Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) will stand trial accused of transferring illegal royalties to third party charitable foundations in order for the foundations to finance treatment of multiple sclerosis with its Copaxone drug. Massachusetts District Court Judge Nathaniel Gorton rejected Teva's petition to have the case dismissed and Teva's argument that its contributions to the charitable foundations could not represent a breach of the law since the company did not control the way the contributions were used.
In the lawsuit, filed in August 2020 in the District Court in Boston, the US Department of Justice claims that Teva acted in breach of the False Claims Act between 2006 and 2015. According to the lawsuit, the company paid two supposedly independent charitable foundations more than $300 million in order to cover co-payments to Medicare by patients being treated with Copaxone.
The US Department of Justice alleged that Teva referred Copaxone patients to a pharmacy in Florida, Advanced Care Scripts, which arranged with the foundations that the money that Teva transferred to them would serve to cover the patients' co-payments for the drug. US federal law allows drug companies to make donations to independent foundations that offer assistance paying for drugs, but forbids companies to subsidize directly co-payments by patients who belong to Medicare.
Ultimately, Teva is accused of having conspired with the pharmacy to ensure that its donations matched the amount required to cover co-payments for Copaxone, thus using the charitable foundations as a means of protecting patients from a fourfold rise in the price of Copaxone to some $73,000 annually. The result, it is alleged, is that false claims amounting to hundreds of millions of dollars were made to the Medicare national medical insurance program, while Teva recorded revenue of the same amount. Teva's actions, it is alleged, served to keep the price of Copaxone high, contrary to the purpose of patients' co-payments.
The pharmacy and the two charitable foundations have already agreed to pay $9.5 million to settle the claims against them.
Published by Globes, Israel business news - en.globes.co.il - on September 12, 2021
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