Emily Boyd
Associate Editor
Loyola University Chicago School of Law, JD 2019

 

In the eyes of underinsured or uninsured patients, Patient Assistance Programs (PAPs) offer access to otherwise unaffordable medications. However, there are questions being raised whether PAPs are being abused by manufacturers as an inappropriate inducement. The government is increasing its inquiries into PAPs and is beginning to take more investigative action.  PAPs are often funded by charitable donations from companies who benefit from the PAP paying for co-insurance for the very drugs the company manufactures. It is essential for companies seeking to develop or maintain charitable donations to remain compliant with existing regulations, but also be aware of forthcoming regulations as a result of present actions.

Regulating prescription assistance

Prescription Assistance Programs are donor sponsored initiatives aimed at helping patients with minimal or no coverage obtain prescription drug medications. Typically, the funding donors are major pharmaceutical companies.

The Partnership for Prescription Assistance presents biopharmaceutical research company-sponsored initiatives as the solution to access and medication compliance issues. However, the healthcare industry has long viewed PAPs in a much different light, as possibly motivated more by self-interest than as charitable assistance. Pharmaceutical companies benefit from the publicity and altruistic reputation that providing patient assistance garners. Some have raised the concern that an increasing number of patients participating in these programs rely on and trust brand-name drugs even when a lower-cost alternative is, or becomes, available. Patients with an established relationship remain loyal to branded drugs, and the sponsoring companies reap enormous financial rewards.

In 2005 guidance, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) stated that lawful avenues exist for pharmaceutical company-sponsored PAPs to support Medicare Part D beneficiaries. They also acknowledged heightened risk for scrutiny under the federal Anti-Kickback Statute. In a 2014 Supplemental Bulletin, OIG presented further reflection and updated guidance on PAPs. It cautioned that limitations in drug choice presented by a PAP increases the likelihood that such assistance will be viewed as an improper conduit to remunerate the PAP’s funding donors (the pharmaceutical companies). Specific to pharmaceutical company-sponsored PAPs, implications of illegal beneficiary inducements under the Civil Monetary Penalty Law are strong should the beneficiaries’ eligibility be inappropriately influenced or dependent on certain provider decisions.

Recent enforcement

News outlets have been enthusiastic to report on the quick-spreading trend in federal scrutiny and corresponding loss of trust in pharmaceutical companies. It was reported in 2016, that pharmaceutical companies contributed over $1 billion to the seven largest co-pay charities in the United States in 2014. Another report finds that pharmaceutical company-sponsored PAPs accounted for 10 of the 15 largest United States charities, and provided over $6 billion in 2014.

The last several years have seen increasing enforcement and scrutiny from governmental authorities. Pharmaceutical companies, including Gilead and Biogen, have disclosed subpoenas requesting information on their funding of PAPs and co-pay programs. Good Days (formerly Chronic Disease Fund Inc.) has opened up its pharmaceutical company donors to intense review by the IRS. Reuters reported that summonses for information were sent to some of the charity’s donors including: Novartis, Genentech, Johnson & Johnson, Bayer, Teva, and Biogen. The investigation suggests that the government has moved into serious territory for both Good Days and its donors.  Good Days could risk losing its tax-exempt status, while the pharmaceutical companies could be criminally liable under the federal Anti-Kickback Statute depending on the results of the investigation.

U.S. Attorney’s Offices in Massachusetts and New York have begun their own investigations into other companies’ use of corporate giving. The government appears to have its eyes set on the pharmaceutical industry and companies’ use of charitable donations essentially as a thoroughfare to incentivize use of their own drugs.

In California, proposed bill AB 265, if implemented, would dramatically change PAPs and coupon programs for pharmaceutical companies. The bill would prohibit manufacturers from offering any out-of-pocket expense reductions on any prescription drug where a lower-cost generic, therapeutically equivalent, or over-the-counter alternative drug is available to the patient.

Remaining compliant

Pharmaceutical companies involved in charitable giving must remain aware of the existing and changing scope of governmental regulations.

In response to an OIG letter stating problematic areas in charitable giving, OIG published its Notice of Modification of OIG Advisory Opinion No. 06-04 in 2015. Based on the response it received, OIG provided some direction as to what behaviors will pose a risk in PAP giving. The notice advises that funds donated to co-pay assistance programs may not be earmarked for a single drug or manufacturer. Further, the letter states that risk-adverse programs should make co-pay assistance available for all FDA-approved drugs (including generic and bioequivalent) for a disease class.

In the 2016 OIG Advisory Opinion No. 15-16, a specific charitable PAP was given guidance on its proposed program. While the opinion is specific to that organization, a number of program features were identified as having minimal risk of donor contributions influencing referrals, and presenting a low risk of fraud and abuse. Based on the opinion, companies seeking to begin or continue PAP contributions should be mindful of a few key points. Patients should retain individual choice in providers, drugs, and plans even when participating in charitable programs. Funds should cover drugs from multiple manufacturers in each covered disease class, including generic and bioequivalent drugs. Donors and affiliates should have no influence on the diseases covered by the program, and donors’ customers should not have assistance tied to the donor’s contributions to, or involvement in, the program.

Companies wishing to provide assistance can do so in a lawful manner. OIG has presented parameters that, when followed, allow true charity by healthcare companies and real benefits to those seeking aid.