Dompé U.S. to Pay $32 Million Over Medicare Co-Pay Kickbacks

Key Takeaways

• $32 Million Settlement: Dompé U.S. agreed to pay $32 million to resolve allegations that it paid Medicare beneficiaries’ Oxervate co-pays through two patient assistance foundations between 2018 and 2021.
• Self-Disclosure Led to Cooperation Credit: Dompé farmaceutici disclosed the conduct to the U.S. government, and both the parent company and Dompé U.S. received credit for self-disclosure, cooperation and remediation.
• Foundation Payments Drew Scrutiny: Dompé admitted that two foundations opened funds that, among other things, paid Oxervate co-pays after conversations with company employees, and Dompé subsequently contributed to those foundations.
• Patient Assistance Data Was Shared: Dompé solicited foundation data directly from the foundations and through its specialty pharmacy, with information reaching certain individuals involved in patient assistance foundation budgeting.

Deep Dive

Dompé has agreed to pay $32 million to resolve allegations that it used patient assistance foundations to cover Medicare beneficiaries’ co-pays for Oxervate, its prescription drug, turning what appeared to be charitable assistance into what federal authorities alleged were unlawful inducements to purchase the company’s product.

The case arrived at the Justice Department by an unusual route. Dompé farmaceutici disclosed the conduct to the federal government itself. The parent company and its U.S. subsidiary then cooperated with authorities and received credit under Justice Department guidelines that take self-disclosure, cooperation and remediation into account in False Claims Act cases.

What Dompé disclosed, however, went to a familiar concern in pharmaceutical enforcement: the line between helping patients afford expensive medicines and using financial assistance to insulate them from the price of a particular manufacturer's drug.

According to the settlement, Dompé admitted that around the time Oxervate launched in the United States in 2018, employees at Dompé U.S. expressed reservations about launching the drug before the company made a payment to a patient assistance foundation that paid co-pays for Oxervate. After conversations with Dompé employees, two foundations opened funds that, among other things, paid Medicare beneficiaries’ co-pays for the drug. Dompé contributed money to those foundations.

The relationship did not end with the contributions. Dompé also solicited patient assistance foundation data directly from the foundations and from the specialty pharmacy providing hub services to Dompé U.S. patients. According to the Justice Department, that information was then provided, directly or indirectly, to certain people involved in determining the company's patient assistance foundation budgets.

Those details matter because Medicare co-pays are not simply an administrative remainder of the prescription drug system. Congress included cost-sharing requirements in federal health care programs in part so that patients would retain some sensitivity to price, allowing market forces to place a check on health care costs and on the prices manufacturers can demand for their drugs.

The Anti-Kickback Statute consequently prohibits pharmaceutical manufacturers from offering or paying remuneration, directly or indirectly, to induce Medicare patients to purchase their products. Money is remuneration, but the statute reaches more broadly than cash handed from one party to another. A manufacturer's payment of a patient's co-pay obligation can also fall within the prohibition.

The government's allegations against Dompé rested on that principle. Federal authorities alleged that between 2018 and 2021, the company paid Medicare beneficiaries' Oxervate co-pays through the two foundations to induce purchases of the drug, creating False Claims Act liability.

Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division said the settlement demonstrated the government's commitment to enforcing the Anti-Kickback Statute and preventing pharmaceutical manufacturers from using unlawful inducements. He also pointed to the other half of the case, which is what companies do after discovering misconduct.

"The Department encourages companies that uncover improper kickbacks to self-disclose such conduct," Shumate said.

The settlement also adds to a much larger body of enforcement involving pharmaceutical manufacturers and patient assistance charities. U.S. Attorney Leah B. Foley for the District of Massachusetts said her office has recovered more than $1.4 billion for taxpayers through settlements and enforcement actions involving drug company kickbacks to purported charities.

Federal authorities have long viewed such arrangements with suspicion when assistance nominally provided through an independent charity effectively allows a manufacturer to finance the cost-sharing obligations attached to its own drugs. The concern is not charity itself. It is whether the separation between the manufacturer and the organization providing the assistance is genuine enough to preserve the safeguards Medicare's cost-sharing system was designed to create.

Acting Deputy Inspector General for Investigations Miranda L. Bennett of the Department of Health and Human Services Office of Inspector General said arrangements that disguise pharmaceutical kickbacks as charitable patient assistance can corrupt medical decision-making and increase costs for federal health care programs.

Self-disclosure did not make the underlying problem disappear. Dompé still agreed to pay $32 million, and the settlement contains admissions about the company's interactions with the foundations, its contributions and its collection of data connected with patient assistance. But the Justice Department expressly credited Dompé farmaceutici and Dompé U.S. for self-disclosure, cooperation and remediation.

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