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Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 1 of 59
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`UNITED STATES DISTRICT COURT
`DISTRICT OF MASSACHUSETTS
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`Defendants.
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`COMPLAINT
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`Introduction
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`1.
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`This is an action against defendants Teva Pharmaceuticals USA, Inc., and Teva
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`Neuroscience, Inc. (collectively, “Teva”), to recover treble damages, restitution, and civil
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`penalties under the False Claims Act, 31 U.S.C. §§ 3729-33, and the common law for causing
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`the submission of false claims to Medicare as a result of kickbacks that Teva paid in the form of
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`illegal co-pay subsidies for its multiple sclerosis (“MS”) drug, Copaxone. During the period
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`from late 2006 through at least 2015, Teva knowingly and willfully violated the anti-kickback
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`statute, 42 U.S.C. § 1320a-7b(b), by paying over $300 million to two third-party foundations,
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`Chronic Disease Fund (“CDF”) and The Assistance Fund (“TAF”), to cover the Medicare co-pay
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`obligations of Copaxone patients. This conduct generated hundreds of millions of dollars in
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`false claims to Medicare and a corresponding amount of revenue for Teva.
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`2.
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`Teva used CDF and TAF as conduits: it paid the foundations with the intent and
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`understanding that, in violation of the anti-kickback statute, they would use Teva’s money to
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`cover the co-pays of patients taking Copaxone. Teva intended the payments to ensure that
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`Civil Action No. 20-11548
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`UNITED STATES OF AMERICA,
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`Plaintiff,
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`v.
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`TEVA PHARMACEUTICALS USA, INC., and
`TEVA NEUROSCIENCE, INC.,
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 2 of 59
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`Copaxone patients never faced the steep prices that Teva charged for its drug, thus inducing the
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`patients, including Medicare patients, to purchase the drug. As depicted in the graph below,
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`during the period from late 2006 to 2015, while Teva was subsidizing Copaxone’s cost through
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`CDF and TAF, Teva raised the price of Copaxone at a rate over 19 times the rate of inflation,
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`from approximately $17,000 per year to over $73,000 per year.
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 3 of 59
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`3.
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`Teva paid CDF and TAF tens of millions of dollars each year because it knew that
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`the foundations would use Teva’s money to cover Copaxone co-pays, thus increasing Copaxone
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`sales and enriching Teva in amounts that far exceeded its payments to the foundations. (A list of
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`payments from Teva to CDF and TAF during the period from December 2006 through 2015 is
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`attached as Exhibit 1.) Ostensibly, CDF and TAF each operated a “MS” fund that covered co-
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`pays for any of the many MS drugs on the market. In practice, however, Teva conspired with the
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`foundations so that they operated their MS funds to maximize the proportion of Copaxone
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`patients who benefited whenever Teva made a payment to the foundations.
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`4.
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`Teva effectuated its scheme through a specialty pharmacy, Advanced Care
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`Scripts, Inc. (“ACS”), to which Teva referred Copaxone patients who faced Medicare co-pays
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`for the drug. ACS, in turn, arranged for the patients to obtain Medicare co-pay coverage,
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`initially from CDF, and later, after TAF was established, from both CDF and TAF. ACS then
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`reported back to Teva how many Copaxone patients were receiving co-pay coverage from each
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`foundation. During its annual budgeting process, Teva used information from ACS and the
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`foundations to determine how much money each foundation would need to cover the Medicare
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`co-pays of existing Copaxone patients in the following year, and Teva paid each foundation
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`accordingly. From the outset, ACS’s founder, Edward Hensley “understood that Teva was
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`purposefully utilizing ACS and structuring its donations to CDF in a manner that essentially
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`ensured that such donations would benefit only Copaxone patients, and not patients who had
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 4 of 59
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`been prescribed competitor MS medications.” Affidavit of Edward Hensley (“Hensley Aff.”) ¶ 3
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`(attached as Exhibit 2). When Teva began paying TAF, in addition to CDF, Hensley ensured
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`that Teva “understood that Teva effectively would be able to use TAF as it had CDF:
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`essentially, as a ‘pass-through’ donation vehicle to get Teva monies into the hands of Copaxone
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`patients.” Id. ¶ 10.
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`5.
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`Teva and ACS also worked together to enable Teva to cover Medicare co-pays for
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`Copaxone patients who started on the drug after the beginning of a year, when the TAF and CDF
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`MS funds were often closed to new patients because the foundations had allocated all of their
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`funding to existing patients. During the course of each year, ACS would provide periodic
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`reports to Teva on the number of new Copaxone patients awaiting Medicare co-pay coverage.
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`When an ACS report showed a substantial number of Copaxone patients waiting, Teva would
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`multiply the number of waiting patients by the relevant foundation’s grant amount for Copaxone
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`patients, add the foundation’s nine percent administrative fee, and then send a corresponding
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`payment to the foundation. Just before sending the payment, Teva would notify ACS, which
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`then would send a “batch file” of applications for all the waiting Copaxone patients to the
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`foundation so that the foundation would act on those applications as soon as the fund re-opened.
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`See Hensley Aff. ¶¶ 5-6. In this way, Teva and ACS ensured that the vast majority of Teva’s
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`payments to the foundations went to cover the Medicare co-pays of Copaxone patients.
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 5 of 59
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`6.
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`Thus, for Teva, both CDF and TAF functioned not as charities for MS patients,
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`but as pass-through vehicles for money from Teva to Copaxone patients. Indeed, Teva had a
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`special review process for charitable donations, but did not use that process when making its
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`payments to CDF and TAF. Teva knew that, if it did not use CDF and TAF to subsidize
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`Medicare patients’ co-pays for Copaxone, substantially fewer patients would use Copaxone and
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`Teva’s revenues would suffer. As one Teva employee noted once when the company was
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`considering whether to reduce funding for TAF, “[n]ot funding these patients has a direct and
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`immediate impact on units [sold].” Teva avoided such lost sales by regularly paying CDF and
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`TAF whatever it understood they needed to cover Medicare patients’ co-pays for Copaxone.
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`7.
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`Teva’s scheme circumvented the congressional design of the Medicare system,
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`which requires drug co-pays, in part, to act as a market constraint against increasing prices.
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`Instead, unbound by any market check on pricing due to its payment of illegal kickbacks, Teva
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`left American taxpayers to shoulder the high prices that Teva set for Copaxone, while Teva
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`reaped for itself the resulting profits.
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`Jurisdiction and Venue
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`8.
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`This Court has subject matter jurisdiction under 28 U.S.C. § 1345. The Court has
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`supplemental jurisdiction to entertain the common law cause of action under 28 U.S.C.
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`§ 1367(a). The Court may exercise personal jurisdiction over both Teva Pharmaceuticals USA,
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 6 of 59
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`Inc., and Teva Neuroscience, Inc., and venue is appropriate in this Court, under 31 U.S.C.
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`§ 3732(a), because both entities caused false claims to be submitted in this District.
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`The Parties
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`9.
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`Plaintiff United States, acting through the Department of Health and Human
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`Services (“HHS”), administers the Health Insurance Program for the Aged and Disabled
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`established by Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395, et seq. (Medicare).
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`10.
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`Defendant Teva Pharmaceuticals USA, Inc. (“Teva USA”), is a Delaware
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`corporation with its principal place of business in Parsippany, New Jersey. Teva USA is a
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`wholly-owned subsidiary of Teva Pharmaceutical Industries Ltd. (“Teva Ltd.”), an Israeli
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`business entity whose shares are publicly traded in the United States.
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`11.
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`Defendant Teva Neuroscience, Inc. (“Teva Neuroscience”), is a Delaware
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`corporation with its principal place of business in Overland Park, Kansas. It is a wholly-owned
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`subsidiary of Teva USA.
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`12.
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`Teva Neuroscience and Teva USA were individually and collectively involved in
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`the schemes alleged herein. Personnel from both entities proposed, coordinated and approved
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`the payments to CDF and TAF. In many instances, Teva USA was the source of Teva’s
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`payments to the foundations. In other instances, Teva paid the foundations through Teva
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`Neuroscience.
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 7 of 59
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`13.
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`Teva Ltd. approved the Teva Neuroscience and Teva USA budgets for payments
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`to CDF and TAF. Senior Teva Neuroscience management reported to Teva USA’s senior
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`management, who in turn reported to senior management at Teva Ltd. in Israel. Senior
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`executives at Teva Ltd. directly approved some of the larger payments to TAF and CDF. As
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`stated in a September 2015 e-mail regarding “Medicare Donations Process,” the payments
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`required approval from increasingly senior executives, up to Teva Ltd. Chief Executive Officer
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`Erez Vigodman:
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`(A copy of this e-mail is attached as Exhibit 3.) Notably, Teva had a company process for
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`making charitable donations. According to Teva’s 2012 “Integrity Principles Policy” concerning
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`charitable donations, “[t]he review and approval process, including all funding decisions for
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`proposed donations, is the responsibility of the appropriate Review Committee (Corporate
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`Responsibility, Medical Advocacy, Medical Affairs and/or Compliance) which is separate from
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`Sales and Marketing.” (A copy of the Teva Integrity Principles Policy is attached as Exhibit 4.)
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`Teva did not follow this policy for payments to CDF and TAF; instead, Teva’s marketing and
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`patient services teams determined the timing and amounts of those payments, which came from
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 8 of 59
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`the Copaxone marketing budget, and senior Teva sales, marketing and finance executives then
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`approved the payments.
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`I.
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`The Medicare Part D Program And Co-Pays Under Medicare Part D
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`Legal Background
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` Medicare Part D
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`14.
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`Congress established Medicare in 1965 to provide health insurance coverage for
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`people aged 65 or older and for people with certain disabilities or afflictions. See 42 U.S.C.
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`§§ 1395 et seq.
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`15. Medicare is funded by the federal government and administered by the Centers
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`for Medicare and Medicaid Services (“CMS”), which is part of the United States Department of
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`Health and Human Services (“HHS”).
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`16.
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`In 2003, Congress passed the Medicare Prescription Drug, Improvement, and
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`Modernization Act, Pub. L. 108-173, 117 Stat. 2066, which established a voluntary prescription
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`drug benefit program for Medicare enrollees known as Medicare Part D. Under Medicare Part
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`D, Medicare contracts with private entities, known as Part D Plan Sponsors, to administer
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`prescription drug plans. See 42 C.F.R. § 423.4.
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`17. Medicare beneficiaries who wish to receive Part D benefits must enroll in a Part D
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`Plan offered by a Part D Plan Sponsor. CMS regulates and subsidizes the Part D Sponsors
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`pursuant to one-year, annually renewable contracts. Part D Sponsors, in turn, enter into
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 9 of 59
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`subcontracts with pharmacies, or other “downstream entities,” to provide prescription drugs to
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`the Medicare Part D beneficiaries enrolled in their plans.
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`18.
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`These entities submit claims to Part D plans that pay for the drug using funds
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`provided by CMS from the Medicare Prescription Drug Account, an account within the Federal
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`Supplementary Medical Insurance Trust Fund. 42 C.F.R. § 423.315(a).
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`Medicare Part D Co-Pay Obligations
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`19.
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`By congressional design, under the Medicare statute, a Part D beneficiary may be
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`required to make a partial payment for the cost of these prescription drugs in the form of a “co-
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`payment,” “coinsurance,” or “deductible” (collectively “co-pays”). These co-pay obligations can
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`be substantial for expensive medications and vary throughout the year, depending on the total
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`Part D covered expenses the beneficiary has incurred in the year. See 42 U.S.C. § 1395w-102.
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`For example, after meeting an annual deductible (originally $250 in 2006), the standard Part D
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`benefit requires a 25 percent patient co-pay up to an “initial coverage limit” (originally $2,250 in
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`2006). Id. at b(1)-(2).
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`20.
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`After meeting the “initial coverage limit,” there is a “coverage gap” during which
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`patient co-pay obligations increase substantially until the patient meets an “annual out-of-pocket
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`threshold” for the coverage year. See 42 U.S.C. § 1395w-102(b)(2)(D). For brand name drugs,
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`the patient co-pay owed in the “coverage gap” was 100 percent through 2010, 50 percent in 2011
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`and 2012, 47.5 percent in 2013 and 2014, and 45 percent in 2015 and 2016.
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 10 of 59
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`21.
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`The financial thresholds for the “deductible,” “initial coverage limit,” and annual
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`“out-of-pocket threshold” have increased each year since 2006 pursuant to a statutory and
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`regulatory formula (from $250, $2,250, and $3,600, respectively, to $360, $3,310, and $4,850,
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`respectively, by 2016).
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`22. Medicare Part D coverage for costs incurred after the “coverage gap”, i.e., on
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`costs incurred for the remainder of the benefit year above the “annual out-of-pocket threshold”
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`(originally $3,600 in 2006), is commonly referred to as “catastrophic coverage.”
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`23.
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`Congress determined that patients owe a co-pay obligation in the “catastrophic
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`coverage” phase equaling the greater of: 1) five percent of the prescription drug costs; or 2) a
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`small fixed dollar amount (originally $5 for brand name drugs in 2006). 42 U.S.C. § 1395w-
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`102(b)(4). As a practical matter, a patient will owe a five percent co-pay in the “catastrophic
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`coverage” phase of Part D for any expensive, brand name drug. As described below, the
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`remaining costs are paid by a “reinsurance subsidy” from CMS (80 percent) and by the Part D
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`plans (15 percent).
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`24.
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`In a July 2015 e-mail exchange, Teva employees shared the following
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`visualization of the Medicare Part D co-pay structure:
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 11 of 59
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`(A copy of the e-mail exchange with this visual is attached as Exhibit 5.)
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`25.
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`Congress intended these Medicare co-pays to encourage physicians and
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`beneficiaries to be efficient consumers of federally-reimbursed health care products, and also to
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`encourage those manufacturing such products to price them based on market forces such as
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`consumer sensitivity and competition. Manufacturers paying the Medicare co-pays of those
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`seeking to buy their drugs circumvent this congressionally-designed check on health care costs.
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`As the United States Department of Health and Human Services, Office of the Inspector General
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 12 of 59
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`(“HHS-OIG”) has observed, drug manufacturers paying the Medicare Part D co-pays of patients
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`taking their products “eliminat[e] a market safeguard against inflated prices.” HHS-OIG, Special
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`Advisory Bulletin on Patient Assistance Programs for Medicare Part D Enrollees, 70 Fed. Reg.
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`70623, 70625 (Nov. 22, 2005).
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`Medicare Payments For Prescription Drugs Under Medicare Part D
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`26.
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`Generally, after a physician writes a prescription for a Medicare Part D
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`beneficiary, the patient can take the prescription to a pharmacy or submit it to a mail order
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`specialty pharmacy to be filled.
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`27. When the patient submits the prescription, the Medicare co-pay is due from the
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`patient to complete the purchase of the drug and have the pharmacy fill the prescription.
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`28. When the pharmacy dispenses a drug to a Part D beneficiary, the pharmacy
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`submits a claim to the beneficiary’s Part D Sponsor, which, in turn, submits an electronic record
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`of the claim, called a Prescription Drug Event (“PDE”), to CMS. After dispensing the drug, the
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`pharmacy receives reimbursement from the CMS-funded Part D Sponsor for the drug cost less
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`the co-pay for which the Part D beneficiary was responsible.
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`29.
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`The PDE contains many specific representations regarding each Medicare
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`prescription drug claim, including the patient’s name, service provider of the drug, the prescriber
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`of the drug, the name of the drug, and the quantity dispensed to the patient. Each PDE that is
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`submitted to CMS is a summary record that documents the final adjudication of a dispensing
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 13 of 59
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`event based upon claims received from pharmacies and serves as the request for payment for
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`each individual prescription submitted to Medicare under the Part D program.
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`30.
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`The creation and submission of PDE claims data is necessary for CMS to
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`administer the Part D program and to reimburse Part D Plan Sponsors for qualified drug
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`coverage that they provide to Medicare beneficiaries. Submitting the required information,
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`which is contained in the PDE, is a condition of payment for CMS’s provision of Medicare funds
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`to Part D Plan sponsors. See 42 C.F.R. § 423.322.
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`31.
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`CMS pays Part D Plan Sponsors based upon these PDEs in various ways. For
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`example, CMS gives each Part D sponsor advance monthly payments to cover, among other
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`things, the Part D Plan Sponsor’s direct CMS subsidy per enrollee (which is based on a
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`standardized bid made by the Part D sponsor) and estimated reinsurance subsidies (to account for
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`CMS’s anticipated 80 percent subsidy of the “catastrophic coverage” costs that will be incurred
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`for all enrollees). See 42 C.F.R. §§ 423.315, 423.329. At the end of the payment year, CMS
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`then reconciles the advance payments paid to each Part D Sponsor with the actual costs the
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`sponsor has incurred, as documented by PDE data. In this reconciliation process, CMS uses the
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`PDE claims data submitted by the Part D Sponsor during the prior payment year to calculate the
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`costs the Part D sponsor has actually incurred for prescriptions filled by Medicare beneficiaries
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`under Part D that year. In the case of the federal government’s 80 percent reinsurance subsidy
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`for catastrophic costs, for example, if CMS determines that it underpaid the sponsor, it will make
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 14 of 59
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`up the entire difference. The payments by CMS to the Part D sponsor — which in turn fund the
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`provision of prescription drugs provided to beneficiaries at each drug dispensing event — come
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`from the Medicare Prescription Drug Account, an account within the Federal Supplementary
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`Medical Insurance Trust Fund. 42 C.F.R. § 423.315(a).
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`32.
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`Part D Plan Sponsors must comply with “[f]ederal laws and regulations designed
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`to prevent fraud, waste, and abuse, including, but not limited to, applicable provisions of Federal
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`criminal law, the False Claims Act (31 U.S.C. § 3729, et seq.), and the anti-kickback statute
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`(§ 1128B(b) of the Act).” 42 C.F.R. § 423.505(h)(1). Any “first tier, downstream, and related
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`entity” that Part D Plans subcontract with (including pharmacies dispensing medication) must
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`also comply with these, and any other, contractual obligations of the Part D Plan, see 42 C.F.R.
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`§ 423.505(i)(3)(iii), and separately comply with all applicable federal laws, regulations, and
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`CMS instructions. See 42 C.F.R. § 423.505(i)(3)(iv).
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`33.
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`CMS regulations require Part D Plan Sponsors and related “downstream” entities
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`that generate and submit PDE claims data to certify that such data is true, accurate, and complete
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`and that the PDE data is the basis for obtaining federal reimbursement for the health care
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`products or services reflected therein. 42 C.F.R. § 423.505(k).
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`34.
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`Compliance with the regulatory requirement that claims data in the PDE record
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`submitted to CMS be “true, accurate, and complete” is an express condition of payment under
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`the Medicare Part D Program. 42 C.F.R. § 423.505(k).
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 15 of 59
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`35.
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`The submission of PDEs is essential to the functioning of the Part D Program, the
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`singular purpose of which is to provide coverage for drug products for the Medicare population.
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`The accuracy of the information contained in each PDE for each patient determines how much
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`payment will be made by Part D for that particular prescription.
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`II.
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`The False Claims Act
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`36.
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`The False Claims Act provides, in pertinent part, that any person who:
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`(A) knowingly presents, or causes to be presented, a false or fraudulent claim for
`payment or approval;
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`(B) knowingly makes, uses, or causes to be made or used, a false record or
`statement material to a false or fraudulent claim; [or]
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`(C) conspires to commit a violation of subparagraph (A) [or] (B),
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` . . is liable to the United States Government for a civil penalty of not less than
`$5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties
`Inflation Adjustment Act of 1990 (28 U.S.C. § 2461 note; Public Law 104-410),
`plus 3 times the amount of damages which the Government sustains because of
`the act of that person.
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`31 U.S.C. § 3729(a)(1).
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`37.
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`For purposes of the False Claims Act, the terms “knowing” and “knowingly”
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`mean that a person, with respect to information: (i) has actual knowledge of the information; (ii)
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`acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless
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`disregard of the truth or falsity of the information. No proof of specific intent to defraud is
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`required. 31 U.S.C. § 3729(b)(1).
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 16 of 59
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`38.
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`The False Claims Act defines the term “claim,” in pertinent part, as
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`any request or demand, whether under a contract or otherwise, for money or
`property and whether or not the United States has title to the money or property,
`that (i) is presented to an officer, employee, or agent of the United States; or (ii) is
`made to a contractor, grantee, or other recipient, if the money or property is to be
`spent or used on the Government’s behalf or to advance a Government program
`or interest, and if the United States Government--(I) provides or has provided any
`portion of the money or property requested or demanded; or (II) will reimburse
`such contractor, grantee, or other recipient for any portion of the money or
`property which is requested or demanded[.]
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`31 U.S.C. § 3729(b)(2).
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`39.
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`For purposes of the False Claims Act, the term “material” means “having a
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`natural tendency to influence, or be capable of influencing, the payment or receipt of money or
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`property.” 31 U.S.C. § 3729(b)(4).
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`III.
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` The Anti-Kickback Statute
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`40.
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`The anti-kickback statute, 42 U.S.C. § 1320a-7b(b), arose out of Congressional
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`concern that payoffs to those who can influence health care decisions would result in goods and
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`services being provided that are excessively costly, medically unnecessary, of poor quality, or
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`potentially harmful to patients. To protect the integrity of Federal health care programs from
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`these difficult-to-detect harms, Congress enacted a per se prohibition against the payment of
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`kickbacks in any form, regardless of whether the particular kickback gives rise to overutilization,
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`poor quality of care, or patient harm. In particular, when determining what conduct to prohibit,
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`Congress determined that the inducements at issue would “contribute significantly to the cost” of
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`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 17 of 59
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`Federal health care programs absent federal penalties as a deterrent. H.R. Rep. No. 95-393, at 53
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`(1977), reprinted in 1977 U.S.C.C.A.N. 3039, 3056. First enacted in 1972, Congress
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`strengthened the anti-kickback statute in 1977, 1987, and 2010 to ensure that kickbacks
`
`masquerading as legitimate transactions did not evade its reach. See Social Security
`
`Amendments of 1972, Pub. L. No. 92-603, §§ 242(b) and (c); 42 U.S.C. § 1320a-7b, Medicare-
`
`Medicaid Antifraud and Abuse Amendments, Pub. L. No. 95-142; Medicare and Medicaid
`
`Patient and Program Protection Act of 1987, Pub. L. No. 100-93; Patient Protection and
`
`Affordable Care Act, Pub. L. No. 111-148.
`
`41.
`
`The anti-kickback statute prohibits any person or entity from knowingly and
`
`willfully offering, making, soliciting, or accepting remuneration, in cash or in kind, directly or
`
`indirectly, to induce or reward any person for purchasing, ordering, or recommending or
`
`arranging for the purchasing or ordering of federally-funded medical goods or services:
`
`(b) Illegal remunerations
`* * *
`(2) whoever knowingly and willfully offers or pays any remuneration (including any
`kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind
`to any person to induce such person--
`(A) to refer an individual to a person for the furnishing or arranging for the furnishing
`of any item or service for which payment may be made in whole or in part under a
`Federal health care program, or
`(B) to purchase, lease, order, or arrange for or recommend purchasing, leasing, or
`ordering any good, facility, service, or item for which payment may be made in whole
`or in part under a Federal health care program, shall be guilty of a felony and upon
`conviction thereof, shall be fined not more than $100,000 or imprisoned for not more
`than ten years, or both.
`
`
`17
`
`
`
`
`
`

`

`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 18 of 59
`
`
`
`42 U.S.C. § 1320a-7b(b)(2). Violation of the anti-kickback statute also can subject the
`
`perpetrator to exclusion from participation in Federal health care programs and civil monetary
`
`penalties. 42 U.S.C. § 1320a-7b(b)(2); 42 U.S.C. § 1320a-7(b)(7); 42 U.S.C. § 1320a-7a(a)(7).
`
`42.
`
`The anti-kickback statute prohibits offering or paying anything of value, including
`
`“cash” and “in-kind” payments or rebates. 42 U.S.C. § 1320a-7b(b)(2). Money and other forms
`
`of financial subsidies that can be used to pay or waive Medicare co-pays constitute remuneration
`
`under the anti-kickback statute.
`
`43.
`
`The anti-kickback statute defines a “Federal health care program” to mean “any
`
`plan or program that provides health benefits, whether directly, through insurance, or otherwise,
`
`which is funded directly, in whole or in part, by the United States Government,” except for the
`
`health insurance program for federal employees under 5 U.S.C. §§ 8901 et seq. 42 U.S.C.
`
`§ 1320a-7b(f). Medicare is a “Federal health care program” for purposes of the anti-kickback
`
`statute.
`
`44.
`
`The anti-kickback statute provides that, “[w]ith respect to violations of this
`
`section, a person need not have actual knowledge of this section or specific intent to commit a
`
`violation of this section.” 42 U.S.C. § 1320a-7b(h).
`
`45.
`
`In 2010, Congress amended the anti-kickback statute to include language that
`
`reaffirmed prior case law and provided that any Medicare claim “that includes items or services
`
`resulting from a violation of [the anti-kickback statute] constitutes a false or fraudulent claim for
`
`18
`
`
`
`
`
`

`

`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 19 of 59
`
`
`
`purposes of [the False Claims Act].” 42 U.S.C. § 1320a-7b(g). Under this provision, claims
`
`submitted to Federal health care programs that result from violations of the anti-kickback statute
`
`are per se false or fraudulent within the meaning of 31 U.S.C. § 3729(a). Accordingly, a person
`
`violates the False Claims Act when he or she knowingly submits or causes to be submitted
`
`claims to Federal health care programs that result from violations of the anti-kickback statute.
`
`46.
`
`Compliance with the anti-kickback statute is material to CMS’s decision to pay a
`
`Medicare claim.
`
`I.
`
`Background
`
`Factual Allegations
`
`A.
`
`47.
`
`Teva And Copaxone
`
`Teva Ltd. licensed the rights to Copaxone from the Weizmann Institute of Science
`
`in 1987. The United States Food and Drug Administration approved Copaxone in 1996, and it
`
`subsequently became one of the best-selling drugs in the United States. For example, “[i]n 2015,
`
`Copaxone® revenues . . . amounted to $3.2 billion in the U.S. (approximately 29% of Teva’s
`
`total 2015 U.S. revenues).” Teva Ltd., Annual Report (Form 20-k), Notes to Consolidated
`
`Financial Statements, F-64, available at
`
`https://www.sec.gov/Archives/edgar/data/818686/000119312516459785/d120587d20f.htm. In
`
`2015, Medicare spent over $1.1 billion on catastrophic coverage for Copaxone. See HHS-OIG,
`
`High Price Drugs Are Increasing Federal Payments For Medicare Part D Catastrophic
`
`Coverage (Jan. 2017), available at https://oig.hhs.gov/oei/reports/oei-02-16-00270.pdf.
`19
`
`
`
`
`
`

`

`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 20 of 59
`
`
`
`B.
`
`48.
`
`Teva’s “Shared Solutions” Program
`
`For Copaxone patients, Teva provided a suite of services called “Shared
`
`Solutions.” According to Teva, Shared Solutions was “dedicated to getting and keeping patients
`
`on” Copaxone. Through Shared Solutions, Teva offered free injection devices that patients
`
`could use to administer the drug, maintained a staff of nurses who provided patients with free
`
`injection training, and assigned case managers who worked with patients to obtain insurance
`
`coverage for the drug and helped them to identify means of covering the often substantial
`
`insurance co-pays for the drug. Physicians who prescribed Copaxone typically submitted an
`
`enrollment form directly to Shared Solutions for each new Copaxone patient. As a result, Shared
`
`Solutions established relationships with the vast majority of all Copaxone patients.
`
`49.
`
`Teva explained the financial component of the Shared Solutions offering in a set
`
`of talking points for its Copaxone sales team:
`
`
`
`20
`
`
`
`
`
`

`

`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 21 of 59
`
`
`
`
`
`Similarly, in a 2011 Work Plan for Teva Neuroscience, the company noted that “Copaxone
`
`Patient Assistance Programs remove prescribing barriers and drive[] adherence and compliance.”
`
`Thus, Shared Solutions served to assure both patients and their physicians that they need not
`
`worry about Copaxone’s substantial cost.
`
`50.
`
`In October 2006, Teva entered into a contract with ACS, a specialty pharmacy
`
`that Hensley and Jeff Spafford had co-founded earlier that year. (A copy of this contract is
`
`attached as Exhibit 6.) Hensley had a prior business relationship with Denise Lynch, who at the
`
`time was Teva’s Director of Customer Resources and ran Teva’s Shared Solutions program.
`
`(Lynch’s title later changed to Vice President of Patient Services.) Pursuant to the contract,
`
`Shared Solutions referred to ACS patients who had been prescribed Copaxone and who either
`
`had or were eligible for Medicare Part D coverage. If a patient did not already have Medicare
`
`Part D coverage, ACS helped the patient sign up for coverage. If a patient was eligible for
`
`Medicare co-pay coverage from a foundation, ACS would gather the necessary information from
`
`the patient and submit an application for the patient to CDF.
`
`21
`
`
`
`
`
`

`

`Case 1:20-cv-11548-NMG Document 1 Filed 08/18/20 Page 22 of 59
`
`
`
`51.
`
`ACS generated revenue on its work for Teva from service fees that Teva paid to
`
`ACS to facilitate foundation coverage for Medicare patients, and from dispensing Copaxone.
`
`ACS dispensed Copaxone to the vast majority of the Copaxone patients for whom it arranged co-
`
`pay coverage through its arrangement with Teva.
`
`52.
`
`In 2008, Hensley and Spafford sold ACS to another pharmacy. They stayed on at
`
`ACS until late 2009. Meanwhile, during 2009, they founded TAF and a for-profit business
`
`called AssistRx. After TAF opened its MS fund in or about January 2010, ACS started helping
`
`Medicare patients obtain Copaxone co-pay coverage from both TAF and CDF. In September
`
`2010, AssistRx started running Teva’s free drug program for Copaxone patients who did not
`
`have insurance. As part of that program

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