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Advanced Care Scripts agrees to pay $1.4 million to resolve allegations that it conspired with Biogen to pay kickbacks through the two foundations

BOSTON – Cambridge-based pharmaceutical company Biogen Inc. has agreed to pay $22 million to resolve allegations that it violated the False Claims Act by illegally using two foundations, Chronic Disease Fund (CDF) and The Assistance Fund (TAF), as conduits to pay the Medicare co-pays for patients taking Biogen’s multiple sclerosis (MS) drugs, Avonex and Tysabri.

Advanced Care Scripts (ACS), a specialty pharmacy that performed services for Biogen, has agreed to pay $1.4 million to resolve allegations that it conspired with Biogen to enable Biogen to use CDF and TAF as conduits for Biogen to pay Medicare co-pays for Avonex and Tysabri patients.

In separate settlements in late 2019, CDF paid $2 million and TAF paid $4 million to resolve allegations concerning their respective roles in enabling certain pharmaceutical companies to pay kickbacks to Medicare patients.

When a Medicare beneficiary obtains a prescription drug covered by Medicare Part D, the beneficiary may be required to make a partial payment, which may take the form of a co-payment, co-insurance, or deductible (collectively, co-pays). Congress included co-pay requirements in these programs, in part, to encourage market forces to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs. The Anti-Kickback Statute prohibits pharmaceutical companies from offering or paying, directly or indirectly, any remuneration – which involves money or any other thing of value – to induce Medicare patients to purchase the companies’ drugs. 

As part of today’s settlements, the government alleged that Biogen, acting with ACS’s help, used CDF and TAF, each of which claimed status as a nonprofit organization for tax purposes, as conduits to pay the co-pay obligations of thousands of Medicare patients taking Avonex and Tysabri. According to the government’s allegations, Biogen used CDF and TAF, which Biogen paid, to cover Avonex and Tysabri patients’ co-pays to induce those patients’ Medicare-reimbursed purchases of the drugs. 

The government specifically alleges that in 2011, Biogen identified Medicare-eligible Avonex patients in Biogen’s free drug program, and arranged for ACS to transfer those patients from the Biogen free drug program to CDF, so that CDF could cover those patients’ Medicare co-pays and the patients’ purchases of Avonex would generate Medicare revenue for Biogen. Biogen then paid CDF, and ACS promptly sent CDF batch files of co-pay assistance applications for Medicare-eligible Avonex patients who had been receiving the free drug from Biogen. CDF subsequently approved most of those applications and covered the costs of those patients’ Medicare co-pays for Avonex.   

The government further alleges that in 2012, Biogen identified Medicare-eligible Tysabri patients in Biogen’s free drug program, and arranged for ACS to transfer those patients from the Biogen free drug program to TAF, so that TAF could cover those patients’ Medicare co-pays and the patients’ purchases of Tysabri would generate Medicare revenue for Biogen. Biogen made payments to TAF in the second and third quarters of 2012, and each time ACS then transferred to TAF batch files of co-pay assistance applications for Medicare-eligible patients who had been receiving the free drug from Biogen. TAF subsequently paid most or all those patients’ Medicare co-pays for Tysabri. The government further alleges that, in 2013, in much the same fashion, Biogen worked with ACS again to transition Medicare-eligible Tysabri patients out of Biogen’s free drug program to CDF, which Biogen paid so that CDF would cover those patients’ Medicare co-pays for Tysabri and Biogen would receive the resulting Medicare reimbursement revenue.

“Biogen coordinated with ACS to game the system, time its payments, and direct its money to cover co-pay costs for patients using its drugs,” said First Assistant United States Attorney Nathaniel R. Mendell.  “By using co-pay foundations this way – as a conduit to pay for co-pays for Biogen patients – Biogen violated the anti-kickback statute and undermined Medicare’s co-pay structure, which Congress designed to safeguard against inflated drug prices. We commend ACS for resolving this matter expeditiously and Biogen for resolving this matter on a cooperative basis.” 

“The resolution announced today, like prior settlements concerning similar misconduct, demonstrates the government’s commitment to hold accountable companies that pay kickbacks to undermine important constraints on rising drug costs,” said Acting Assistant Attorney Jeffrey Bossert Clark of the Department of Justice’s Civil Division. “Drug companies that illegally manipulate charitable patient assistance programs to subsidize copays for their own products will be held accountable.” 

“Kickback schemes can undermine our healthcare system and lead to higher costs for the Medicare program,” said Phillip Coyne, Special Agent in Charge, Office of the Inspector General of the Department of Health and Human Service’s Boston Regional Office. “We will continue to hold pharmaceutical companies and specialty pharmacies accountable if they work together to subvert the charitable donation process and violate the prohibition on the payment of kickbacks.”

“Biogen tried to unfairly boost its bottom line by working with Advanced Care Scripts to bill Medicare for those who were already receiving their drug for free, undermining Medicare’s co-pay structure which was set up to safeguard against inflated drug prices,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division. “Kickback schemes like this one undermine our healthcare system, can compromise medical decisions, and waste taxpayer dollars. The FBI will continue to work with our partners to hold accountable those who conspire to disguise kickbacks as charitable contributions, at the expense of the Medicare program.”

Since 2017 the U.S. Attorney’s Office has collected over $1 billion from eleven pharmaceutical companies that allegedly used third-party foundations as conduits to pay kickbacks. The Department also has reached settlements with four foundations, as well with ACS concerning its relationship with a different pharmaceutical company.

The False Claims Act settlements resolve allegations originally brought in lawsuits filed by whistleblowers under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. In connection with today’s announced settlement, the relator will receive approximately $3.96 million of the recovery.

First Assistant U.S. Attorney Mendell, Acting Assistant Attorney General Clark, HHS-OIG SAC Coyne, and Boston FBI SAC Bonavolanta made the announcement today. The matter was handled by Assistant U.S. Attorneys Abraham R. George, Evan Panich and Gregg Shapiro of Lelling’s Affirmative Civil Enforcement Unit, with assistance from Trial Attorneys Augie Ripa and Sarah Arni of the Department of Justice’s Civil Division.

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