Actelion to Pay $360 Million in DoJ Settlement

In a settlement with the US Justice Department (DoJ) Actelion Pharmaceuticals, a Johnson & Johnson subsidiary, has agreed to pay $360 million to settle civil claims it used a charity to pay illegal kickbacks to patients in the US Medicare program.

The Swiss drugmaker acquired by J&J in 2017 allegedly used a charitable foundation to help Medicare patients make payments for its high blood pressure drugs.

According to press reports, the settlement is the largest so far in the ongoing US investigation of the use of charitable foundations in the pharmaceutical industry. In December 2017, United Therapeutics said it would pay $210m to settle similar claims.

For patients who qualify, the government-run Medicare program covers much of the cost of prescription drugs, but patients may still be required to make a copayment, which reduces the price drugmakers can charge. 

The DOJ charges that Actelion’s arrangement with the charity violated the False Claims Act. The company effectively set up a proprietary fund to cover the copays of just its own drugs, said the US attorney for the district of Massachusetts.

Actelion did not admit wrongdoing as part of the settlement. The company noted that the case pre-dates its acquisition by Johnson & Johnson.

Meanwhile, the financial fallout continues from the Reuters report that J&J knew for years that its talc-based baby powder could contain trades of asbestos. Several analysts have suggested it could be cheaper to try to settle the many lawsuits – 11,700 at last count – out of court. In a day’s trading after the news broke, the paper lost $40 billion of its value.

Mark Lanier, a lawyer who represented plaintiffs in the nearly $4.7 billion talc verdict against J&J in July, told the network CNBC the company's talc problems “can be resolved for much, much less than” the tens of billions J&J has lost in market. The company has since appealed that verdict.