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Drugmakers Jazz, Alexion, Lundbeck to pay $123 million to resolve U.S. charity kickback probe

BOSTON (Reuters) – Three drugmakers will pay $122.6 million to resolve claims they used charities that help cover Medicare patients’ out-of-pocket drug costs as a way to pay kickbacks aimed at encouraging use of their medications, including some expensive ones.

The U.S. Justice Department on Thursday said Jazz Pharmaceuticals Plc, Lundbeck A/S and Alexion Pharmaceuticals Inc had become the latest companies to settle claims stemming from an industry-wide probe of drugmakers’ financial support of patient assistance charities.

The government has alleged in earlier settlements that drugmakers used such charities as a means to improperly pay the copay obligations of Medicare patients using their drugs in violation of the Anti-Kickback Statute.

The investigation came amid growing attention to skyrocketing U.S. drug prices. Copays are partly meant to serve as a check on healthcare expenses by exposing patients to some of a drug’s cost.

Jazz will pay $57 million, Lundbeck will pay $52.6 million and Alexion will pay $13 million. None of the companies admitted wrongdoing, a fact Lundbeck noted in a statement.

Alexion in a statement said the settlement recognized “significant,” recent, positive changes at the company. Jazz did not respond to a request for comment.

Drug companies are prohibited from subsidizing copayments for patients enrolled in the government Medicare healthcare program for those aged 65 and older. Companies may donate to nonprofits providing copay assistance as long as they are independent.

The investigation led to allegations that some drugmakers and charities did not act independently enough.

The government alleged Alexion in 2010 asked a foundation to set up a fund to help patients afford Soliris, a treatment for two rare blood disorders that costs over $500,000 annually.

While such funds are typically set up to help patients afford treatments for a given disease or condition, the government said Alexion discussed with the foundation wanting to only support patients using Soliris.

The department said Jazz similarly asked a foundation to set up funds to cover copays for patients using its narcolepsy treatment Xyrem and its pain medication Prialt.

The foundation’s funds through 2014 almost exclusively assisted patients using those two drugs and referred those with chronic pain trying to afford drugs other than Prialt elsewhere, the government said.

The department said Lundbeck beginning in 2011 donated millions of dollars to a charity’s fund that ostensibly covered copays of patients with Huntington’s Disease, but in reality only covered the copays of patients using its drug Xenazine.

Reporting by Nate Raymond in Boston; Editing by Susan Thomas and Bill Berkrot

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