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Teva in talks to settle US lawsuit alleging MS drug kickbacks

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By Nate Raymond

BOSTON, June 17 (Reuters) -Teva Pharmaceutical Industries Ltd TEVA.TA said it is in active talks to settle a U.S. Department of Justice lawsuit alleging it used charities that help cover Medicare patients' out-of-pocket drug costs as a means to pay kickbacks to boost sales of its multiple sclerosis drug Copaxone.

Teva made the disclosure on Sunday in a filing asking the Boston-based 1st U.S. Circuit Court of Appeals to put on hold its appeal set to be heard next month of a key ruling over what the government must prove to establish it violated the False Claims Act.

That law makes it illegal to defraud governmental programs and allows the government and whistleblowers to pursue civil cases seeking to recover taxpayer money paid out based on false claims submitted for payment.

"The parties are actively engaged in settlement negotiations and Teva is optimistic that the parties can reach a resolution, but additional time is needed to do so," Teva's lawyers wrote.

The case is one of two left pending from an industry-wide probe of drugmakers' financial support of patient assistance charities that has resulted in more than $1 billion in settlements with 12 drugmakers, four charities and one pharmacy.

Teva in court papers had said that it faced triple damages under the False Claims Act of as much as $10 billion in the Justice Department's lawsuit, which was filed in 2020. It has denied wrongdoing.

Israel-based Teva and the U.S. Attorney's Office in Massachusetts, which has been handling the case, declined to comment on Monday.

Drug companies are prohibited from subsidizing co-payments for patients enrolled in Medicare, the government healthcare program for those aged 65 and older. Companies may donate to non-profits providing co-pay assistance as long as they are independent.

But the government has alleged that various pharmaceutical companies used such charities as a means to improperly pay the co-pay obligations of Medicare patients using their drugs, in violation of the Anti-Kickback Statute.

The lawsuit alleged Teva paid two such charitable foundations, the Chronic Disease Fund and The Assistance Fund, more than $350 million from 2006 to 2017 to cover co-payments for Copaxone patients, turning the charities into vehicles to pay kickbacks to patients to use the drug.

During that time, Teva quintupled the drug's price to about $85,000 per year from approximately $17,000. The drug at that time was Teva's best seller, generating $3.8 billion in revenues in 2017 alone.

The industry-wide investigation was launched during heightened attention to rising drug prices. Co-pays are partly meant to serve as a check on healthcare expenses by exposing patients to some of a medicine's true cost.

The 1st Circuit had scheduled arguments on July 22 in both the case against Teva and a similar lawsuit filed in 2020 against Regeneron Pharmaceuticals Inc on the issue of what government must prove at trial.

In Teva's case, the company was appealing U.S. District Judge Nathaniel Gorton's decision last year holding the government did not have to prove that specific Medicare payments would not have been made if not for illegal kickbacks.

In Regeneron's case, Chief U.S. District Judge F. Dennis Saylor reached the opposite conclusion. Both judges allowed Teva and Regeneron to pursue appeals now instead of going to trial first given the importance of the question to the litigation.

The case is United States v. Teva Pharmaceuticals USA Inc, 1st U.S. Circuit Court of Appeals, No. 23-1958.

For the government: Daniel Winik of the U.S. Department of Justice

For Teva: Alexandra Shapiro of Shapiro Arato Branch and William Peterson of Morgan, Lewis & Bockius

Read more:

Trial against Teva over kickback claims put on hold amid appeal

U.S. sues Teva over alleged kickbacks for multiple sclerosis drug

Reporting by Nate Raymond in Boston


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