Astellas faces U.S. probe over patient assistance charity support

BOSTON (Reuters) - Astellas Pharma Inc has become the latest company to reveal it has become the subject of a U.S. probe into drugmakers’ financial support of charities offering assistance to Medicare patients seeking help to cover out-of-pocket drug costs.

A man walks past the headquarters of Japanese pharmaceutical company Astellas Pharma Inc. in Tokyo July 17, 2009. REUTERS/Stringer

In a lawsuit filed on Monday in federal court in Chicago against its insurers, a unit of Japan’s Astellas, said the U.S. Justice Department was conducting a joint criminal and civil investigation of the company, its officers and its employees.

Astellas US Holdings Inc said it first received a subpoena from the Justice Department in March 2016 in connection with the industry-wide probe and on Oct. 26 entered into an agreement that essentially allows for an extension of the statute of limitations.

Astellas said the Justice Department was investigating potential violations of healthcare fraud law and other criminal statutes, as well as potential civil claims under the False Claims Act.

The lawsuit sought damages due to Starr Indemnity and Liability Co’s refusal to reimburse it for its defense costs and a declaration that two excess insurers must also cover its costs.

Astellas in a statement on Wednesday said it was cooperating with the investigation. In court papers, it said it “maintains that its donations were lawful and appropriate.”

Starr did not respond to a request for comment.

Drug companies are prohibited from subsidizing co-payments for patients enrolled in government healthcare programs like Medicare. But companies may donate to nonprofits providing co-pay assistance as long as they are independent.

Amid increased attention to rising drug prices, concern has arisen that donations from drugmakers to patient-assistance groups may be contributing to price inflation.

Companies, including Pfizer Inc and Johnson & Johnson have received subpoenas seeking information related to their support of such charities. United Therapeutics Corp in July said it set aside $210 million to resolve claims arising from the probe.

The probe by the U.S. Attorney’s Office for the District of Massachusetts has also led to subpoenas to, among others, Gilead Sciences Inc; Valeant Pharmaceuticals International Inc; Jazz Pharmaceuticals Inc [JAZZP.UL] and Celgene Corp.

In September, Aegerion Pharmaceuticals Inc became the first drugmaker to resolve such allegations, agreeing to pay $40.1 million to resolve probes related to various claims stemming from its marketing of cholesterol drug Juxtapid.

In that deal, Aegerion, a Novelion Therapeutics Inc unit, resolved claims it violated an anti-kickback law by funneling funds through a charity to induce Juxtapid purchases by defraying patients’ co-payment obligations.

The case is Astellas US Holding Inc v. Starr Indemnity and Liability Company, et al, U.S. District Court, Northern District of Illinois, No. 17-cv-08220.

Reporting by Nate RaymondEditing by Jonathan Oatis