Gilead to Pay $97M to Resolve Healthcare Fraud Allegations

The Department of Justice recently announced that Gilead agreed to pay $97 million to resolve healthcare fraud allegations that it violated the False Claims Act and illegally paid kickbacks to a foundation. 

The foundation was allegedly a conduit to pay the copays of thousands of Medicare patients taking its pulmonary arterial hypertension drug, Letairis, the federal agency explained. 

“This settlement demonstrates the government’s commitment to hold accountable companies that pay illegal kickbacks, whether directly or through a third party,” Acting Assistant Attorney General Jeffrey Bossert Clark of the Department of Justice’s Civil Division, said in the announcement.  

“We will not allow permit pharmaceutical manufacturers to set unaffordable drug prices while circumventing important cost-control mechanisms within the Medicare program.”

The allegations also claimed that Gilead obtained data from the foundation on how much the foundation had spent for patients on Letairis.

The pharmaceutical company then used the information to decide how much to pay the foundation and to confirm that its payments were sufficient to cover the copays of only the patients taking their drug. 

Other pharmaceutical companies have also been at the center of similar healthcare fraud allegations, including Actelion and United Therapeutics, which also resolved claims that it used a foundation as a conduit to pay the copays of Medicare patients taking their individual drugs in 2017 and 2018.

United Therapeutics paid $210 million to resolve the claims, while Actelion paid $360 million.

“When pharmaceutical companies deceitfully employ the charitable donation process as an instrument to subsidize copays for their own drugs, it subverts a critical safeguard against the excessive inflation of drug costs,” said Phillip M. Coyne, special agent in charge at the Office of the Inspector General regional office in Boston.  

“Manipulation of this process threatens the integrity of our federal healthcare system, disregarding the American taxpayer who ultimately bears the cost.  As such, we remain vigilantly focused on confronting this type of conduct and will continue our aggressive enforcement in this area.”

Allegedly, Gilead also referred Medicare patients to the foundation to generate revenue from Medicare and persuade the purchase of Letairis. This resulted in claims to Medicare to cover the cost of the drug.

But this isn’t the first time Gilead has found itself in hot water. 

Last November, the Department of Justice announced that it filed a complaint alleging that the company infringed on four patents awarded and owned by the US and HHS.

The complaint was in connection with two of Gilead’s most popular drugs, Truvada and Descovy, which are both used to prevent HIV. 

According to the allegations, Gilead repeatedly refused to obtain a license for use of the patented drug regiments, while also continuing to profit from hundreds of millions of dollars of publicly funded research.

Gilead also allegedly challenged the validity of all four patents before the Patent and Trademark Office. 

“HHS recognizes Gilead’s role in selling Truvada and Descovy to patients for prevention of HIV.  Communities have put these drugs to use in saving lives and reducing the spread of HIV,” HHS Secretary Alex Azar said in the November announcement.  

“However, Gilead must respect the U.S. patent system, the groundbreaking work by CDC researchers, and the substantial taxpayer contributions to the development of these drugs. The complaint filed today seeks to ensure that they do.”