Not So Charitable

close up of word medicare block letter

A non-profit group paying drug co-pays for seriously ill people may appear to be charitable. But when an organization makes the payments as kickbacks for highly competitive pharmaceutical companies, it undermines federal laws designed to help patients and indicates Medicare fraud.

The U.S. Justice Department has been conducting an industrywide investigation of these types of practices, resulting in $850 million in settlements with drug-makers and charities across the nation. As part of this effort, a Florida-based, patient-assistance charity has settled claims that it was involved in the widespread kickback scheme against the federal Medicare program.

The Assistance Fund, or TAF, of Orlando, did not admit wrongdoing and said it is fully committed to operating in full compliance of federal Medicare guidelines. TAF agreed to pay $4 million to resolve claims that it acted as a conduit for pharmaceutical companies to pay kickbacks to Medicare patients using their high-priced Multiple Sclerosis (MS) drugs.
TAF, like other similar foundations, provides assistance to patients seeking to pay out-of-pocket costs for medications. (The organization claims to have assisted 78,000 people since 2009.)
Drug companies are prohibited from subsidizing co-payments for patients enrolled in the government’s Medicare healthcare program for those aged 65 and older. Companies may donate to non-profits providing co-pay assistance, while they are independent.

The government alleges that various drug-makers have used charities like TAF to improperly pay the co-pay obligations of Medicare patients using their drugs, in violation of the federal Anti-Kickback law. The law is designed to prevent corruption in medical decision-making, unfair competition, and to maintain program costs.

The investigation came amid growing attention to soaring U.S. drug prices. Co-pays are partly meant to serve as a check on healthcare expenses by exposing patients to some of a medicine’s cost. The settlement with TAF centered on payments it received from three MS drug manufacturers, Teva, which sells Copaxone; Biogen, which sells Tysabri and Avonex; and Novartis, which sells Gilenya.

The government alleged that TAF engaged in practices that allowed it to coordinate with Teva, Biogen and Novartis from 2011 to 2014 to ensure that it used the companies’ money to support patients using their respective MS drugs instead of rival ones. TAF also solicited and received payments from Teva from 2011 to 2015 that correlated with the charity’s spending on patients using Copaxone, the department said.

Today’s Fraud of the Day comes from a Reuters news article, “Charity to pay $4 million to resolve U.S. pharma kickback probe,” published Nov. 20, 2019.BOSTON (Reuters) – A Florida-based charity will pay $4 million to resolve claims that it acted as a conduit for companies including Biogen Inc and Novartis AG to pay kickbacks to Medicare patients using their high-priced multiple sclerosis drugs, the U.S. Justice Department said on Wednesday.

The settlement with the patient assistance charity The Assistance Fund marked the third so far with a foundation linked to an industry-wide probe that has resulted in $850 million in settlements with drugmakers and charities.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.