J&J unit to pay $360 million to U.S. to resolve charity kickback probe

FILE PHOTO: The Johnson and Johnson logo is seen at an office building in Singapore January 17, 2018. REUTERS/Thomas White

BOSTON (Reuters) – A unit of Johnson & Johnson (JNJ.N) has agreed to pay the U.S. government $360 million to resolve an investigation into its financial support of charities that help Medicare patients cover out-of-pocket drug costs, the U.S. Justice Department said on Thursday.

The settlement with Actelion Pharmaceuticals US Inc, which became a subsidiary of J&J after the pharmaceutical giant acquired the biotech company in 2017, was the largest so far to result from an industry-wide probe into drugmakers’ support of patient assistance charities.

The investigation, led by the U.S. Attorney’s Office for the District of Massachusetts, has led to allegations that several drugmakers used these charitable foundations as a means to pay Medicare patients’ co-pays in violation of the Anti-Kickback Statute.

Actelion did not admit wrongdoing as part of the settlement. New Brunswick, New Jersey-based J&J did not immediately respond to a request for comment.

Drug companies are prohibited from subsidizing co-payments for patients enrolled in the Medicare government healthcare program for the elderly. But companies may donate to non-profits providing co-pay assistance as long as they are independent.

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

Thursday’s settlement surpassed the largest accord previously announced by the Department of Justice – an agreement by United Therapeutics Corp (UTHR.O) in December 2017 to pay $210 million to resolve claims it improperly used a charity to cover co-payments.

Pfizer Inc (PFE.N) in May resolved similar allegations for nearly $23.85 million. Jazz Pharmaceuticals Plc (JAZZ.O) and Lundbeck (LUN.CO) earlier this year disclosed they had reached agreements to resolve similar claims for $57 million and $52.6 million, respectively.

Several other drugmakers have, since 2015, disclosed receiving subpoenas as a result of the investigation, including Gilead Sciences Inc(GILD.O), Novartis AG(NOVN.S), and Regeneron Pharmaceuticals Inc (REGN.O).

Reporting by Nate Raymond in Boston; Editing by Bernadette Baum

Our Standards:The Thomson Reuters Trust Principles.

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