Alexion Pharmaceuticals Inc. of New Haven will pay the government $13 million to resolve allegations that it violated the False Claims Act through a kickback scheme.
The U.S. Department of Justice announced the civil agreement on Thursday. Federal investigators allege Alexion and two other global pharmaceutical companies illegally paid the Medicare or Civilian Health and Medical Program (ChampVA) copays for their own drugs. The money was paid through independent foundations which the government claims the companies were using as “mere conduits.”
Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division said these enforcement actions make it clear the government will hold drug companies accountable if they pay illegal kickbacks.
“Pharmaceutical companies undercut a key safeguard against rising drug costs when they create assistance funds to serve as conduits for the companies to subsidize the copays of their own drugs,” Hunt said in a statement.
Massachusetts U.S. Attorney Andrew E. Lelling, whose office was involved in the investigation, alleged this misconduct is “widespread.”
“Enforcement will continue until pharmaceutical companies stop circumventing the anti-kickback laws to artificially bolster high drug prices, all at the expense of American taxpayers,” Lelling added.
Alexion sells Soliris, which is aimed at treating a neuromuscular disorder. The drug can cost about $500,000 a year.
From 2010 to 2016, Alexion allegedly made donations to a special fund at a foundation to pay the Medicare copay obligations of patients taking Soliris.
The government claimed Alexion knew the drug’s price would be prohibitive for patients. Alexion approached a foundation in 2010, asking it to create a fund to help patients afford the medication by paying the patients’ Medicare copays and other medical expenses, according to the government. Alexion was the sole donor to the fund.
The scheme resulted in claims to Medicare to cover the cost of Soliris, according to the government.
The anti-kickback statute bars drug companies from paying any remuneration to induce Medicare or ChampVA patients to purchase their drugs. This prohibition includes paying patients’ copays.
According to the government, Alexion made numerous changes following the alleged misconduct, including hiring a new eight-member executive leadership team and changing half the members of its board of directors.
Alexion said in a statement, “Alexion is pleased to have reached a constructive resolution with the government that recognizes the significant positive changes achieved over the last two years under the company’s new leadership.”
“We are committed to continuing to work toward our mission of transforming the lives of people with rare and devastating diseases,” the statement added.
According to the company, it received a subpoena in December 2016 regarding its support of “independent charity patient assistance programs that provide financial assistance to patients with diseases treated by Alexion therapies.”
“Alexion was among a number of companies that received similar subpoenas as part of an industry-wide government investigation,” the company’s statement said.
Two other companies also agreed to pay civil settlements to resolve kickback allegations, according to the Department of Justice. The others included the Ireland-based Jazz, which sells the narcolepsy medication Xyrem, and the Denmark-based Lundbeck, which sells Xenazine, which treats involuntary movement associated with Huntington’s disease. Jazz agreed to pay $57 million, while Lundbeck will pay $52.6 million, according to the government.
While Alexion moved its corporate headquarters to Boston in 2018, hundreds of employees continue to work at the company’s research facility in New Haven.
Contact Michelle Tuccitto Sullo at msullo@newhavenbiz.com
