Government Takes a Hard Line on Fraudulent Donations to Patient Assistance Programs

Last month, the Department of Justice ("DOJ") announced a settlement with two pharmaceutical companies – Astellas Pharma US, Inc. ("Astellas"), and Amgen Inc. ("Amgen") – resolving allegations that their "donations" to patient assistance programs violated the False Claims Act. The two companies agreed to pay a total of $124.75 million, and both entered into five-year corporate integrity agreements with the Office of Inspector General as part of their respective settlements. United States Attorney Andrew E. Lelling said that according to the allegations, the companies illegally subsidized the high costs of their own drugs at the expense of American taxpayers, and "[w]e will keep pursuing these cases until pharmaceutical companies stop engaging in this kind of behavior.” Multiple settlements related to similar investigations have already brought in hundreds of millions of dollars in only a few years' time.

Allegations against Astellas Pharma US, Inc.

The allegations against Astellas centered around their product Xtandi, an androgen receptor inhibitor ("ARI") used to treat recurrent or advanced prostate cancer. ARIs are used in hormone therapy, and they are designed to suppress the androgen receptor in order to slow or shrink prostate cancer growth. Xtandi was first introduced for treatment of prostate cancer in 2012, and was the only drug of its kind available for 6 years, with no generic option and no competitors.[1]

In July 2013, two foundations opened ARI-only prostate cancer drug copay funds; Astellas had allegedly asked both foundations to open these funds, and was the sole donor to both funds. Medicare patients taking Xtandi received nearly all the available copay assistance from the two ARI funds, and Astellas allegedly promoted the existence of the funds to persuade medical providers to prescribe Xtandi. 

Allegations against Amgen Inc.

The allegations against Amgen related to two of their products: 1) Sensipar, a secondary hyperparathyroidism drug; and 2) Kyprolis, a multiple myeloma drug.

Sensipar

Secondary hyperparathyroidism is a disorder primarily seen in patients with chronic kidney failure where parathyroid hormone ("PTH") levels in the blood are increased due to abnormally low levels of calcium; the resulting high PTH levels make bones more porous and fragile. Sensipar mimics the action of calcium on tissues to avoid high PTH levels.

Amgen allegedly approached a new foundation about creating a fund that would support only Sensipar patients, after ending their donor relationship with another foundation that provided financial support to patients taking any of several secondary hyperparathyroidism drugs. With Amgen as its sole donor, the new foundation launched a “Secondary Hyperparathyroidism” fund in November 2011 that covered only Sensipar. Amgen has agreed to pay $24.75 million to resolve the government’s allegations.

Kyprolis

Multiple myeloma is a blood cancer where abnormal plasma cells (a type of white blood cell) grow and multiply excessively and form tumors in the bone marrow. Kyprolis is a selective proteasome inhibitor that is used to treat patients with multiple myeloma when initial treatments do not work or if those treatments no longer work after a relapse. Kyprolis irreversibly binds to and inhibits the 20S proteasome, an enzyme that degrades unwanted cellular proteins; the goal is to allow unwanted proteins to build up inside the abnormal plasma cells to kill them and inhibit tumor growth. Kyprolis is administered on a 28-day cycle and it can only be infused at certain health care facilities, which contributes to high travel costs for patients using this drug.

The government alleged that Onyx Pharmaceuticals was the sole donor to a fund almost exclusively benefitting Kyprolis patients, and that Amgen continued to donate to the fund after acquiring Onyx. This fund was supposedly created to cover health care related travel expenses for patients taking any multiple myeloma drug, but principally covered Kyprolis patients. The foundation in question also operated a second fund that covered copays for multiple myeloma drugs, including Kyprolis. While this latter fund had multiple donors, the government alleged that, for 2013, Onyx tailored its donations to the exact amount the fund needed to cover the copays of Kyprolis patients.

Massachusetts Leads the Field in Pharma Donation Fraud Investigations

The U.S. Attorney's Office for the District of Massachusetts investigated the allegations against Astellas and Amgen in cooperation with the DOJ, the FBI, the Office of Inspector General for the Department of Health and Human Services, and the U.S. Postal Inspection Service. At the time of this settlement announcement, the DOJ had already collected over $700 million from six other pharmaceutical companies (United Therapeutics, Pfizer, Actelion, Jazz, Lundbeck, Alexion) based off investigations also initiated by the District of Massachusetts. These companies also allegedly used third-party foundations to funnel kickbacks to Medicare patients for purchasing their drugs.

Government Continues to Aggressively Pursue These Investigations

Yet another settlement with a pharmaceutical company, US WorldMeds LLC ("USWM"), was announced just five days after the DOJ press release on the Astellas/Amgen settlement. The government alleged in part that USWM illegally paid Medicare patients' copays for their drug Apokyn through a third-party foundation after increasing the price of the drug. USWM ultimately agreed to pay $17.5 million to resolve all allegations.[2]

Even more recently, the federal government filed a complaint with similar allegations against Mallinckrodt ARD LLC, previously known as Questcor Pharmaceuticals Inc,, in connection with their drug H.P. Achthar Gel ("Achthar"). Mallinckrodt and Questcor allegedly used a foundation as a conduit to pay illegal kickbacks in the form of copay subsidies to facilitate increased drug prices. The government alleges that by 2014, Mallinckrodt had raised the price of Achthar from approximately $50 to over $32,200 per 5 mL vial since acquiring the drug in 2001.[3]

If you are aware of fraud against the government, whether in healthcare or another sector, you may be eligible to blow the whistle in a False Claims Act lawsuit and may be entitled to a portion of the recovery. To find out more, contact Goldberg Kohn for a confidential consultation.

---

[1] Xtandi is a second-generation nonsteroidal antiandrogen ("NSAA"), and was the only second-generation NSAA on the market until a similar drug, Erleada, was developed by Janssen Pharmaceutica and approved by the FDA in 2018.

[2] See United States ex rel. Bennett v.US WorldMeds, LLC, The Assistance Fund, Inc. et al., No. 3:13-CV-363 (D. Conn.) and United States ex rel. Chinnapongse v.US WorldMeds, LLC, No. 3:16-cv-0080 (D. Conn.). 

[3] See United States of America ex rel. Strunck et al. v. Mallinckrodt ARD, Inc., No. 12-CV-0175 (E.D. Pa.), and United States of America ex rel. Clark v. Questor Pharmaceuticals, Inc., No. 13-CV-1776 (E.D. Pa.). The government intervened in both these whistleblower cases and is consolidating them into a single action.