.

Be­fore Cat­a­lyst’s Fir­dapse (which car­ries an av­er­age an­nu­al list price of $375,000) was sanc­tioned for use in Lam­bert-Eaton myas­thenic syn­drome (LEMS) by the FDA, hun­dreds of pa­tients had been able to ac­cess a sim­i­lar drug from com­pound­ing phar­ma­cies for a frac­tion of the cost, or Ja­cobus’ for free, as part of an FDA-rat­i­fied com­pas­sion­ate use pro­gram. But the ap­proval of the Cat­a­lyst drug — ac­com­pa­nied by mar­ket ex­clu­siv­i­ty span­ning sev­en years — ef­fec­tive­ly pre­clud­ed Ja­cobus and com­pound­ing phar­ma­cies from sell­ing their ver­sions.

Plagued by de­lays, As­traZeneca HQ costs soar to £750M as it edges to­ward 2020 com­ple­tion

In the lat­est up­date on As­traZeneca’s de­lay-prone HQ project, the phar­ma gi­ant re­vealed that the cost of con­struc­tion has swelled to £750 mil­lion ($956 mil­lion) — more than dou­ble the orig­i­nal es­ti­mate in 2013.

The move-in date is still in 2020, a spokesper­son con­firmed, af­ter As­traZeneca pushed pro­ject­ed com­ple­tion from 2016 to 2017, and then to the spring of 2019. While the ini­tial plan called for a £330 mil­lion (then $500 mil­lion) in­vest­ment, the cost bal­looned to £500 mil­lion ($650 mil­lion), and more in the most re­cent up­date.

Fresh analy­sis spot­lights car­dio ben­e­fit of J&J's In­vokana in di­a­betes pa­tients with­out his­to­ry of CV dis­ease

In­vokana sales may be mut­ed, but the di­a­betes drug is set to get some love af­ter its mak­er J&J un­veiled da­ta at the Amer­i­can Di­a­betes As­so­ci­a­tion meet­ing on Tues­day sug­gest­ing the med­i­cine can con­fer a car­dio­vas­cu­lar ben­e­fit in pa­tients who do not have pre­ex­ist­ing CV dis­ease.

Back in April, J&J had re­port­ed that in the late-stage CRE­DENCE study, the SGLT2 drug scored a 30% re­duc­tion in the risk of a com­pos­ite of ail­ments: a pro­gres­sion to the dou­bling of serum cre­a­ti­nine, end-stage kid­ney dis­ease and re­nal or car­dio­vas­cu­lar death. In terms of sec­ondary end­points, the drug was al­so found be heart-pro­tec­tive: low­er­ing the risk of CV death and hos­pi­tal­iza­tion for heart fail­ure by 31%, as well as ma­jor ad­verse CV events by 20%. In March, the com­pa­ny sub­mit­ted an ap­pli­ca­tion to ex­pand In­vokana’s la­bel to re­flect its im­pact on chron­ic kid­ney dis­ease.