(Reuters) - Biopharmaceutical company Incyte Corp will pay $12.6 million to resolve allegations that it used a charity as a conduit to pay Medicare and Tricare patients kickbacks to use its cancer drug Jakafi, the U.S. Justice Department said on Tuesday.
The settlement resolves allegations first raised in a whistleblower lawsuit filed in Philadelphia federal court and follows similar cases that have allowed the department to recover more than $1 billion from drugmakers and charities.
Incyte, represented by Kristin Graham Koehler of Sidley Austin, did not admit wrongdoing as part of the civil settlement.
The Wilmington, Delaware-based company in a statement said it donated money to the charity with the understanding that its actions were lawful and appropriate and does not believe that it violated the law.
"Incyte’s donations to non-profit foundations have served – and continue to serve – as a safety net for lower-income individuals living with potentially fatal blood cancers, regardless of whether they were prescribed Jakafi or another medication," the company said.
Drug companies are prohibited from subsidizing co-payments for patients enrolled in Medicare, the government healthcare program for those aged 65 and older, or Tricare, the military government healthcare program.
But companies may donate to nonprofits providing co-pay assistance as long as they are independent.
The Justice Department alleged that Incyte from 2011 to 2014 used the patient-assistance charity known as Good Days as a means to pay the copay obligations of certain Medicare and Tricare patients taking the expensive drug Jakafi.
The charity has established a fund to support patients diagnosed with myelofibrosis, a rare, life-threatening condition that involves abnormal blood cell production and scarring in the bone marrow.
But the government alleged that Incyte managers pressured the charity to provide assistance to ineligible Jakafi patients who had other non-myelofibrosis conditions including leukemia and another cancer known as polycythemia vera.
The department said the conduct resulted in the submission of false claims for payment to both Medicare and Tricare.
Similar cases have been pursued primarily by the U.S. Attorney's Office in Boston, which in 2019 struck a $2 million settlement with Good Days to resolve similar allegations concerning other drug companies.
The allegations against Incyte were first raised in a lawsuit filed in 2018 by Justin Dillon, a former compliance officer at Incyte, under the False Claims Act.
That law allows whistleblowers to sue companies on the government's behalf to recover taxpayer money paid out based on false claims. If successful, whistleblowers are entitled a cut of any recovery.
In Dillon's case, the federal government has agreed to pay him $3.59 million, according to a settlement agreement. His lawyer, Brian McCormick of Ross Feller Casey, did not respond to a request for comment.
The case is U.S. ex rel Justin Dillon v. Incyte Corporation, U.S. District Court, Eastern District of Pennsylvania, No. 18-cv-02642.
For the United States: Matthew Howatt and Paul Koob of the U.S. Attorney's Office for the Eastern District of Pennsylvania
For Incyte: Kristin Graham Koehler of Sidley Austin
For Dillon: Brian McCormick of Ross Feller Casey
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