Updated on: December 12, 2018

Actelion Pharmaceuticals Pays $360 Million to Settle Allegations of Kickbacks to Patients: Lessons Learned

Original story posted on: December 11, 2018

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Medicare patients were specifically excluded from the program.

The U.S. Justice Department announced on Dec. 6 that Actelion Pharmaceuticals has agreed to pay $360 million to resolve allegations that it paid kickbacks by giving contributions to the Caring Voice Coalition, a charitable organization that then used the contributions to pay the copays of patients purchasing Actelion drugs.

There had been several other settlements related to this same charity. Caring Voices had an received a favorable advisory opinion in 2006: https://oig.hhs.gov/fraud/docs/advisoryopinions/2006/AdvOpn06-04A.pdf

In a first, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) revoked that favorable opinion in late 2017: https://oig.hhs.gov/fraud/docs/advisoryopinions/2017/AdvOpnRescission06-04.pdf

The government’s core allegation is that by eliminating copayment issues, drug companies were able to raise prices without alienating patients because the patient wasn’t responsible for any share of the price. The government concluded that Caring Voices Coalition made misrepresentations when seeking the advisory opinion. In particular, the Coalition suggested that no patient-specific information would be shared with donors. In fact, the government believes that Actelion was gathering data about how many of the company’s patients used Caring Voice Coalition and geared donations to cover exactly the amount used by its patients – but not the patients who used a competitor’s drugs.

The government stressed that Actelion had a program to assist patients who were poor. However, Medicare patients were specifically excluded from the program. Medicare patients were sent to the Caring Voices Coalition.

What lessons can we learn from this settlement? That is not an easy question to answer. Certainly, one factor influencing this case is the belief that drug companies are rapidly increasing prices, and that this program allowed that trend to continue without prompting a political outcry. It is well known that routine waiver of copayments can be a problem. One interesting question is whether the government would have viewed the case differently if Actelion had used its own program to adjust the copayments.

I don’t know the answer, but I am confident that this case shouldn’t cause listeners to conclude that waiving copays for the poor is inherently problematic. It is not. Hospitals can, and if they are tax-exempt, should provide assistance to poor patients. I think the big lesson of the case is this: if you design a plan to lower patient responsibility broadly while not offering the same discount to insurers, you may face trouble.

When you try to find ways to “help” people with high-deductible plans, those plans are going to view it as a means to circumvent their agreement with their insured. Both the government and private insurers have copayments as a means to control utilization. Remember that an insurer’s obligation to pay a claim derives entirely from a patient’s obligation to pay.

The legal term is “indemnification;” the insurer is promising to absorb any costs for which the patient is responsible. Because of this, in most cases, when you tell a patient they don’t need to pay, the insurer doesn’t need to pay. That being said, when a patient is truly destitute, I don’t think many courts will absolve the insurer of a duty to pay. I am not aware of cases supporting that proposition, but I also don’t believe that there are any that undercut it.

The bottom line is that I feel comfortable concluding that it is permissible to waive copayments for the poor. However, be aware that any broader effort to circumvent the requirement may not be viewed as, dare I say, “copay-setic.”

For more discussion on recent cases, regulations, and legal risk, please sign up for my RACmonitor webcast on Dec. 18, “How to Avoid Legal Pitfalls: Learn from False Claims Act Cases and OIG Guidance.”

Part of staying out of trouble is staying on top of the government’s enforcement priorities.

Comment on this article

David M. Glaser, Esq.

David M. Glaser, Esq., is a shareholder in Fredrikson & Byron’s Health Law Group. David helps clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and a member of the RACmonitor editorial board.


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