Two More Pharma Companies Resolve Co-Pay Foundation Kickback Claims – Prosecutors Continue Pursuit of Similar Cases

Federal and state prosecutors recently convened at the Boston Bar Association’s White Collar Crime Conference to discuss, among other topics, health care enforcement priorities. At the conference, the U.S. Attorney’s Office for the District of Massachusetts (USAO) highlighted its recent focus on pharmaceutical companies that make donations to co-pay assistance foundations, an area where we have recently seen a flurry of False Claims Act (FCA) enforcement. The USAO discussed three recent settlements and noted that more were coming.

Just days after the conference, the USAO announced that it had reached settlements with two pharmaceutical companies, Astellas Pharma US, Inc. and Amgen Inc., concerning allegations related to the companies’ donations to co-pay foundations. As with other recent settlements, the government alleged that the conduct constituted illegal kickbacks in violation of the FCA.  The settlements totaled nearly $125 million, and represented the seventh and eighth such settlements in the District of Massachusetts since December 2017, with a total settlement amount of over $840 million.

These cases arose out of the reality that, in certain situations, Medicare recipients often have to pay for a portion of their prescription drugs.  The foundations in question provided assistance to Medicare recipients to help pay those costs.  According to the government, the companies made donations to these co-pay foundations, and the co-pay foundations, in turn, provided payment assistance for drugs manufactured by the pharmaceutical companies.

Similar to other recent settlements, neither company admitted wrongdoing and also denied wrongdoing in separately issued statements.  As we have highlighted in recent posts concerning FCA cases in the healthcare industry (see here and here), the government’s pursuit of FCA claims across the healthcare industry seems increasingly aggressive, and what appear like good and legal business operations one moment may draw the government’s ire the next.  In cases like these, it is not at all clear how the government would prove, if pushed to do so, a conclusive link between the pharmaceutical companies’ donations to the foundations and the subsequent decisions by the foundations to subsidize certain drug costs. Yet, the risks inherent in putting the government to its proof often militate against such action, and companies across the healthcare industry, including pharmaceutical companies, naturally desire to maintain focus on developing and producing effective treatments that benefit their patients.  In this environment, companies can best achieve their goals by knowing the government’s views on the law and carefully considering and structuring business operations in a manner least likely to cause issues down the road.

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