Concerned that some drugmakers may be using patient assistance charities to pay kickbacks to Medicare beneficiaries as a way to get them to use their drugs, two U.S. lawmakers are urging the U.S. Department of Health and Human Services to increase its oversight.
Massachusetts Sen. and presidential candidate Elizabeth Warren, and Sen. Sheldon Whitehouse of Rhode Island, recently sent a five-page letter to HHS’s acting Inspector General asking that the agency “revise its guidance” on the proper administration of these programs “in light of recent enforcement actions.”
While HHS has not objected to such relationships, as we wrote about earlier this year, there has been an increase in scrutiny over the way they operate.
Lawmakers point out in their letter that since December 2017, the U.S. Department of Justice has reached settlements with at least eight pharmaceutical manufacturers totaling more than $800 million for funneling kickbacks through independent charity Physician Assistance Programs (PAPs).
In each of the cases, the drug company worked with an “independent” foundation to set up a fund to which the company was the sole contributor. The fund was either directed to a specific condition that only the drug company’s products were approved to treat, or funded only the specific kind of treatment the company manufactured. The fund was used to help patients purchase treatments with Medicare or other insurance benefits.
Manufacturer-run PAPs are not permitted to provide any cost-sharing assistance to Medicare beneficiaries because such incentives would violate federal anti-kickback laws. However, there is nothing to prevent independent charity PAPs from providing co-payment or cost-sharing assistance, as long as they operate with true independence from their donors who manufacture the drugs.
Lawmakers, however, suggest there is mounting evident that drug manufacturers have used purportedly independent charitable foundations to funnel taxpayer dollars into their own coffers, turning massive profits, while at the same time claiming tax deductions for their donations.
They also voice concerns that the trend is leading to the use of more expensive brand-name drugs instead of less expensive generic ones. And, they also suggest that these PAPs are targeting patients who have health insurance, thus limiting access to patients in real need of financial assistance.
Lawmakers are asking HHS-OIG to update its guidance for independent charity PAPs to:
- Publicly disclose which treatments they cover and provide written justifications for any deviations from the FDA’s full list of approved treatments for any specific disease or condition.
- Cover generic alternatives to brand-name treatments whenever available.
- Prohibit them from excluding potential beneficiaries on the basis of their insurance status. Prohibit pharmaceutical company donors from earmarking their donations for disease-specific funds, regardless of how narrowly the funds are defined.
- Require annual public reports from each PAP on applicant characteristics, approval rates, insurance status and type for both applicants and participants, distribution of spending, and data shared with donors.
With increased government oversight and attention from federal lawmakers, charity foundations would be wise to review the way they do business.
The Health Law Offices of Anthony C. Vitale can review your patient assistant program to confirm compliance with the major fraud and abuse laws which govern this area. Contact us for additional information at 305-358-4500 or send us an email to firstname.lastname@example.org and let’s discuss how we might be able to assist you.