United Therapeutics Agrees to Pay $210 Million to Resolve Allegations that it Paid Kickbacks Through a Co-Pay Assistance Foundation

BOSTON – The U.S. Attorney’s Office announced today that pharmaceutical company United Therapeutics Corporation (UT), a seller of pulmonary arterial hypertension (PAH) drugs, has agreed to pay $210 million to resolve allegations that it violated the False Claims Act by paying kickbacks to Medicare patients through a purportedly independent charitable foundation. 

When a Medicare beneficiary obtains a prescription drug covered by Medicare Part B or 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.   

UT sells a number of PAH drugs, including Adcirca, Remodulin, Tyvaso, and Orenitram.  As part of today’s settlement, the government alleged that UT used a foundation, which claims 501(c)(3) status for tax purposes, as a conduit to pay the co-pay obligations of thousands of Medicare patients taking its PAH drugs.  From February 2010 through January 2014, the government alleged, UT routinely obtained data from the foundation detailing how many patients on each UT PAH drug the foundation had assisted and how much the foundation had spent on those patients.  The government alleged that UT used this data to decide the amount to donate to the foundation.  At the same time, the government alleged, UT had a policy of not permitting Medicare patients to participate in its free drug program (which was open to other financially needy patients) even if those Medicare patients could not afford their co-pays for UT drugs.  Instead, in order to generate revenue from Medicare and to induce purchases of its PAH drugs, UT allegedly referred Medicare patients prescribed its PAH drugs to the foundation, which resulted in claims to Medicare to cover the cost of those drugs.

“UT used a third party to do exactly what it knew it could not lawfully do itself,” said Acting United States Attorney William D. Weinreb.  “According to the allegations in today’s settlement agreement, UT understood that the third-party foundation used UT’s money to cover the co-pays of patients taking UT drugs.  UT’s payments to the foundation were not charity for PAH patients generally, but rather were a way to funnel money to patients taking UT drugs.  The Anti-Kickback Statute exists to protect Medicare, and the taxpayers who fund it, from schemes like these that leave Medicare holding the bag for the costs of expensive drugs.”

“While we support efforts to provide patients with access to needed medications, such assistance must comply with federal law.  Today’s settlement shows that the government will hold accountable drug companies that attempt to use illegal kickbacks to defeat mechanisms Congress designed to act as a check on drug pricing and healthcare costs,” said Principal Deputy Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  

UT also has entered into a corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).  The five-year CIA requires, among other things, that UT implement measures designed to ensure that arrangements and interactions with third-party patient assistance programs are compliant with the law.  In addition, the CIA requires reviews by an independent review organization, compliance-related certifications from company executives and Board members, and the implementation of a risk assessment and mitigation process.

“Our corporate integrity agreement requires United Therapeutics to implement controls and monitoring designed to promote true independence from any patient assistance programs to which it donates,” said Gregory E. Demske, Chief Counsel to the Inspector General for the United States Department of Health and Human Services.  “Without true independence, a drug company can use a foundation as a conduit for improper payments that expose the taxpayer-funded Medicare program to the risk of abuse.” 

Acting U.S. Attorney Weinreb, Acting Assistant Attorney General Readler, and HHS- OIG Chief Counsel Demske made the announcement today.  This matter was investigated by HHS-OIG, the Federal Bureau of Investigation, the United States Postal Inspection Service, and the United States Department of Veterans Affairs Office of Inspector General, and was handled by Assistant U.S. Attorneys Gregg Shapiro, Abraham George, and Deana El-Mallawany of Weinreb’s Office, and by Trial Attorneys Augustine Ripa and Sarah Arni of the Justice Department’s Civil Division.