Actelion: Allegedly Warned, Still Taking the Data

In the Actelion copay kickback settlement, the company agreed to pay $360 million to resolve civil allegations that it used a purportedly independent charitable foundation to pay Medicare patients’ share of its drug prices. The government alleged that Actelion obtained reports showing which of its drugs the foundation was supporting, used those reports to budget future donations, and kept receiving the data despite the foundation’s warning. For someone inside patient assistance, finance or a foundation, the telling detail is the connection between the assistance report and the next funding decision.

Actelion Pharmaceuticals US sold pulmonary arterial hypertension drugs, including Tracleer, Ventavis, Veletri and Opsumit. The Justice Department’s December 6, 2018 announcement described the alleged data-sharing and funding practices in 2014 and 2015. This pharmaceutical fraud case turns on how the company allegedly connected charitable assistance to sales of its own products.

Why the Copay Was the Point

A foundation-paid copay could remove the patient’s immediate price barrier while leaving Medicare to pay the remaining cost of the prescription. That is the economic engine behind the copay charity kickback allegations against Actelion.

Medicare patients may owe a copayment, coinsurance or a deductible for drugs covered under Part B or Part D. The government’s announcement explains that Congress included these payments partly to make patients sensitive to prices and put some pressure on health care costs, including manufacturers’ charges. For an expensive drug, the patient’s portion can itself become an obstacle to a purchase. The announcement applied the Anti-Kickback Statute, which prohibits direct or indirect payments to induce Medicare patients to purchase a manufacturer’s drugs.

The USC Schaeffer Center’s 2020 study, The Association Between Drug Rebates and List Prices, found that increases in rebates were associated with increases in list prices across its sample of branded drugs. Patients’ deductibles and coinsurance can still depend on prices before rebates reach the health plan. A lower net price for the insurer does little for someone who cannot afford the amount due at the pharmacy. Actelion’s case concerned the alleged use of foundation funding to remove that immediate barrier for the company’s own drugs.

Patient Data Became a Donation Budget

Actelion allegedly used the foundation’s product-level reports to decide how much money to contribute next. The government described a recurring exchange of information that let the company connect its donations to its own prescriptions.

The reports covered how many patients the foundation had assisted on each Actelion drug, how much it had spent on those patients, and how much it expected to spend on them in the future. Expected spending supplied a basis for the next contribution.

According to the government, Actelion used this information to budget payments drug by drug and confirm that its donations would cover patients taking Actelion products, but not patients taking competing manufacturers’ PAH drugs. The alleged funding calculation followed the donor’s products.

The government alleged that the foundation paid copays for thousands of patients, inducing purchases that Actelion’s prices might otherwise have prevented and generating Medicare claims for the remaining cost.

For a finance employee, the recognizable record is a contribution budget built from the foundation’s drug-specific spending forecast. For someone at the foundation, it is the report sent back to the donor.

Free Drugs Were Available, but Medicare Patients Were Sent Elsewhere

Actelion allegedly excluded Medicare patients from its free-drug program even when they could not afford their copays. The program remained open to other financially needy patients. The government said Actelion instead referred the Medicare patients to the foundation to generate revenue and induce purchases.

That eligibility decision changed who paid for the medicine. Giving a patient the drug free produces no revenue from that supply. Funding the patient’s copay can instead generate a sale, with Medicare paying the balance. In the government’s account, Actelion kept financially needy Medicare patients on that second path.

The patient’s need and the manufacturer’s financial interest therefore met at the referral decision. A patient seeking help could end up with a foundation grant and a Medicare-funded prescription instead of a free supply from the manufacturer. The internal policy deciding which patients could receive free medicine was part of the alleged kickback arrangement.

The Foundation Warning and the Tracleer Price

The government alleged that Actelion kept receiving copay expenditure data even after the foundation warned the company against receiving it. The alleged warning came from the very organization supplying the reports.

The warning concerned data with a specific use inside the manufacturer: calculating contributions for its own products. An employee who saw the warning and the later reports would have a view of both the concern and what the business did afterward.

The price history gives that connection its force. In the settlement announcement, the U.S. Attorney’s Office said Actelion raised Tracleer’s price by nearly 30 times the rate of overall U.S. inflation during the covered period. In the government’s account, Actelion raised the price, paid away the patient’s reason to balk, and left taxpayers with the balance through Medicare.

Johnson & Johnson Acquired Actelion After the Alleged Conduct

Johnson & Johnson acquired Actelion on June 16, 2017, after the conduct covered by the settlement. The Justice Department said Johnson & Johnson was not involved in the alleged conduct.

What Evidence Is Needed to Prove Fraud?

For this kind of copay arrangement, the evidence connects foundation assistance, product-specific funding decisions and the prescriptions charged to Medicare. Actelion’s case identifies the business records that can make those connections: patient counts by drug, actual and forecast copay spending, contribution budgets, free-drug eligibility policies, referral communications and the foundation’s warning.

Different healthcare employees may know different parts. A patient-assistance employee may know why a Medicare patient was referred away from free medicine. A finance employee may know how the donation budget was calculated. A foundation employee may know what information the manufacturer requested and received. The value of that knowledge is in explaining how a decision in one part of the business affected the payment in another.

Our work with pharmaceutical whistleblowers starts with what you know about those decisions. Bring that knowledge to our experts so we can connect the funding, referrals and Medicare claims with you. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

Other Copay Cases Show Different Ways to Favor a Donor

United Therapeutics agreed to a separate $210 million civil settlement over alleged PAH copay kickbacks, a smaller settlement than Actelion’s for a closely similar arrangement. The government described product-specific foundation spending data used to decide donations, along with a policy excluding needy Medicare patients from free drugs. It is the closest parallel to Actelion’s combination of funding information and patient referrals.

The whistleblower’s second amended complaint against Incyte alleged a similar move from free Jakafi to foundation assistance that generated Medicare claims. It described the information flowing back to the manufacturer:

The alleged information flow let the manufacturer see whether its contribution supported patients taking its medicine.

In Pfizer’s copay case, the government alleged that the company coordinated a foundation fund’s opening with a Tikosyn price increase. Timing served the commercial purpose: assistance became available alongside the higher price. Actelion’s distinctive allegation was the continuing use of patient and expenditure data despite the foundation’s warning.

The Jazz and Lundbeck settlements show other ways fund administration could favor a manufacturer’s medicine. Jazz allegedly funded a program that required patients using competing products to obtain a denial letter from another assistance plan before receiving help. Lundbeck allegedly arranged to repurpose donations to a general fund after the foundation stopped covering certain Xenazine uses through its Huntington’s disease fund.

These cases put different decisions under scrutiny: how much to donate, when a fund opens, which patients face additional conditions, and where money moves when a fund stops paying. In Actelion’s case, the government’s account comes back to the report that told the donor how much assistance its own drugs would need next.

You Know How the Donation Was Decided

If you saw foundation reports turn into product budgets, or needy Medicare patients directed away from free drugs, speak to one of our whistleblower experts about how those decisions were made. We connect the funding decisions to Medicare claims to build your strongest copay kickback whistleblower case, and bring in pharmaceutical kickback whistleblower lawyers who understand patient-assistance arrangements. We stay beside you as your partners throughout the case.