Prosecutors Sue Teva's U.S. Business Over Charitable Donations -- Update
August 18 2020 - 2:05PM
Dow Jones News
By Micah Maidenberg
Federal prosecutors accused Teva Pharmaceutical Industries
Ltd.'s U.S. business of violating an anti-kickback law by using
charitable donations to shield Medicare patients from rising costs
of a multiple sclerosis drug while ensuring the drug's sales.
Between 2006 and at least 2015, Teva's U.S. unit and one of its
subsidiaries paid two foundations more than $300 million for
Medicare copays for patients using the company's Copaxone drug to
treat multiple sclerosis, according to a civil suit the Justice
Department filed Tuesday in the U.S. District Court for
Massachusetts.
The Teva businesses used the foundations as conduits,
prosecutors allege, intending for the funds it provided to cover
copays as it raised the cost of the drug from about $17,000 a year
to more than $73,000 a year from late in 2006 until five years ago,
the suit alleges. Using the foundations in such a manner violated a
federal anti-kickback statute, according to the complaint.
"Teva intended the payments to ensure that Copaxone patients
never faced the steep prices that Teva charged for its drug, thus
inducing the patients, including Medicare patients, to purchase the
drug," the lawsuit says.
Teva said it would defend itself against the suit.
"This case brought by the Department of Justice regarding these
charitable contributions only seeks to further restrict patients'
access to important medicines and health care," a spokeswoman for
the drugmaker's U.S. business said in a statement.
American depository receipts for Israel-based Teva
Pharmaceutical Industries were down 10% in midday trading in New
York.
The new suit against Teva's U.S. unit is the latest example of
federal prosecutors taking aim at the relationship between
pharmaceutical companies and charitable foundations that help
patients pay for treatments. The Justice Department has
investigated more than a dozen drugmakers for their donations to
foundations that help with drug copays.
In June, the Justice Department accused Regeneron
Pharmaceuticals Inc. of paying kickbacks to a foundation to boost
sales of its eye-disease treatment Eylea. A Regeneron spokeswoman
said at the time the company didn't believe the case had merit and
would defend itself.
Other drugmakers have settled investigations into whether they
violated federal law by using charities to pay for Medicare
patients' out-of-pocket costs for prescriptions. Pfizer Inc. agreed
two years ago to pay about $24 million to resolve such allegations,
saying at the time the settlement wasn't an admission of facts or
liability.
Prosecutors claim that Teva's U.S. unit and its subsidiary
referred patients using Copaxone who faced Medicare copays to a
specialty pharmacy. That company arranged for patients to obtain
help with copays through two foundations, Chronic Disease Fund and
the Assistance Fund, according to the suit.
The specialty pharmacy told Teva how many Copaxone patients were
receiving copay help from each organization, which Teva would use,
along with information from the foundations, to determine how much
it needed to donate to each foundation, the lawsuit says.
The foundations, as well as the pharmacy, aren't listed as
defendants in the case. Representatives from the Chronic Disease
Fund and from the pharmacy, Advanced Care Scripts Inc., didn't
immediately respond to requests for comment.
A spokeswoman for the Assistance Fund said that it is committed
to operating in full compliance with federal rules, adding that its
alleged conduct, as described in the suit, was attributed to a
former employee.
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
August 18, 2020 13:50 ET (17:50 GMT)
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