A trial set for September between the U.S. government and Teva Pharmaceuticals Industries over an alleged kickback scheme has been paused because of an appeal to the First Circuit Court of Appeals.
The U.S. Department of Justice’s lawsuit claims that Israel-based Teva illegally boosted the sales of Copaxone (glatiramer acetate), a drug used to treat multiple sclerosis. According to the government, Teva paid two charities more than $350 million over 11 years to cover co-payments for Copaxone patients. These payments allegedly shielded them from a 500% increase in the price of Copaxone from $17,000 to $85,000. This would violate U.S. laws that are intended to prevent drugmakers from subsidizing co-payments for patients enrolled in Medicare.
While payments to independent nonprofits are legal, the lawsuit alleges that the Chronic Disease Fund and The Assistance Fund were used as conduits for Teva. Using these allegedly improper co-payments, Medicare paid out $1.49 billion to Copaxone patients who have had their co-pay subsidies in a fraudulent scheme that put the ballooning cost of Copaxone onto the government, violating the federal False Claims Act.
In August, U.S. District Judge Nathaniel Gorton denied Teva’s motion for a judgment without a trial, ruling that the government did not have to prove that specific Medicare payments would not have been made if not for the illegal kickback scheme perpetuated by Teva. Judge Gorton’s ruling noted that any claims that were “tainted” by kickbacks were innately fraudulent.
The First Circuit Court of Appeals will review the judgment made by Judge Gorton to see whether it should be reversed. According to Judge Gorton, normally, appeals would only be allowed after a final judgment has been issued, but this exception was warranted because the judge believes that there is “substantial ground for difference of opinion.”
If the First Circuit reverses the judgment, then the government will likely be required to produce additional evidence in order to continue the lawsuit. If the Court sides with the government, the case will continue to trial. The government is seeking triple damages for its claims with a potential ceiling of over $4 billion.
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