Actelion Agrees to Pay $360 Million for Improperly Funneling Kickbacks into Patient Assistance Program (PAP)

Johnson & Johnson acquisition Actelion recently became the latest drug maker to land in the crosshairs of the Department of Justice (DOJ) for the improper use of a charitable Patient Assistance Program (PAP). The company reached a $360 million settlement with the government to resolve claims that it had funneled money into a PAP for the purpose of covering the Medicare copays of thousands of patients taking Actelion’s pulmonary arterial hypertension drugs. By funding these copays, Actelion was able to increase the number of patients who could afford the expensive medications, which increased demand and revenue on its drugs.

Under the federal Anti-Kickback Statute (AKS), drug makers are not allowed to provide payments or anything else of value, directly or indirectly, in order to induce Medicare patients to use a drug company’s products. As early as 2003, the Health and Human Services Department (HHS) made clear that patient assistance programs designed to reimburse Medicare beneficiaries for cost sharing amounts related to a particular drug or drugs – as opposed to getting access to treatment regardless of who provides or manufactures it – is an AKS violation.

The Actelion settlement is just one of the cases in which drug companies have recently been connected to the Caring Voice Coalition (CVC), a PAP 501(c)(3) charitable foundation. Through this foundation, Actelion allegedly donated money in exchange for receiving data from CVC on how much the foundation spent on each drug.  Actelion then allegedly used this information to continue to provide funds to CVC, ensuring that these funds were only used on its products and in doing so receiving back the money that it had “donated,” even after the foundation advised against this practice.

Additionally, the government alleged that Actelion did not allow Medicare patients to participate in Actelion’s own free drug program, even if they were qualified for charitable assistance from CVC. Instead of giving patients access to free medications under its free drug program, Actelion referred patients to CVC, which would use Actelion funds to cover the copay on the medications, leaving Medicare to foot the rest of the bill. The government alleges these CVC funds induced Medicare patients to choose Actelion drugs rather than competing (often cheaper) pulmonary medications.

Why Do Drug Companies Pay Kickbacks to PAPs?

The pattern of the allegations in the Actelion case is not new.  Often, the charitable PAP foundations on the surface appear to have altruistic intentions – i.e., helping low-income patients get the medical care and products that they need. Many PAPs are legitimate organizations that help patients get access to otherwise unaffordable healthcare. However, when giant pharmaceutical companies funnel money into these programs to increase company revenue at the expense of government insurance programs, this activity has the potential to unload huge healthcare costs on American taxpayers.

Take Action

If you are aware of a PAP that is potentially defrauding public insurance programs, including Medicare or Medicaid, you may qualify to serve as a whistleblower. If the allegations you bring to light are successfully prosecuted by the federal government, you may be entitled to a monetary reward. Please contact the Qui Tam lawyers at Baron & Budd or call us at (866) 401-5971 if you would like more information.

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