Canada Markets close in 6 hrs 29 mins

J&J unit to pay $360 million to U.S. to resolve charity kickback probe

By Nate Raymond
FILE PHOTO: The Johnson and Johnson logo is seen at an office building in Singapore January 17, 2018. REUTERS/Thomas White

By Nate Raymond

BOSTON (Reuters) - A Johnson & Johnson unit will pay the U.S. government $360 million to resolve an investigation into its financial support of a charity that helped Medicare patients cover out-of-pocket drug costs, the Justice Department said on Thursday.

The settlement with Actelion Pharmaceuticals US Inc, which became a subsidiary of J&J following a 2017 acquisition, was the largest so far to result from an industry-wide probe into drugmakers' support of patient assistance charities.

The government said Actelion from 2014 to 2015 used a charity as a conduit to improperly pay the co-pay obligations of thousands of Medicare patients using its pulmonary artery hypertension treatments Tracleer, Ventavis, Veletri and Opsumit.

That charity, Caring Voice Coalition (CVC), has stopped providing aid after the government in 2017 revoked its approval to do so because of concerns drugmakers had improper influence over it.

Actelion did not admit wrongdoing. Caroline Pavis, a company spokeswoman, in a statement said the conduct pre-dated New Brunswick, New Jersey-based J&J's acquisition of Actelion and that it was committed to following the law.

Richmond, Virginia-based CVC said it cannot comment on "ongoing legal matters."

Drug companies are prohibited from subsidizing co-payments for patients enrolled in the Medicare government healthcare program for the elderly. But companies may donate to non-profits providing co-pay assistance as long as they are independent.

Amid increased attention on rising drug prices in the United States, there has been concern that donations from drugmakers to patient-assistance groups may be contributing to price inflation.

A probe led by the U.S. Attorney's Office for the District of Massachusetts has led to allegations that several drugmakers used these charitable foundations as a means to pay Medicare patients' co-pays in violation of the Anti-Kickback Statute.

In Actelion's case, the government said it routinely obtained data from CVC regarding the extent that patients it helped used its drugs. Actelion then used that information to budget for future payments to the charity.

CVC was at the center of an earlier, $210 million settlement by United Therapeutics Corp in December 2017, which resolved claims the company improperly used the charity to cover co-payments.

Several other drugmakers have, since 2015, disclosed receiving subpoenas related to the investigation. Pfizer Inc in May resolved similar allegations involving a different charity for nearly $23.85 million.

Jazz Pharmaceuticals Plc and Lundbeck earlier this year disclosed they had reached agreements to resolve similar claims for $57 million and $52.6 million, respectively.

(Reporting by Nate Raymond in Boston; Editing by Bernadette Baum and Grant McCool)