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IRS Opens Probe Into Charity Funded by Drugmakers

The U.S. Internal Revenue Service is exploring whether the Chronic Disease Fund, a patient-assistance charity funded largely by drugmakers, gave “impermissible” benefits to its corporate donors, according to federal court filings.

According to Bloomberg, an IRS analysis found that 95 percent of the $129.3 million the charity spent on co-payment support in its public programs in 2011 went to patients taking drugs made by the very companies that had donated the money, according to court papers.

Donations from drug companies “are nearly all returned to those same pharmaceutical manufacturers as payments for the drugs they make,” attorneys for the IRS said in papers filed in federal courts in California, Pennsylvania and other states, seeking information related to the probe. “In effect, CDF is serving as a conduit for its pharmaceutical manufacturer ‘donors,’” government lawyers said.

The IRS has sent summonses to Roche Holding AG’s Genentech unit, Biogen Inc., Johnson & Johnson, Teva Pharmaceutical Industries Ltd., Novartis AG and Bayer AG, seeking information on donations to CDF. Biogen, Novartis and Bayer said they’re cooperating with the IRS summonses, and Teva declined to comment. J&J said it has no control over how co-pay charities operate. Roche declined to comment on ongoing legal matters.