The Department of Justice announced today that two more pharmaceutical companies – Astellas Pharma US Inc. (Astellas) and Amgen Inc. (Amgen) – have agreed to pay a total of $124.75 million to resolve allegations that they each violated the False Claims Act by illegally paying the Medicare copays for their own products, through purportedly independent foundations that the companies used as mere conduits.

When a Medicare beneficiary obtains a prescription drug covered by Medicare, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance, or a deductible (collectively “copays”). Congress included copay requirements in the Medicare program, in part, 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 a pharmaceutical company 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 company’s drugs. This prohibition extends to the payment of patients’ copay obligations.

“When pharmaceutical companies use foundations to create funds that are used improperly to subsidize the copays of only their own drugs, it violates the law and undercuts a key safeguard against rising drug costs,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “These enforcement actions make clear that the government will hold accountable drug companies that directly or indirectly pay illegal kickbacks.”

“According to the allegations in today’s settlements, Astellas and Amgen conspired with two copay foundations to create funds that functioned almost exclusively to benefit patients taking Astellas and Amgen drugs,” said United States Attorney Andrew E. Lelling. “As a result, the companies’ payments to the foundations were not ‘donations,’ but rather were kickbacks that undermined the structure of the Medicare program and illegally subsidized the high costs of the companies’ drugs at the expense of American taxpayers. We will keep pursuing these cases until pharmaceutical companies stop engaging in this kind of behavior.”

“Kickback schemes can undermine our healthcare system, compromise medical decisions, and waste taxpayer dollars,” said Phillip Coyne, Special Agent in Charge, Office of the Inspector General of the Department of Health and Human Service’s Boston Regional Office. “We will continue to hold pharmaceutical companies accountable for subverting the charitable donation process in order to circumvent safeguards designed to protect the integrity of the Medicare program.”

“As today's settlements make clear, the FBI will aggressively go after pharmaceutical companies that look to bolster their drug prices by paying illegal kickbacks — whether directly or indirectly — to undermine taxpayer funded healthcare programs, including Medicare,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division.

Amgen and Astellas each entered five-year corporate integrity agreements (CIAs) with OIG as part of their respective settlements. The CIAs require the companies to implement measures, controls, and monitoring designed to promote independence from any patient assistance programs to which they donate. In addition, the companies agreed to implement risk assessment programs and to obtain compliance-related certifications from company executives and Board members.

The government’s allegations in the two settlements being announced today are as follows:

Astellas : Astellas sells Xtandi, an androgen receptor inhibitor (ARI) used to treat certain prostate cancer; none of the other major drugs to treat the condition is an ARI. The government alleged that, in May 2013, Astellas asked two foundations about the creation of copay assistance funds to cover the copays for Medicare patients taking ARIs, but not for other types of prostate cancer drugs. In July 2013, both foundations opened ARI-only copay funds; Astellas was the sole donor to both funds. The government alleged that Astellas knew that Xtandi would likely account for the vast majority of utilization from each fund, and, in fact, Medicare patients taking Xtandi received nearly all of the copay assistance from the two ARI funds. The government further alleged that, during the time that the ARI funds were open, Astellas promoted the existence of the ARI funds as an advantage for Xtandi over competing drugs in an effort to persuade medical providers to prescribe Xtandi. Astellas has agreed to pay $100 million to resolve the government’s allegations.

Amgen : Amgen sells the secondary hyperparathyroidism drug Sensipar and the multiple myeloma drug Kyprolis. Amgen acquired Kyprolis as part of its acquisition of Onyx Pharmaceuticals Inc. in 2013. With respect to Sensipar, the government alleged that, in late 2011, Amgen stopped donating to a foundation that provided financial support to patients taking any of several secondary hyperparathyroidism drugs and approached a new foundation about creating a “Secondary Hyperparathyroidism” fund that would support only Sensipar patients. Amgen allegedly worked with the new foundation to determine the fund’s coverage parameters and, in November 2011, the foundation launched a “Secondary Hyperparathyroidism” fund with Amgen as its sole donor. Until June 2014, the fund covered only Sensipar. Amgen allegedly made payments to the fund even though the cost of these payments exceeded the cost to Amgen of providing free Sensipar to financially needy patients. However, by enabling the fund to cover the copays of Medicare beneficiaries, Amgen caused claims to be submitted to Medicare and generated revenue for itself.

With respect to Kyprolis, the government also alleged that Amgen’s predecessor, Onyx, asked a foundation to create a fund that ostensibly would cover health care related travel expenses for patients taking any multiple myeloma drug, but which was actually used almost exclusively to cover travel expenses for patients taking Kyprolis, which must be infused at certain health care facilities. The government alleged that Onyx was the sole donor to this travel fund and that Amgen, after integrating Onyx into its operations in 2015, continued to donate to the fund. The foundation also operated a second fund that covered copays for multiple myeloma drugs, including Kyprolis. While this latter fund had multiple donors, the government alleged that, for 2013, Onyx received data from the foundation on the fund’s anticipated and actual expenses for coverage of Kyprolis copays, which it used to tailor its donations to the fund to just the amount needed to cover the copays of Kyprolis patients. Amgen has agreed to pay $24.75 million to resolve the government’s allegations.

The government’s resolution 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).

These investigations were conducted by the Department of Justice’s Civil Division and the U.S. Attorney’s Office for the District of Massachusetts, in conjunction with the Department of Health and Human Services, Office of Inspector General; and the FBI. The U.S. Postal Inspection Service also assisted with the investigation.

The claims resolved by the settlement are allegations only; there has been no determination of liability.