Astellas Will Pay $100 Million to Resolve Kickback Allegations Involving Medicare Copays

Astellas, a pharmaceutical company, has just agreed to pay $100 million to resolve allegations that it illegally used charitable foundations to cover Medicare copays to boost sales of its drug Xtandi.

Astellas Will Pay $100 Million to Resolve Kickback Allegations Involving Medicare Copays

Because patients covered by Medicare are often required to make partial payments for prescription drugs, many foundations subsidize them. When pharmaceutical companies donate to those foundations, the practice may violate the Anti-Kickback Statute, which forbids drugmakers from incentivizing the purchase of their products.

Astellas is the maker of Xtandi, a drug used to treat prostate cancer. According to the government’s findings, Astellas directly asked two foundations to start two funds to assist prostate cancer patients with their copay obligations. The funds then began exclusively subsidizing the purchase of Xtandi by Medicare-covered patients. Meanwhile, Astellas was the only donor to the funds.

Astellas’ $100-million settlement also requires the company to enter a corporate integrity agreement through 2024. From now on, any attempts made by Astellas to donate to Medicare copay funds will be closely monitored.

“Kickback schemes can undermine our healthcare system, compromise medical decisions, and waste taxpayer dollars,” a spokesperson for the prosecution said. The government official added that the Department of Justice will continue to protect “the integrity of the Medicare program.”

Assistant Attorney General Jody Hunt said in a statement that the improper use of foundations to subsidize copays that benefit a specific pharmaceutical company “violates the law and undercuts a key safeguard against rising drug costs.”  

Astellas currently faces a separate whistleblower lawsuit over Medicaid fraud. The suit alleges the drugmaker defrauded the government healthcare plan’s Drug Rebate Program. Ronald J. Streck filed it on behalf of the federal government and 26 states. Streck learned about the alleged misconduct while holding a management position at a network of drug wholesalers.  

Whistleblowers like Streck can receive up to 25 percent of any recoveries they may help secure for the government. Under the False Claims Act, tipsters also enjoy anti-retaliation protections.

Medicare copays and the Medicaid Rebate Program are important instruments to facilitate access to prescription drugs; they help keep prices in check and provide opportunities for the subsidization of their purchase. When pharmaceutical companies commit Medicare and Medicaid fraud, they are misappropriating resources and potentially depriving patients of critical medications and treatments.

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