DOJ reaches $122M settlement with drug companies over Medicare violation

Opioids. File photo: Flickr/K-State

April 5 (UPI) — Three drugmakers accused of illegally paying copays for Medicare patients reached a settlement with the U.S. Department of Justice totaling $122.6 million Thursday.

The Justice Department said that Jazz Pharmaceuticals, Lundbeck LLC and Alexion Pharmaceuticals violated a statute that prohibits a pharmaceutical company from offering or paying any remuneration to induce patients to purchase the company’s drugs.

“This misconduct is widespread, and enforcement will continue until pharmaceutical companies stop circumventing the anti-kickback laws to artificially bolster high drug prices, all at the expense of American taxpayers,” U.S. Attorney Andrew Lelling said.

In 2011, Jazz allegedly requested that an outside foundation create a fund that would pay the copays of Medicare patients using its narcolepsy drug Xyrem.

The company then made Medicare patients ineligible for Jazz’s free drug program, instead referring them to the foundation. This enabled Jazz to generate revenue from Medicare and induce purchases of the drug instead of providing them for free.

“Meanwhile, Jazz raised the price of Xyrem by over 150 percent from 2011 through the end of the relevant time period,” the Justice Department said.

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Lundbeck — which manufactures Xenazine, the only approved drug to treat ailments associated with Huntington’s disease — allegedly funneled millions of dollars into a fund that ostensibly provided financial support only for patients with Huntington’s disease. The company then referred Xenazine patients with other conditions to the foundation and paid their copays for the unapproved uses.

Alexion also allegedly asked a foundation to set up a fund to cover out-of-pocket expenses for patients that take Soliris, a drug used to treat a rare blood disorder that costs $500,000 a year.

Jazz and Lundbeck each entered five-year corporate integrity agreements as part of their settlements, which require them to ensure any patient assistance programs they donate to are operated independently.

Alexion wasn’t required to enter such a deal because the Justice Department said it had already made “sweeping and fundamental” organizational changes including hiring a new eight-member executive leadership team and changing half of the members of its board of directors.

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