Case 1:20-cv-11548-NMG Document 27 Filed 11/17/20 Page 1 of 46
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`UNITED STATES DISTRICT COURT
`DISTRICT OF MASSACHUSETTS
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`THE UNITED STATES’ OPPOSITION TO TEVA’S MOTION TO DISMISS
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`Civil Action No. 20-11548-NMG
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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 27 Filed 11/17/20 Page 2 of 46
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`TABLE OF CONTENTS
`INTRODUCTION .......................................................................................................................... 1 
`
`LEGAL BACKGROUND .............................................................................................................. 4
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`I. 
`
`II. 
`
`MEDICARE PART D AND ITS COST-SHARING PROVISIONS. .................... 4
`
`THE FALSE CLAIMS ACT AND THE ANTI-KICKBACK STATUTE ............ 5 
`
`III. HHS-OIG’S GUIDANCE CONCERNING PAYING MEDICARE
`BENEFICIARIES’ COST-SHARING AMOUNTS............................................... 6
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`FACTUAL BACKGROUND ......................................................................................................... 9
`
`I.
`
`II.
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`TEVA’S SCHEME TO SUBSIDIZE COPAXONE’S HIGH PRICE BY
`COVERING PATIENTS MEDICARE CO-PAYS FOR THE DRUG .................. 9
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`TEVA PAID TAF AND CDF TO GENERATE MEDICARE CLAIMS FOR
`COPAXONE ......................................................................................................... 12
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`III.
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`TEVA KNEW ITS CONDUCT WAS UNLAWFUL .......................................... 14 
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`ARGUMENT ................................................................................................................................ 14 
`
`I. 
`
`THE GOVERNMENT HAS PLED FACTS SUPPORTING EACH ELEMENT
`OF THE ANTI-KICKBACK STATUTE AND THE FALSE CLAIMS ACT .... 15 
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`A. 
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`The Complaint Sufficiently Pleads That Teva Violated The AKS ............15
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`1. Teva Provided Remuneration To Patients Through CDF and TAF
`........................................................................................................15
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`2. Teva Intended Its Payments To Induce Purchases Of Copaxone. ..16
`
`a.
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`b.
`
`c.
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`Teva Actively Ensured Its Payments Benefitted Copaxone
`Patients ...............................................................................16
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`The AKS Does Not Require The Government To Plead Or
`Prove Corruption Of Clinical Decision-Making ................19
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`The Complaint Need Not Allege That Teva’s Payments To
`The Foundations Were Contingent On The Foundations’
`Agreement To Promote Copaxone .....................................20
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`Medicare Paid For Thousands of Kickback-Tainted Copaxone
`Claims ............................................................................................21
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`3.
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`ii
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`Case 1:20-cv-11548-NMG Document 27 Filed 11/17/20 Page 3 of 46
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`4.
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`The Complaint Alleges That Teva’s Conduct Was Knowing And
`Willful. ...........................................................................................22
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`a.
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`b.
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`The Complaint Alleges The Statutory Scienter Elements Of
`The AKS ............................................................................22
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`The HHS-OIG Guidance Does Not Provide Teva A
`Defense To Willfulness ......................................................23
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`B. 
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`The Complaint Sufficiently Pleads That Teva Violated the False Claims
`Act. .............................................................................................................25
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`1. Teva’s Kickbacks Caused False Claims .........................................25
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`2. Teva’s AKS Violations Were “Material” For Purposes Of The
` FCA .................................................................................................28
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`3. Teva’s Conduct Was Knowing Under The FCA. ...........................29
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`The Government Has Sufficiently Pled An FCA Conspiracy.. .................30
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`C.
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`II.
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`III.
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`IV.
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`THE COMPLAINT ALLEGES FCA VIOLATIONS WITH PARTICULARITY
`............................................................................................................................... 32
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`THE COMPLAINT SUFFICIENTLY ALLEGES UNJUST ENRICHMENT ... 34
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`THE FIRST AMENDMENT DOES NOT PROTECT TEVA’S KICKBACK
`CONDUCT ........................................................................................................... 36
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`CONCLUSION ............................................................................................................................. 38 
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`iii
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`Case 1:20-cv-11548-NMG Document 27 Filed 11/17/20 Page 4 of 46
`
`TABLE OF AUTHORITIES
`
`Cases
`Bell Atl. Corp. v. Twombly,
`550 U.S. 544 (2007) ................................................................................................................14
`Cardigan Mountain Sch. v. N.H. Ins. Co.,
`787 F.3d 82 (1st Cir. 2015) .....................................................................................................14
`Giboney v. Empire Storage & Ice Co.,
`336 U.S. 490 (1949) ................................................................................................................37
`Guilfoile v. Shields,
`913 F.3d 178 (1st Cir. 2019) .................................................................................16, 19, 25, 28
`In re Pharm. Indus. Average Wholesale Price Litig.,
`491 F. Supp. 2d 12 (D. Mass. 2007) ..........................................................................................5
`Mass. Eye & Ear Infirmary v. QLT Phototherapeutics, Inc.,
`552 F.3d 47 (1st Cir. 2009) .....................................................................................................35
`Massachusetts v. Mylan Labs.,
`357 F. Supp. 2d 314 (D. Mass. 2005) ......................................................................................35
`Sorrell v. IMS Health Inc.,
`564 U.S. 552 (2011) ................................................................................................................37
`United States ex rel. Arnstein v. Teva Pharm. USA, Inc.,
`No. 13 Civ. 3702, 2019 WL 1245656 (S.D.N.Y. Feb. 27, 2019) ............................................25
`United States ex rel. Banigan v. Organon USA Inc.,
`No. CV 07-12153-RWZ, 2016 WL 10704126 (D. Mass. Aug. 23, 2016) ............ 15-16, 23, 29
`United States ex rel. Bawduniak v. Biogen Idec, Inc.,
`No. 12-CV-10601-IT, 2018 WL 1996829 (D. Mass. Apr. 27, 2018) ..................................... 27
`United States ex rel. Bilotta v. Novartis Pharmaceuticals Corp.,
`50 F. Supp. 3d 497 (S.D.N.Y. 2014) .................................................................................17, 23
`United States ex rel. Decesare v. Americare in Home Nursing,
`No. 1:05CV696, 2011 WL 607390 (E.D. Va. Feb. 10, 2011) .................................................29
`United States ex rel. Escobar v. Universal Health Servs., Inc.,
`842 F.3d 103 (1st Cir. 2016) .............................................................................................15, 25
`United States ex rel. Gagne v. City of Worcester,
`565 F.3d 40 (1st Cir. 2009) ...............................................................................................14, 32
`United States ex rel. Ge v. Takeda Pharm. Co.,
`737 F.3d 116 (1st Cir. 2013) ...................................................................................................32
`
`iv
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`

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`Case 1:20-cv-11548-NMG Document 27 Filed 11/17/20 Page 5 of 46
`
`United States ex rel. Gohil v. Sanofi U.S. Servs. Inc.,
`No. 02-2964, 2020 WL 4260797 (E.D. Pa. July 24, 2020) ...............................................28, 30
`United States ex rel. Gohil v. Sanofi U.S. Servs. Inc.,
`No. 02-2964, 2020 WL 6682483 (E.D. Pa. Nov. 12, 2020) ........................................24, 26, 29
`United States ex rel. Goodman v. Arriva Med., LLC,
`No. 3:13-CV-0760, 2020 WL 3840446 (M.D. Tenn. July 8, 2020) ..............................5, 17, 26
`United States ex rel. Greenfield v. Medco Health Sols., Inc.,
`880 F.3d 89 (3d Cir. 2018) .......................................................................................... 19, 25-26
`United States ex rel. Grenadyor v. Ukrainian Village Pharmacy, Inc.,
`772 F.3d 1102 (7th Cir. 2014) .................................................................................................16
`United States ex rel. Kosenske v. Carlisle HMA, Inc.,
`No. 1:05-CV-2184, 2010 WL 1390661 (M.D. Pa. Mar. 31, 2010) ................................... 29-30
`
`United States ex rel. Lutz v. United States,
`853 F.3d 131, 135 (4th Cir. 2017) ...........................................................................................25
`United States ex rel. Nargol v. DePuy Orthopaedics, Inc.,
`865 F.3d 29 (1st Cir. 2017) .....................................................................................................32
`United States ex rel. Nevyas v. Allergan, Inc.,
`No. 09-432, 2015 WL 3429381 (E.D. Pa. May 26, 2015) ......................................................36
`United States ex rel. Purcell v. MWI Corp.,
`254 F. Supp. 2d 69 (D.D.C. 2003) ...........................................................................................36
`United States ex rel. Ruscher v. Omnicare, Inc.,
`663 F. App’x 368 (5th Cir. 2016) ............................................................................................16
`United States ex rel. Strunck v. Mallinckrodt ARD, LLC,
`Nos. 12-175, 13-1776, 2020 WL 362717 (E.D. Pa. Jan. 22, 2020) .............................17, 29, 34
`
`
`United States ex rel. Vitale v. MiMedx Group, Inc.,
`381 F. Supp. 3d 647 (D.S.C. 2019) .........................................................................................18
`United States ex rel. Wallace v. Exactech, Inc.,
`No. 2:18-CV-01010-LSC, 2020 WL 4500493 (N.D. Ala. Aug. 5, 2020) ...............................27
`United States ex rel. Westmoreland v. Amgen, Inc.,
`738 F. Supp. 2d 267 (D. Mass. 2010) ................................................................................ 30-32
`United States ex rel. Wilkins v. United Health Grp., Inc.,
`659 F.3d 295 (3d Cir. 2011) ....................................................................................................19
`United States ex rel. Wood v. Allergan, Inc.,
`246 F. Supp. 3d 772 (S.D.N.Y. 2017) .....................................................................................29
`
`v
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`Case 1:20-cv-11548-NMG Document 27 Filed 11/17/20 Page 6 of 46
`
`United States v. Applied Pharmacy Consultants, Inc.,
`182 F.3d 603 (8th Cir. 1999) ............................................................................................. 35-36
`United States v. Bay State Ambulance & Hosp. Rental Serv., Inc.,
`874 F.2d 20 (1st Cir. 1989) ...............................................................................................15, 22
`United States v. Berkeley Heartlab, Inc.,
`225 F. Supp. 3d 487 (D.S.C. 2016) ...........................................................................................5
`United States v. Borrasi,
`639 F.3d 774 (7th Cir. 2011) ...................................................................................................16
`United States v. Celgene Corp.,
`226 F. Supp. 3d 1032 (C.D. Cal. 2016) ...................................................................................20
`United States v. Delgado,
`668 F.3d. 219 (5th Cir. 2012) ............................................................................................ 22-23
`United States v. Eggleston,
`823 Fed. App’x. 340 (6th Cir. 2020) .......................................................................................19
`United States v. Facteau,
`No. 1:15-cr-10076-ADB, 2020 WL 5517573 (D. Mass. Sept. 14, 2020) ...............................36
`United States v. Goodwin,
`974 F.3d 872 (8th Cir. 2020) ...................................................................................................22
`United States v. Greber,
`760 F.2d 68 (3d Cir. 1985) ......................................................................................................16
`United States v. Holland,
`396 F. Supp. 3d 1210 (N.D. Ga. 2019) ....................................................................................18
`United States v. Mathur,
`No. 2:11-cr-00312, 2012 WL 4742833 (D. Nev. Sept. 13, 2012) ...........................................36
`
`
`United States v. McClatchey,
`217 F.3d 823 (10th Cir. 2000) ..........................................................................................16, 18
`United States v. Medtronic, Inc.,
`189 F. Supp. 3d 259 (D. Mass. 2016) ......................................................................................16
`
`
`United States v. President & Fellows of Harvard Coll.,
`323 F. Supp. 2d 151, 196 (D. Mass. 2004) .............................................................................30
`United States v. Vernon,
`723 F.3d 1234 (11th Cir. 2013) ...............................................................................................15
`Universal Health Servs., Inc. v. United States ex rel. Escobar,
`136 S. Ct. 1989 (2016) .............................................................................................................28
`
`vi
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`Case 1:20-cv-11548-NMG Document 27 Filed 11/17/20 Page 7 of 46
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`Wisconsin v. Mitchell,
`508 U.S. 476 (1993) ................................................................................................................36
`
`
`Statutes
`
`31 U.S.C. § 3729 .................................................................................................................. passim
`
`42 U.S.C § 1320a-7a ........................................................................................................................6
`
`
`42 U.S.C. § 1320a-7b ............................................................................................................. passim
`
`42 U.S.C. § 1320a-7d .....................................................................................................................21
`
`42 U.S.C. § 1395w-102................................................................................................................... 4
`
`Federal Rules
`
`Fed. R. Civ. P. 8 ............................................................................................................................35
`
`Fed. R. Civ. P. 9 ......................................................................................................................15, 32
`
`Legislative History
`
`155 Cong. Rec. S10853 (daily ed. Oct. 28, 2009) (statement of Sen. Kaufman) ..........................25
`
`Miscellaneous
`
`Department of Justice, Justice Manual § 1-20.201 (2018) ............................................................24
`
`HHS-OIG Advisory Opinion 03-03, available at
`https://oig.hhs.gov/fraud/docs/advisoryopinions/2003/ao0303.pdf ............................................. 6-7
`
`HHS-OIG Advisory Opinion 06-10, available at
`https://oig.hhs.gov/fraud/docs/advisoryopinions/2006/AdvOpn06-10A.pdf ...................................9
`
`HHS-OIG Advisory Opinion 10-06, available at
`https://oig.hhs.gov/fraud/docs/advisoryopinions/2010/AdvOpn10-06.pdf .....................................9
`
`HHS-OIG Advisory Opinion 20-05, available at
`https://oig.hhs.gov/fraud/docs/advisoryopinions/2020/AdvOpn20-05.pdf31123 ..........................6
`
`HHS-OIG, Special Advisory Bulletin: Patient Assistance Programs for Medicare Part D
`Enrollees, 70 Fed. Reg. 70623 (Nov. 22, 2005) ................................................................... 7-8, 23
`
`
`HHS-OIG, Supplemental Special Advisory Bulletin: Independent Charity Patient Assistance
`Programs, 79 Fed. Reg. 31120 (May 30, 2014) ....................................................................... 9, 21
`
`vii
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`
`Medicare Prescription Drug, Improvement and Modernization Act of 2003, Public Law 108-173,
`117 Stat. 2272 ..................................................................................................................................4
`
`
`viii
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`Case 1:20-cv-11548-NMG Document 27 Filed 11/17/20 Page 9 of 46
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`INTRODUCTION
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`
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`The government’s complaint alleges that Teva Neuroscience, Inc., and Teva
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`Pharmaceuticals USA, Inc. (collectively, “Teva”), paid two foundations hundreds of millions of
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`dollars, not as charity, but as part of a scheme to do what Teva knew the law prohibited: to
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`funnel money to Medicare patients taking its own multiple sclerosis (“MS”) drug, Copaxone, for
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`which Teva charged approximately $17,000 per year in 2006 and over $73,000 per year by 2015.
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`The complaint alleges, in detail, that Teva: (1) unlawfully turned the two foundations, Chronic
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`Disease Fund (“CDF”) and The Assistance Fund (“TAF”), into conduits to pay its own
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`Copaxone patients’ Medicare co-pay obligations (as defined infra at 4) so that the patients would
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`not face the steep prices Teva set for the drug; (2) conspired with a pharmacy, Advanced Care
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`Scripts, Inc. (“ACS”), as well as with CDF and TAF, to do so; (3) acted knowingly and willfully,
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`in violation of the anti-kickback statute (“AKS”), 42 U.S.C. § 1320a-7b(b), and knowingly under
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`the False Claims Act (“FCA”), 31 U.S.C. § 3729; and (4) thus caused the submission of false,
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`kickback-tainted claims to Medicare. The Motion to Dismiss should be denied because the
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`complaint alleges all of the elements of an FCA action predicated on AKS violations, and of
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`unjust enrichment.
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`According to the complaint, Teva conspired with ACS, CDF, and TAF to ensure that its
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`money flowed through the two foundations to cover Copaxone patients’ Medicare co-pays.
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`When an MS patient was first prescribed Copaxone, the patient’s physician generally would
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`direct the patient to Shared Solutions, a group within Teva that advised patients on how to use
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`Copaxone and how to get coverage for it. If the patient was on Medicare, and thus was likely to
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`face thousands of dollars per year in co-pays for the drug, Teva knew that it could not cover the
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`patient’s co-pays directly. Instead, Shared Solutions typically referred the patient to ACS, which
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`1
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`not only dispensed Copaxone and other MS drugs but also arranged for MS patients to obtain co-
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`pay coverage from CDF and TAF, the two foundations that Teva supported. The MS funds at
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`these foundations ostensibly provided Medicare co-pay coverage for any MS drug, but Teva
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`wanted its money to go to its patients, and not to patients taking its competitors’ MS drugs.
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`Meanwhile, the funds often had no additional money to allocate to patients with MS, and so,
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`when that was the case, they would deny grants to new applicants and not put them on a wait list.
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`When the funds were closed to new MS patients, ACS would tell Teva how many Medicare
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`patients with Copaxone prescriptions did not yet have foundation co-pay coverage grants. Teva
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`then would pay one of the funds enough money for grants to cover all of the waiting Copaxone
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`patients’ Medicare co-pays through the end of the year. Contemporaneously, Teva told ACS
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`whenever it was going to make such a payment to the CDF or TAF MS fund, thus causing the
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`fund to re-open, and ACS then immediately would send that fund an electronic “batch file”
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`consisting almost exclusively of Copaxone patients’ co-pay grant applications. Since the funds
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`had no wait list and processed new applications on a first-come, first-served basis, this scheme
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`resulted in Copaxone patients generally receiving the vast majority of the co-pay coverage grants
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`from CDF or TAF whenever Teva made a payment that enabled one of their MS funds to open.
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`Contrary to the company’s argument now, Teva did not merely “hope” that its payments would
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`reach its patients; instead, it intended and knew that the money it paid CDF and TAF would go to
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`its patients.
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`Once a Copaxone patient received a co-pay coverage grant from CDF or TAF, ACS
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`tracked the status of each grant. At the end of each year, as Copaxone patients’ annual co-pay
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`coverage grants from CDF and TAF were about to expire, ACS would tell Teva how many
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`Copaxone patients were enrolled at each foundation and therefore needed to have their grants
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`2
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`renewed for the following year. Teva then used that information to determine its year-end
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`payments to the foundations so that the foundations would renew those Copaxone patients’
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`annual co-pay grants for the next year. Thus, throughout the period from 2006 until at least
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`2015, Teva correlated its payments to the foundations with the foundations’ expected
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`expenditures on Copaxone patients’ Medicare co-pays. While the correlation was never entirely
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`perfect, Teva’s arrangements with ACS, CDF, and TAF enabled Teva to maximize the flow of
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`its dollars to Copaxone patients and to minimize the number of patients on other MS drugs who
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`benefited from Teva’s payments to the two foundations. Thus, Teva knew that TAF and CDF
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`did not operate “independently” from Teva; rather, Teva knew the foundations used its payments
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`overwhelmingly for Copaxone patients, and not for MS patients generally. Overall, the hundreds
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`of millions of dollars that Teva spent in this manner resulted in at least hundreds of millions of
`
`dollars in false Medicare claims for Copaxone, and effectively subsidized the drug’s ever-
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`increasing price, at the Medicare program’s expense.
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`The Court should deny Teva’s motion to dismiss not only because the government’s
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`complaint adequately alleges that Teva’s long-running scheme to pay its own patients’ Medicare
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`co-pays violated the AKS and the FCA, but also because the motion raises evidentiary issues that
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`are inappropriate in a motion to dismiss and seeks to add nonexistent elements to the AKS and
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`FCA. The government can prevail, for example, by showing that Teva knowingly and willfully
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`paid its patients indirectly through CDF or TAF, and need not show that CDF and TAF agreed to
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`“promote” Copaxone, as Teva contends. Teva also mischaracterizes both the role and the
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`substance of guidance issued by the Department of Health and Human Services, Office of
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`Inspector General (“HHS-OIG”) regarding co-pay assistance foundations. As discussed below,
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`HHS-OIG has consistently warned that a pharmaceutical manufacturer’s correlation of its
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`3
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`Case 1:20-cv-11548-NMG Document 27 Filed 11/17/20 Page 12 of 46
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`payments to a foundation with the foundation’s spending on that manufacturer’s drug may reflect
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`an improper effort to use the foundation as a kickback conduit. Teva flouted that guidance, and
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`thus can take no solace in the aspects of the guidance that Teva, CDF, and TAF may have
`
`followed. Finally, the First Amendment does not protect Teva’s use of speech to commit a
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`crime.
`
`LEGAL BACKGROUND
`
`I.
`
`MEDICARE PART D AND ITS COST-SHARING PROVISIONS
`
`In 2003, Congress passed the law that created Medicare Part D, which became
`
`operational on January 1, 2006, and provides prescription drug coverage for Medicare
`
`beneficiaries.1 See Medicare Prescription Drug, Improvement and Modernization Act of 2003,
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`Public Law 108-173, 117 Stat. 2272. Under Part D, when a beneficiary fills a prescription for a
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`drug, the beneficiary may have to make a partial payment in the form of a “co-payment,”
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`“coinsurance,” or “deductible” (collectively “co-pays”). These co-pay obligations can be
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`substantial for expensive medications like Copaxone. After paying an annual deductible, the
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`standard Part D benefit requires a 25% patient co-pay up to an “initial coverage limit.” See 42
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`U.S.C. § 1395w-102(b)(1)-(2). Then, there is a “coverage gap” in which patient co-pay
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`obligations increase substantially until the patient meets an “annual out-of-pocket threshold” for
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`the coverage year. See 42 U.S.C. § 1395w-102(b)(2)(D). For brand name drugs like Copaxone,
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`the co-pay in the “coverage gap” was 100% through 2010, 50% in 2011 and 2012, 47.5% in
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`2013 and 2014, and 45% in 2015 and 2016. See Complaint (“Compl.”) ¶ 20. After the coverage
`
`
`1 Before and since the advent of Part D, Medicare Part B has provided coverage for physician-
`administered drugs, for which physicians bill the co-pays directly to patients. Copaxone is not
`physician-administered and is typically dispensed to patients by pharmacies, which collect the
`co-pays.
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`4
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`gap, the co-pay is 5% of the drug’s cost, which was a significant amount for Copaxone given the
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`prices Teva set for the drug. See id. ¶ 23.
`
`II.
`
`THE FALSE CLAIMS ACT AND THE ANTI-KICKBACK STATUTE
`
`The FCA is an anti-fraud statute that imposes civil liability for anyone who, inter alia,
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`“knowingly presents, or causes to be presented, a false or fraudulent claim for payment or
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`approval.” 31 U.S.C. § 3729(a)(1)(A). For purposes of the FCA, a “claim” includes a claim for
`
`reimbursement from a federal health care program, such as Medicare. See, e.g., In re Pharm.
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`Indus. Average Wholesale Price Litig., 491 F. Supp. 2d 12, 18 (D. Mass. 2007). A claim for
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`payment is per se “false” or “fraudulent” within the meaning of the FCA, if it “includes items or
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`services resulting from a violation of [the AKS].” 42 U.S.C. § 1320a-7b(g).
`
`The AKS imposes criminal liability on anyone who:
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`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 . . . to purchase . . . or arrange for or recommend
`purchasing . . . any good . . . for which payment may be made in whole or in part
`under a Federal health care program[.]
`
`42 U.S.C. § 1320a-7b(b)(2). That is, the AKS prohibits a pharmaceutical company’s knowing
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`and willful payment of any remuneration to any person (including a patient), directly or
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`indirectly, to purchase or arrange for the purchasing of any good or item reimbursable by a
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`federal health care program. Construing the statute’s plain language, numerous courts have held
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`that it is a violation of the AKS to cover a Medicare patient’s co-pay. See, e.g., United States ex
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`rel. Goodman v. Arriva Med., LLC, No. 3:13-CV-0760, 2020 WL 3840446, at *2 (M.D. Tenn.
`
`July 8, 2020); United States v. Berkeley Heartlab, Inc., 225 F. Supp. 3d 487, 499 n.3 (D.S.C.
`
`2016).
`
`5
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`Case 1:20-cv-11548-NMG Document 27 Filed 11/17/20 Page 14 of 46
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`Although Teva’s brief references an “access to care” exemption for certain remuneration,
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`see Defendants’ Memorandum of Law in Support of Motion to Dismiss (“Memo”) at 3, 30, the
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`AKS does not contain such an exemption. The exemption appears in an entirely different
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`statute, the Civil Monetary Penalties Law (“CMPL”), 42 U.S.C § 1320a–7a (not 42 U.S.C.
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`§ 1320a-7b). See HHS-OIG Advisory Opinion 20-05 at 11 & n.22, available at
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`https://oig.hhs.gov/fraud/docs/advisoryopinions/2020/AdvOpn20-05.pdf (recognizing that
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`exceptions to definition of “remuneration” “apply only for the purposes of the definition of
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`‘remuneration’ applicable to [42 U.S.C § 1320a–7a] (the CMP[L] statute); they do not apply for
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`purposes of [42 U.S.C. § 1320a-7b] (the Federal anti-kickback statute)”). Contrary to Teva’s
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`suggestion, the CMPL is not the AKS; it is used only in administrative proceedings brought by
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`the Secretary of Health and Human Services. See 42 U.S.C § 1320a–7a(c)(1) (“The Secretary
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`may initiate a proceeding . . . .”). To the extent the “access to care” exemption to the CMPL has
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`any bearing at all on this case, it shows Congress knew how to make specific exemptions when it
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`wished to do so. Congress did not exempt remuneration promoting “access to care” from the
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`AKS.
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`III. HHS-OIG’S GUIDANCE CONCERNING PAYING MEDICARE
`BENEFICIARIES’ COST-SHARING AMOUNTS
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`On February 3, 2003, in response to a pharmaceutical manufacturer’s request for an
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`advisory opinion on whether it could cover the co-pays for its physician-administered drug,
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`which was reimbursed under Medicare Part B, HHS-OIG issued Advisory Opinion 03-03
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`advising that that the manufacturer’s proposal “could potentially” violate the AKS. See id.,
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`available at https://oig.hhs.gov/fraud/docs/advisoryopinions/2003/ao0303.pdf. HHS-OIG
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`concluded that the proposed arrangement would allow the manufacturer to “pay[] beneficiaries
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`who use its product,” and was “squarely prohibited by the statute.” Id. at 5. HHS-OIG further
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`6
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`Case 1:20-cv-11548-NMG Document 27 Filed 11/17/20 Page 15 of 46
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`explained why a pharmaceutical manufacturer’s payment of its patients’ cost-sharing amounts
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`would be problematic. First, the proposed arrangement “would provide the [manufacturer’s]
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`Drugs with an obvious financial advantage over competing drugs in the market. . . . [R]ational
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`beneficiaries would prefer treatment with the [manufacturer]’s Drugs, rather than treatment with
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`other drugs for which they must pay the cost-sharing amounts themselves.” Id. Second, the
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`proposed arrangement “could result in increased costs to the Medicare program. Since
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`beneficiaries would be insulated from their financial liability for the [manufacturer]’s Drugs,
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`there would be no incentive to use competing, equally effective products, even if they were less
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`expensive.” Id. Thus, since at least 2003, HHS-OIG has publicly stated its view that providing
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`direct cost-sharing amounts to Medicare beneficiaries can potentially generate prohibited
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`remuneration under the AKS.
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`When Medicare Part D came into being, it not only provided a significant new benefit to
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`Medicare beneficiaries, but, as described above, it also created potentially significant patient co-
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`pay obligations, especially for expensive drugs like Copaxone. On November 22, 2005, shortly
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`before Part D’s effective date, HHS-OIG issued its “Special Advisory Bulletin: Patient
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`Assistance Programs for Medicare Part D Enrollees” (the “2005 SAB”). 70 Fed. Reg. 70623.
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`The 2005 SAB responded to industry questions regarding “whether the [AKS] will be implicated
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`if pharmaceutical manufacturer[s’] [patient assistance programs] continue to offer assistance to
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`financially needy Medicare beneficiaries who enroll in Part D by subsidizing their cost-sharing
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`obligations for covered Part D drugs.” Id. at 70624. HHS-OIG answered by opining that
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`“pharmaceutical manufacturer [patient assistance program]s that subsidize Part D cost-sharing
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`amounts present heightened risks under the [AKS].” Id. Again, HHS-OIG outlined the risks of
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`permitting a pharmaceutical company to “offer subsidies tied to the use of the manufacturer’s
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`7
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`Case 1:20-cv-11548-NMG Document 27 Filed 11/17/20 Page 16 of 46
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`products”: (i) increased costs to the Medicare program, including by “shield[ing] beneficiaries
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`from the economic effects of drug pricing, thus eliminating a market safeguard against inflated
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`prices,” and (ii) steering beneficiaries to the manufacturer’s product because the manufacturer
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`has covered the beneficiaries’ cost-sharing obligations. Id. at 70625-26.
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`At the same time, HHS-OIG opined in the 2005 SAB that a pharmaceutical
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`manufacturer’s payments to an independent foundation that covers Part D co-pays would raise
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`“few, if any, [AKS] concerns, so long as” the manufacturer and the foundation abided by certain
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`principles. Id. at 70626 (emphasis added). Among other things, the 2005 SAB warned that, in
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`order for a manufacturer’s foundation support to avoid risk of violating the AKS, the
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`manufacturer must not exert “any direct or indirect influence or control over” the foundation, the
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`foundation must “award[] assistance in a truly independent manner that severs any link between
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`the pharmaceutical manufacturer’s funding and the beneficiary[,]” and the manufacturer must not
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`“solicit or receive data from the [foundation] that would facilitate the manufacturer in correlating
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`the amount or frequency of its donations with the number of subsidized prescriptions for its
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`products.” Id. HHS-OIG summarized its guidance as follows: “[s]imply put, the independent
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`[foundation] m