United States Files False Claims Act Complaint Against Drug Maker Teva Pharmaceuticals Alleging Illegal Kickbacks

The United States has filed a False Claims Act complaint against Teva Pharmaceuticals USA Inc. and Teva Neuroscience Inc. (Teva), alleging that they illegally paid the Medicare co-pays for their multiple sclerosis (MS) product, Copaxone, through purportedly independent foundations that the companies used as conduits in violation of the Anti-Kickback Statute, the Department of Justice announced today.

“The department is committed to stopping pharmaceutical companies from using foundations as conduits to funnel kickbacks to Medicare patients, and to prop up excessive drug costs at the expense of the American taxpayers,” said Acting Assistant Attorney General Ethan P. Davis of the Department of Justice’s Civil Division. “We will continue to root out these unlawful kickback arrangements that undermine the integrity of federal health care programs.”

“The government’s complaint today alleges that Teva used ostensibly independent charitable foundations as vehicles to pay hundreds of millions of dollars in kickbacks, all while raising the price of its drug, Copaxone, at a rate over 19 times the rate of inflation,” said Andrew E. Lelling, United States Attorney for the District of Massachusetts. “Teva’s alleged kickbacks undermined the Medicare program’s co-pay structure, which Congress created as a safeguard against inflated drug prices.”

“Drug manufacturers that offer kickbacks in order to boost profits – as alleged in this case – drive up health care costs for everyone and undermine the public’s trust in the health care system,” said Special Agent in Charge Phillip M. Coyne of the U.S. Department of Health and Human Services, Office of Inspector General. “Our agency, working closely with our law enforcement partners, will continue to thoroughly investigate such corrosive schemes.”

“As alleged, Teva gamed Medicare and tried to deflect attention away from a 329% increase in the cost of its drug by masking kickbacks as charitable contributions,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI’s Boston Division. “This case demonstrates the FBI’s ongoing commitment to protect our government programs and the American taxpayers who contribute to them from being victimized by corporations who allegedly pay kickbacks to pad their bottom line.”

When a Medicare beneficiary obtains a prescription drug covered by Medicare Part D, the beneficiary may be required to make a partial payment, which may take the form of a co-payment, co-insurance, or deductible (collectively, co-pays). These co-pay obligations may be substantial for expensive medications. Congress included co-pay requirements in these programs, in part, to encourage market forces to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs. The Anti-Kickback Statute prohibits pharmaceutical companies from offering or paying, directly or indirectly, any remuneration – which includes money or any other thing of value – to induce Medicare patients to purchase the companies’ drugs.

The government alleges that, from 2007 through 2015, Teva paid The Assistance Fund (TAF) and Chronic Disease Fund (CDF) with the intent and understanding that the foundations would use Teva’s money to cover the Medicare co-pays of patients taking Copaxone. During the same period, Teva raised the price of Copaxone from approximately $17,000 per year to over $73,000 per year.

According to the United States’ complaint, Teva largely effectuated its scheme through its vendor, Advanced Care Scripts Inc. (ACS), a specialty pharmacy to which Teva referred virtually all Copaxone patients who faced Medicare co-pays for the drug. Teva used information from ACS and from TAF and CDF to calculate how much money to pay each foundation to maintain coverage of the Medicare co-pays of Copaxone patients enrolled in each foundation. The U.S. further alleges that ACS coordinated the referral of newly-prescribed Copaxone patients to TAF and CDF with Teva, referring patients in batches at the same time that Teva made payments to the foundations, which ensured that Copaxone patients received the vast majority of the co-pay assistance TAF and CDF provided with money from Teva.

The government’s pursuit of these matters illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800‑HHS‑TIPS (800-447-8477).

The lawsuits are being handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of Massachusetts. Investigative support is being provided by the Department of Health and Human Services’ Office of Inspector General and the Federal Bureau of Investigation.

The case is captioned United States v. Teva Pharmaceuticals USA, Inc. and Teva Neuroscience, Inc. No. 20-cv-11548. (D. Mass.). The claims asserted in the government’s complaint are allegations only.

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