By Jonathan Stempel
WASHINGTON (Reuters) - Gilead Sciences Inc (NASDAQ:GILD) has agreed to pay $97 million to resolve U.S. government claims it used a purportedly independent charity to pay illegal kickbacks to cover Medicare patients' out-of-pocket costs for its pulmonary arterial hypertension drug Letairis.
The U.S. Department of Justice said on Wednesday the settlement resolves allegations that Gilead improperly used the Caring Voice Coalition as a conduit to cover thousands of patients' co-payment obligations.
Gilead's actions enabled the Foster City, California-based drugmaker to boost revenue, ran from June 2007 to December 2010, and violated the federal False Claims Act, the department said.
That law prohibits drugmakers from offering anything of value to induce Medicare patients to buy their drugs.
"Gilead used data from CVC that it knew it should not have, and effectively set up a proprietary fund within CVC to cover the co-pays of just its own drug," U.S. Attorney Andrew Lelling in Boston said in a statement.
He said such conduct undermines Medicare's co-pay structure, which Congress meant to prevent against inflated drug prices.
Drugmakers cannot subsidize co-payments for older Americans enrolled in Medicare, but may donate to independent non-profits that provide such assistance.
In a statement, Gilead said it addressed concerns raised by the government, and does not believe it violated the law. It also said there was no allegation that patients who received medication did not need it.
Gilead's settlement resulted from an industrywide probe led by Lelling's office into drugmakers' support for so-called patient assistance charities.
Eleven drug companies including Novartis AG, Pfizer Inc (NYSE:PFE) and United Therapeutics (NASDAQ:UTHR) Corp have reached more than $1 billion of settlements with the government. Four foundations and a pharmacy have also settled.