Alexion Says U.S. Health Inspector General Is Part of DOJ Probe

(Bloomberg) -- Alexion Pharmaceuticals Inc. is under investigation by the U.S. Department of Health and Human Services’ Office of Inspector General, related to a probe of the drugmaker’s support for charities that aid Medicare patients by the U.S. Attorney’s Office in Massachusetts.

“We are aware that the U.S. Department of Health and Human Services Office of Inspector General is working on this inquiry with the U.S. Attorneys’ Office and the Department of Justice,” Alexion said Thursday in a statement.

In January, Alexion said it had received a subpoena from the U.S. Attorney’s Office for the District of Massachusetts requesting documents about the company’s support for charities that give financial assistance to Medicare patients. The company said at the time that it was cooperating with the government.

On Thursday, in response to a Freedom of Information Act request from Bloomberg News to the Department of Health and Human Services’ Office of Inspector General, the OIG said that there was an “open and ongoing investigation” into the rare disease drugmaker. A spokesman for OIG declined to comment.

Alexion’s shares fell 3.2 percent to close at $121.09 in New York.

The Office of Inspector General conducts audits and investigations related to fraud, waste and abuse in Medicare, Medicaid and other government health programs. Patients with severe rare diseases may be sick or poor enough to qualify for government assistance under Medicare and Medicaid. A 2015 U.S. report found that Medicare spent at least $150 million on Soliris, Alexion’s main drug that’s used to treat blood disorders, in 2013. Soliris costs around $500,000 to $700,000 a year.

Sales Practices

Alexion has faced questions over its business practices since its chief executive and financial officers resigned last year amid allegations that the company engaged in improper sales practices. Since then, new CEO Ludwig Hantson has overhauled the executive ranks as he focuses the drugmaker on compliance.

A Bloomberg investigation in May found a widespread culture of aggressive sales at Alexion. Bloomberg reported that sales staff pressured doctors to keep patients on Soliris, company nurses warned patients who wanted to stop taking therapy that doing so could lead to blood clots, and the drugmaker’s close relationships with nonprofits gave it special access to patient information. Alexion also signed deals with lab companies that would alert it when new patients were found -- sharing detailed information that helped it look for new potential customers.

The company has faced scrutiny outside the U.S. as well. In May, Brazilian federal police raided the company’s offices in Sao Paulo. Alexion has previously disclosed that it’s under investigation by the U.S. Securities and Exchange Commission and Department of Justice for issues related to the Foreign Corrupt Practices Act in countries including Brazil, according to a regulatory filing.

To contact the reporters on this story: Doni Bloomfield in Boston at mbloomfiel12@bloomberg.net, Caroline Chen in San Francisco at cchen509@bloomberg.net.

To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Cecile Daurat