On January 21, 2020, the Department of Justice (DOJ) announced a $3 million settlement with Patient Services, Inc. (PSI) to resolve allegations of False Claims Act (FCA) violations. The DOJ alleged that PSI enabled three pharmaceutical companies to pay kickbacks to patients by funneling money to patients taking drugs manufactured by those same pharmaceutical companies. In addition to the $3 million, PSI has entered into a three-year integrity agreement with Health and Human Services’s Office of the Inspector General. The settlement involved no determination of liability.

The DOJ alleged that PSI worked with three pharmaceutical manufacturers – Insys, Aegerion, and Alexion – to enable them to pay kickbacks to patients through the form of co-payment and similar financial assistance provided to patients by PSI. (All three pharmaceutical companies had previously entered into settlements with the DOJ for their alleged involvement.) According to DOJ, the pharmaceutical companies allegedly provided donations to PSI’s patient assistance funds, in which the funds were designed in a manner to maximize the possibility that financial assistance would be provided to patients taking the pharmaceutical company’s drugs. As alleged by the DOJ, this in effect allowed the pharmaceutical manufactures to pay kickbacks in the form of co-payment assistance to patients taking their products. Each of the alleged arrangements is described in more detail below.

Alleged Arrangement with Insys

According to the DOJ, PSI and Insys allegedly developed the “Breakthrough Cancer Pain” fund for their opioid painkiller Subsys, which was approved for pain management in cancer patients. The DOJ alleged that Insys was the only donor to this fund and that PSI allowed Insys to see whether referred patients received financial assistance and the amount of such assistance. The government also alleged that PSI knew that Insys was referring patients who did not have cancer to the Breakthrough Cancer Pain fund, but PSI stated that it would prevent off-label use of Subsys only if Insys requested.

Alleged Arrangement with Aegerion

PSI and Aegerion allegedly established a fund to which Aegerion contributed donations and assisted in creating the patient eligibility criteria used to determine whether PSI would provide co-payment assistance to patients taking Juxtapid, an Aegerion drug. This fund allegedly allowed Aegerion, through PSI, to remove price concerns of physicians prescribing and patients taking Juxtapid, so that Juxtapid would be more frequently prescribed.

Alleged Arrangement with Alexion

The DOJ alleged that PSI and Alexion created a “Complement Mediated Diseases” fund that provided co-payment and other financial assistance to patients prescribed Alexion’s drug, Soliris. According to the allegations, Alexion contributed financially to the fund, and except in rare instances, patients received assistance from the fund only if they were taking Soliris.  The DOJ also alleged that PSI reported to Alexion detailed information regarding payments made to patients from the fund.

This settlement is the fourth of its kind between the DOJ and a patient assistance foundation, indicating the DOJ’s continued focus on scrutinizing foundations that accept donations from pharmaceutical companies.

This post was co-authored by Michael Lisitano, legal intern at Robinson+Cole. Michael is not yet admitted to practice law.