Gilead Settles US Kickback Allegations For $97M

Gilead Sciences, Inc GILD has agreed to pay $97 million to settle allegations that it illegally paid for Medicare co-pays for its own pulmonary arterial hypertension drug Letairis through a charitable entity.

What Happened: The Foster City, California-based drugmaker allegedly used a conduit foundation named Caring Voice Coalition (CVC) even though it was prohibited from doing so under the Anti-Kickback Statute, according to a statement issued by the U.S. Department of Justice.

“Gilead used CVC to cover the patients’ co-pays in order to induce those patients’ purchases of Letairis," the Justice Department claimed. "Gilead knew that the prices it set for Letairis otherwise could have posed a barrier to those purchases.”

The Justice Department also accused United Therapeutics Corporation UTHR and privately-held Actelion of engaging in similar practices.

“Such conduct not only violates the anti-kickback statute, it also undermines the Medicare program’s co-pay structure,” said U.S. Attorney Andrew E. Lelling. 

Why It Matters: Prosecutors have collected over $1 billion from eleven pharmaceutical companies that include the likes of Pfizer Inc PFE, Sanofi SNY, and Novartis AG NVS. 

Gilead said it doesn't believe it violated the law, adding that there were no allegations made that patients who received the drug didn't need it, according to Reuters. 

Gilead’s drug Remdesivir received emergency use authorization in early May for treatment of COVID-19 and the company’s CEO claimed it has enough inventory to treat every hospitalized American.

Last week, New York Governor Andrew Cuomo said the state had filed civil charges against Johnson & Johnson JNJ in connection with understating risks posed by opioid drugs to elderly patients.

Price Action: Gilead shares closed nearly 0.5% lower at $63.09 on Wednesday and fell 0.54% in the after-hours session.