MercoPress. South Atlantic News Agency

Biogen, Novartis, Teva involved in major kickback controversy with US Medicare

Drug companies are prohibited from subsidizing co-payments for patients enrolled in the government's Medicare healthcare program for those aged 65 and older.

A Florida-based charity will pay US$4 million to resolve claims that it acted as a conduit for companies including Biogen Inc and Novartis AG to pay kickbacks to Medicare patients using their high-priced multiple sclerosis drugs, the U.S. Justice Department said on Wednesday.

The settlement with the patient assistance charity The Assistance Fund marked the third so far with a foundation linked to an industry-wide probe that has resulted in US$850 million in settlements with drug makers and charities.

TAF like the other foundations provide assistance to patients seeking to pay out-of-pocket costs for medications and says that since 2009 it has provided assistance to 78,000 people.

TAF did not admit wrongdoing. It said it fully cooperated with the investigators and is committed to operating in full compliance with federal guidelines governing how charities like it can provide assistance to Medicare patients.

Drug companies are prohibited from subsidizing co-payments for patients enrolled in the government's Medicare healthcare program for those aged 65 and older. Companies may donate to non-profits providing co-pay assistance as long as they are independent.

But the government has alleged that various drugmakers have used charities like Orlando, Florida-based TAF as means to improperly pay the co-pay obligations of Medicare patients using their drugs, in violation of the Anti-Kickback Statute.

The investigation, led by the U.S. Attorney's Office in Boston, came amid growing attention to soaring U.S. drug prices. Co-pays are partly meant to serve as a check on healthcare expenses by exposing patients to some of a medicine’s cost.

The settlement with TAF centered on payments it received from three MS drug manufacturers, Teva, which sells Copaxone; Biogen, which sells Tysabri and Avonex; and Novartis, which sells Gilenya.