Gov. Opposes Teva’s Dismissal Bid in Medicare Kickbacks Case

The government filed an opposition Tuesday against Teva Pharmaceuticals’ motion to dismiss the initial complaint that alleged Medicare fraud and violations of the Anti-Kickback Statute against Teva.

The United States filed its complaint on Aug. 18, alleging that the company submitted false Medicare claims after allegedly paying “over $300 million” in kickbacks to the Chronic Disease Fund (CDF) and The Assistance Fund (TAF) to cover the Medicare co-pays of patients taking Coxapone, a drug made by Teva to treat multiple sclerosis. “Teva intended the payments to ensure that Copaxone patients never faced the steep prices that Teva charged for its drug, thus inducing the patients, including Medicare patients, to purchase the drug,” according to the complaint. The United States alleged Teva “knowingly and willfully” violated the anti-kickback statute and “generated hundreds of millions of dollars in false claims to Medicare and a corresponding amount of revenue for Teva” and that “during the period from late 2006 to 2015, while Teva was subsidizing Copaxone’s cost through CDF and TAF, Teva raised the price of Copaxone at a rate over 19 times the rate of inflation, from approximately $17,000 per year to over $73,000 per year.”

In its motion to dismiss the complaint, Teva claimed the “government’s theory is fatally flawed for a number of reasons.” The defendant claimed it did not have control over how CDF and TAF used the donated funds and that to be in violation of the Anti-Kickback Statute (AKS), “a donation must be contingent on the charity’s agreement to recommend or otherwise promote the donor or its product,” saying that no such agreement exists.

The motion claimed that Medicare Part D shifts “significant cost burdens onto seniors, many of whom cannot afford much of their medication regimen without help” and that “pharmaceutical companies assist in addressing this burden in a manner that can also benefit their own products does not convert charitable contributions into criminal acts.” The defendant also claimed in the motion that the “government’s position is that what converts a legal donation into a crime is speech and speech alone — the alleged sharing of information relating to donations.”

The defendant also argued that the Department of Health and Human Services (HHS) Office of Inspector General (OIG) “have consistently reinforced the fundamental proposition that pharmaceutical companies can donate to funds that support their products.”

The government’s opposition to Teva’s motion to dismiss said “the Court should deny Teva’s motion to dismiss not only because the government’s complaint adequately alleges that Teva’s long-running scheme to pay its own patients’ Medicare co-pays violated the AKS and the (False Claims Act), but also because the motion raises evidentiary issues that are inappropriate in a motion to dismiss and seeks to add nonexistent elements to the AKS and FCA.” The government also said Teva mischaracterized the HHS guidance regarding co-pay assistance donations and that “HHS-OIG has consistently warned that a pharmaceutical manufacturer’s correlation of its payments to a foundation with the foundation’s spending on that manufacturer’s drug may reflect an improper effort to use the foundation as a kickback conduit.”

Regarding the First Amendment claim by the defendant, “The First Amendment does not preclude conduct from becoming illegal merely because the conduct may be carried out by means of speech,” according to the opposition, claiming that conduct and speech are distinct.

Teva is represented by Morgan, Lewis & Bockius.