The U.S. government filed a False Claims Act case against Teva Pharmaceuticals USA Inc. and Teva Neuroscience Inc. (Teva), claiming that the company illegally financed copays through supposedly independent foundations to artificially inflate the cost of one of their drugs by over 300%. The drug, Copaxone, is used to slow the progression of multiple sclerosis. Many people who require the drug, use government medical programs like Medicare and Medicaid to pay for a large portion of the price of Copaxone, as it is prohibitively expensive.
Since 2007, Teva has increased the annual cost of Copaxone from $17,000 to around $73,000 in 2015. Copays are the primary check that keeps drug companies from inflating the price of essential drugs and charging Medicare and Medicaid for the balance. Mandating that patients pay at least a percentage of the drug’s total price, keeps prices down, and inhibits fraudulent inflation. The government alleges that Teva paid kickbacks to charitable foundations to get them to pay for copays so that Teva could charge any price it wanted for the drug.
The government alleges that Teva referred all patients, who needed to pay copays for Copaxone, to Advanced Care Scripts Inc. (ACS). ACS allegedly had an agreement with Teva to refer patients to either The Assistance Fund (TAF) or The Chronic Disease Fund (CDF) for help with their copays. ACS then allegedly reported to Teva how much it would need to pay TAF or CDF to cover the patients’ copays. An operation like the one described in the filing would violate the False Claims Act’s anti-kickback statute of the False Claims Act.
When companies create illegal ways to get around common-sense government regulation of essential drug prices, it undermines the integrity of the medical system and puts many patients entirely at the mercy of Medicare and Medicaid. Many essential drugs are already prohibitively expensive for Americans with genetic disorders or chronic illnesses. Pharmaceutical companies further inflating prices to increase their profit margin is fraudulent and dangerous.
The scheme the government alleges that Teva operated is similar to one that the government recently settled for over $600 million with the national branch of Novartis, another massive pharmaceutical company. Novartis was also allegedly funneling money through front foundations to pay for otherwise unaffordable copays.
In the Novartis case, a whistleblower, or relator, stepped forward and reported the scheme to the government. Although the Department of Justice has not mentioned a whistleblower in the Teva case at this time, there may be a relator providing evidence. In cases like the one against Teva, a potential relator is eligible to receive 15 to 30% of the total funds recovered by the government.