Specialty Pharmacy Advanced Care Scripts Agrees to Pay $3.5 Million to Resolve Allegations that it Served as a Kickback Conduit

BOSTON – The U.S. Attorney’s Office has reached a $3.5 million settlement with specialty pharmacy Advanced Care Scripts, Inc. (ACS), to resolve allegations that ACS conspired with pharmaceutical manufacturer Teva Neuroscience, Inc. (Teva), to enable Teva to pay kickbacks to Medicare patients taking Copaxone, a Teva drug approved for treatment of multiple sclerosis.

When a Medicare beneficiary obtains a prescription drug covered by Medicare Part B or Part D, the beneficiary may be required to make a partial payment, which may take the form of a co-payment, co-insurance, or deductible (collectively “co-pays”). These co-pay obligations may be substantial for expensive medications. Congress included co-pay requirements in these programs, in part, to encourage market forces to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs. The Anti-Kickback Statute prohibits pharmaceutical companies from offering or paying, directly or indirectly, any remuneration – which includes money or any other thing of value – to induce Medicare patients to purchase the companies’ drugs.

From approximately October 2006 through January 2015, ACS served as a contracted vendor for Teva and provided, among other things, benefits investigation services to certain patients who had been prescribed Copaxone. As part of today’s settlement, ACS acknowledged certain facts, including that it relayed data from two foundations, Chronic Disease Fund (CDF) and The Assistance Fund (TAF), to Teva so that Teva could correlate its payments to the foundations with the amounts of money the foundations spent on Copaxone patients. ACS further acknowledged that, when the foundations lacked funding and were not accepting new applications for Medicare co-pay coverage, ACS provided regular updates to Teva on the number of Medicare Part D patients serviced by ACS who had prescriptions for Copaxone, met the criteria for foundation co-pay coverage, and were awaiting foundation co-pay coverage. At least one ACS employee understood that Teva would use the number of waiting Copaxone patients to help determine the amount of its next payment to CDF or TAF. Teva sometimes provided ACS with advance notice of its payments to CDF or TAF. Once ACS learned that CDF or TAF had re-opened its co-pay fund, ACS promptly would send the foundation a “batch file” that consisted almost entirely of Copaxone patients’ applications for Medicare co-pay coverage. Thereafter, ACS often received notice from the foundation that most or all of the applications submitted by ACS had been approved to receive co-pay funding. When a Copaxone patient’s application was approved, ACS no longer included that patient in its reports to Teva on the number of Copaxone patients awaiting foundation co-pay coverage.

“According to the allegations in today’s agreement, ACS knowingly enabled a large pharmaceutical manufacturer to pay kickbacks to Medicare patients taking its expensive drug,” said Andrew E. Lelling, United States Attorney for the District of Massachusetts. “Such conduct undermined the Medicare program’s co-pay structure, which Congress created as a safeguard against inflated drug prices. We commend ACS for expeditiously resolving this matter.”

“Advanced Care Scripts (ACS) willingly served as a pawn in a kickback scheme, putting profit over patient needs, by helping Teva to time its foundation payments to boost sales of Teva's own drug, which ACS then dispensed,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division. “Today’s settlement should be a warning to others that the FBI will continue to aggressively go after vendors like ACS who conspire with pharmaceutical companies to disguise kickbacks as charitable contributions, at the expense of hard-working taxpayers who support the Medicare program.”

“This settlement demonstrates the OIG’s commitment to safeguarding the Medicare program from kickback arrangements,” said Phillip M. Coyne, Special Agent in Charge, Office of Inspector General of the U.S. Department of Health and Human Service’s Boston Regional Office. “I appreciate the partnership with the Massachusetts U.S Attorney’s Office in identifying and prosecuting this type of fraud.”

The government previously entered into settlement agreements with TAF and CDF.

U.S. Attorney Lelling, Boston FBI SAC Bonavolonta, and HHS-OIG SAC Coyne made the announcement today. The matter was handled by Assistant U.S. Attorneys Abraham George, Gregg Shapiro, and Evan Panich of Lelling’s Affirmative Civil Enforcement Unit, with assistance from Trial Attorneys Douglas Rosenthal and Nelson Wagner of the Department of Justice’s Civil Division.