U.S. files major False Claims Complaint

The United States has filed a major False Claims Act complaint against Teva Pharmaceuticals USA Inc. and Teva Neuroscience Inc. (Teva), alleging that they illegally paid the Medicare co-pays for their multiple sclerosis (MS) product, Copaxone, through purportedly independent foundations that the companies used as conduits in violation of the Anti-Kickback Statute, the Department of Justice announced today. The government alleges that, from 2007 through 2015, Teva paid The Assistance Fund (TAF) and Chronic Disease Fund (CDF) with the intent and understanding that the foundations would use Teva’s money to cover the Medicare co-pays of patients taking Copaxone. During the same period, Teva raised the price of Copaxone from approximately $17,000 per year to over $73,000 per year. According to the United States’ complaint, Microsoft Word – Teva complaint — 2020.08.17a.docx Teva largely effectuated its scheme through its vendor, Advanced Care Scripts Inc. (ACS), a specialty pharmacy to which Teva referred virtually all Copaxone patients who faced Medicare co-pays for the drug. Teva used information from ACS and from TAF and CDF to calculate how much money to pay each foundation to maintain coverage of the Medicare co-pays of Copaxone patients enrolled in each foundation. The U.S. further alleges that ACS coordinated the referral of newly-prescribed Copaxone patients to TAF and CDF with Teva, referring patients in batches at the same time that Teva made payments to the foundations, which ensured that Copaxone patients received the vast majority of the co-pay assistance TAF and CDF provided with money from Teva.

“The government’s complaint today alleges that Teva used ostensibly independent charitable foundations as vehicles to pay hundreds of millions of dollars in kickbacks, all while raising the price of its drug, Copaxone, at a rate over 19 times the rate of inflation,” said Andrew E. Lelling, United States Attorney for the District of Massachusetts. “Teva’s alleged kickbacks undermined the Medicare program’s co-pay structure, which Congress created as a safeguard against inflated drug prices.”

“Drug manufacturers that offer kickbacks in order to boost profits – as alleged in this case – drive up health care costs for everyone and undermine the public’s trust in the health care system,” said Special Agent in Charge Phillip M. Coyne of the U.S. Department of Health and Human Services, Office of Inspector General. “Our agency, working closely with our law enforcement partners, will continue to thoroughly investigate such corrosive schemes.”

“As alleged, Teva gamed Medicare and tried to deflect attention away from a 329% increase in the cost of its drug by masking kickbacks as charitable contributions,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI’s Boston Division. “This case demonstrates the FBI’s ongoing commitment to protect our government programs and the American taxpayers who contribute to them from being victimized by corporations who allegedly pay kickbacks to pad their bottom line.”

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). These co-pay obligations may be substantial for expensive medications. 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 includes money or any other thing of value – to induce Medicare patients to purchase the companies’ drugs.

The government is seeking triple damages for violations of the federal False Claims Act.

Jeffrey Newman represents whistleblowers in False Claims Act cases. He can be reached at 617-823-3217 or at jeff@jeffnewmanlaw.com