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Charities pay $6 million to feds to resolve allegations they paid kickbacks to Medicare patients purchasing medications

Two charities have agreed to pay a combined $6 million to resolve allegations they enabled drug companies to pay kickbacks to Medicare patients who took the companies’ medications, federal prosecutors in Boston said Friday.

In a statement, US Attorney Andrew E. Lelling’s office identified the nonprofits as the Chronic Disease Fund Inc., doing business as Good Days from CDF, and the Patient Access Network Foundation.

Good Days will fork over $2 million and Patient Access will pay $4 million to the government, Lelling’s office said.

“The government alleged that CDF and PANF worked with various pharmaceutical companies to design and operate certain funds that funneled money from the companies to patients taking the specific drugs the companies sold,” the statement said. “These schemes enabled the pharmaceutical companies to ensure that Medicare patients did not consider the high costs that the companies charged for their drugs.”

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Medicare is the federal program that provides health coverage to people 65 and older, as well as certain younger people with disabilities or people with permanent kidney failure requiring dialysis or a transplant, according to its official government website. Patients who get prescription drugs under Medicare Part B or Part D may face copays.

The government alleged the foundations were not independent charities helping people with copays for any drugs but functioned as “pass-throughs” for drug companies seeking to get patients to use their specific drugs. The arrangement undermined the Medicare program “at the expense of American taxpayers,” Lelling said in the statement put out by his office.

Lelling’s office said the government alleged that “from 2010 through 2014, CDF conspired with five pharmaceutical companies — Novartis, Dendreon, Astellas, Onyx, and Questcor — to enable them to pay kickbacks to Medicare patients taking their drugs. It is further alleged that, from 2011 through 2014, PANF permitted four pharmaceutical companies – Bayer, Astellas, Dendreon, and Amgen – to use PANF as a conduit to pay kickbacks to Medicare patients taking their drugs.”

Dan Klein, president and CEO of Patient Access, defended his organization Friday.

“Since 2004, PAN has provided financial assistance to nearly one million Americans with life-threatening, chronic and rare diseases who cannot afford the high out-of-pocket costs for their treatments,” Klein said in a statement. “Nonprofit patient assistance programs like PAN are necessary to help people access the critical medications they need to stay healthy and improve their quality of life. We take this responsibility seriously and remain focused on our critical mission.”

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Klein said his group “has reached an agreement with the U.S. Attorney for the District of Massachusetts to settle legacy matters relating to funds established between 2011 and 2014. It does not involve any of PAN’s current operations or disease funds, which are reviewed annually by an Independent Review Organization to ensure compliance with [Office of the Inspector General] guidelines and our Advisory Opinion.”

Good Days also responded to the settlement, saying in its own statement that it has “settled federal inquiries regarding allegations that pharmaceutical manufacturers previously engaged with charitable co-pay assistance programs in violation of the federal Anti-Kickback Statute. The settlement reflects the organization’s desire to move forward and concentrate on providing assistance to people in need of life-saving and life-extending treatments.”

Clorinda Walley, president of Good Days, said in her group’s statement that they’ll keep following the rules of the road.

“We will continue to comply with all regulatory requirements surrounding charitable copay assistance programs and we welcome further clarity and OIG guidance to ensure we can continue to put patients in need first,” Walley said.

A spokesperson for Amgen, the parent company of Onyx, said it settled with the government in April and referred the Globe to a statement the company put out then.

“Amgen has reached a settlement agreement with the federal government to resolve civil claims relating to certain financial donations made by the Company to certain independent charity patient assistance foundations prior to 2017,” the April statement said. “Under the agreement, Amgen will pay $24.75 million to the government to resolve these claims.”

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Amgen said it’s “among a number of companies that previously disclosed receiving subpoenas in connection with a government inquiry related to organizations that provide financial assistance to Medicare patients. The conduct covered by Amgen’s settlement involves allegations by the government that Amgen’s donations to independent charitable organizations that provide patients with financial assistance to access their medicines did not comply with federal law. Amgen does not agree with the government’s view of the relevant facts or that its conduct was inappropriate; accordingly, the settlement does not contain or constitute an admission of liability.”

In addition, Amgen said the “settlement reflects Amgen’s desire to put this legal matter behind it and focus on the needs of patients. The Company believes all individuals deserve access to medicines prescribed by their physicians. Donations to independent charitable organizations can provide significant assistance to patients with their copayments for prescriptions, and Amgen continues to believe these programs help patients lead healthier lives.”

An Astellas spokesperson said Astellas also settled with the feds in April.

“On April 25, 2019, Astellas and the U.S. Department of Justice (DOJ) reached an agreement to resolve all civil claims raised by the government in its investigation regarding Astellas’ past donations to U.S. 501(c)(3) patient co-pay assistance foundations,” the spokesperson said. “We believed that reaching a resolution was the best way for Astellas to continue our focus on patient needs and pursue our mission of contributing towards the health of people around the world through the provision of innovative and reliable pharmaceutical products.”

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Dendreon said Friday that it “takes compliance very seriously and believes all patients deserve access to life-extending medicines prescribed by their physicians. We continue to offer copay assistance to patients through Dendreon’s PROvide™ program, which is designed to help commercially insured patients afford PROVENGE® (sipuleucel-T) treatment. When applicable, we do refer patients to the appropriate independent foundations that may provide financial assistance for treatment-related costs. Patient eligibility is determined solely by the individual foundations.”

The other drug companies named by prosecutors either declined to comment or couldn’t immediately be reached.


Martin Finucane of the Globe Staff contributed to this report. Travis Andersen can be reached at travis.andersen@globe.com. Follow him on Twitter @TAGlobe.