Teva Pharmaceuticals: Charitable Donations for Its Own Customers

In the Teva Copaxone kickback settlement, Teva agreed to pay $425 million to resolve allegations that it used charitable foundations to cover Medicare copays for its own multiple sclerosis drug. The government’s account followed the money through a specialty pharmacy and back to patients taking Copaxone, while Teva kept raising the drug’s price. For someone inside patient assistance, the revealing records were the waiting-patient counts, donation notices and applications sent when a foundation reopened its fund.

The Department of Justice announced these pharmaceutical fraud settlements on October 10, 2024. Alongside the Copaxone resolution, Teva agreed to pay $25 million over generic price-fixing allegations. The combined civil settlement was $450 million, based on Teva’s ability to pay. One matter concerned donations that allegedly bought prescriptions. The other concerned arrangements between manufacturers over prices and customers.

How Do Pharmaceutical Kickbacks Work?

The alleged pharmaceutical kickbacks in the Copaxone case traveled through patient assistance. The government said Teva directed money through two supposedly independent foundations to cover the Medicare copays of people taking its own drug. A donation left the manufacturer, a foundation paid the patient’s share, and Medicare faced the resulting drug claim.

The government filed its own Copaxone complaint in federal court in Massachusetts in August 2020, over alleged conduct from 2006 through 2017. It accused Teva of coordinating with a specialty pharmacy and the foundations to direct its charitable payments to Copaxone patients. During that period, the government said, Teva steadily raised the drug’s price by thousands of dollars. The government alleged that the claimed charity and the company’s sales were connected by design.

That connection explains why copays sit at the center of the case. Medicare patients can owe part of a prescription’s cost through a copayment, coinsurance or deductible. As the Justice Department explained in its settlement announcement, Congress included those payments partly to put a check on health care costs, including the prices drug manufacturers could demand. The alleged arrangement let Teva raise its price while using foundation money to cover its customers’ share.

Drug prices also reach patients unevenly. The 2020 USC Schaeffer Center study The Association Between Drug Rebates and List Prices found that rebates and list prices tended to rise together across branded drugs. It explained how higher list prices can hurt insured patients whose coinsurance and deductibles depend on those prices. Covering that share lets a manufacturer keep customers while raising the price, the incentive at the center of the Copaxone allegations.

The government’s claim was that Teva paid indirect inducements prohibited by the Anti-Kickback Statute and caused false claims to Medicare. The patient saw help with an expensive prescription. The government saw the manufacturer financing demand for the drug it was making more expensive.

At the time of the announcement, the Justice Department called Teva’s resolution the largest copay assistance settlement to date. Since 2017, the Massachusetts office had collected over $1.4 billion through its foundation-conduit enforcement initiative, which also reached four foundations and a specialty pharmacy.

Advanced Care Scripts Connected the Donation to the Patient

Advanced Care Scripts provided benefits investigation services for Teva. Its account shows how a specialty pharmacy could connect a manufacturer’s donations to patients waiting for assistance. The specialty pharmacy reached its own $3.5 million civil settlement, before Teva’s manufacturer settlement.

In that resolution, ACS acknowledged that it passed information from the Chronic Disease Fund and The Assistance Fund to Teva so the manufacturer could compare its donations with what the foundations spent on Copaxone patients. The information moved in both directions. Teva sometimes gave ACS advance notice of its payments to the foundations.

When the funds ran out of money and stopped accepting applications, ACS kept Teva updated on Medicare Part D patients who had Copaxone prescriptions, met the foundations’ assistance criteria and were waiting for coverage. At least one ACS employee understood that Teva would use the number waiting to help decide how much to give next.

Once ACS learned that a fund had reopened, it promptly sent a batch file consisting almost entirely of Copaxone patients’ applications. It often then heard that most or all of those applications had been approved. The batch file connected a funding decision to a group of customers ready to fill prescriptions.

The pharmacy’s account matters because it describes how donation amounts, fund openings and patient applications could be coordinated across separate organizations.

A donation ledger shows how much went out. Waiting-patient reports and batch files can explain whose prescriptions the money was meant to support.

The Difference Between a Free Drug and a Paid Copay

Paying a patient’s copay can generate a Medicare-funded sale for a manufacturer. Giving the same patient the drug free generates no sale. That distinction explains the financial incentive behind routing patients through foundations.

A whistleblower’s qui tam case against Incyte described that choice in its allegations about Jakafi:

The same complaint alleged that Incyte received foundation data confirming that the foundations funded Jakafi patients’ Medicare copays. The parallel is the feedback: a manufacturer could see whether money sent to a foundation supported its own product. In ACS’s acknowledgment, that feedback came through the specialty pharmacy. In the Incyte complaint, it came from the foundations.

The important business question is who controlled the destination of the assistance. A foundation’s name on the payment tells only part of that story. The instructions, patient information and reports returning to the manufacturer explain the commercial purpose alleged in these cases.

Teva’s Generic Price-Fixing Settlement

Teva’s generic price-fixing settlement concerned alleged arrangements with competing manufacturers over pravastatin, clotrimazole and tobramycin. Pravastatin treats high cholesterol and triglyceride levels. Tobramycin is an antibiotic. The government’s civil allegations covered May 1, 2013 through December 31, 2015.

According to the Justice Department’s account of the generic arrangements, Teva allegedly paid and received prohibited compensation through agreements about prices, supply and the allocation of customers. The alleged conduct reached beyond setting a price inside Teva. It involved competing manufacturers arranging business among themselves.

An arrangement over which manufacturer supplies which customer can deprive the customer of competing offers.

Teva’s civil settlement was the seventh resolution from the Justice Department’s generic price-fixing investigation. The civil case connected those arrangements to the Anti-Kickback Statute and the False Claims Act. The Justice Department described the payment as compensation for the government’s exposure to kickbacks used to further anticompetitive conduct. For a pricing or account employee, the relevant business records concern competitor communications, customer assignments, supply arrangements and the transactions that followed them.

Both civil matters put drug spending at issue, but the transactions were different. The Copaxone allegations followed money through patient assistance. The generic allegations followed compensation and agreements between manufacturers.

What Evidence Is Needed to Prove Fraud?

In these healthcare fraud allegations, useful evidence connects the manufacturer’s decisions to the prescriptions, customers and government payments affected. In the Copaxone matter, the practical connections were waiting-patient counts, donation amounts, notice of foundation funding, batch applications and approvals. In the generic matter, they were arrangements over prices, supply and customers.

For pharmaceutical whistleblowers, the value of those records lies in what they show together. Someone handling foundation applications may understand the timing of a batch submission. Someone approving donations may know how the amount was chosen. Someone in generic sales may know how a customer came to be assigned to a particular manufacturer. We work with that knowledge to connect the internal decision to the government’s payment.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Why the Money Moved

If you saw donation amounts tied to waiting prescriptions or customer agreements made with competing manufacturers, speak with our whistleblower experts about why the money moved. We build the case with you and bring in pharmaceutical fraud whistleblower lawyers who understand copay funding and generic pricing arrangements. From the first discussion through the pursuit of a recovery, we stay on your side of the table.