Patient assistance programs are supposed to help patients pay for the cost of drugs should they have no insurance or inadequate coverage. Pharmaceutical companies are the primary sponsors of these programs, yet their donations are intended to be for all patients, not just the ones that take their medications. These programs should be a benefit for patients and the healthcare system, in general. However, the Department of Justice (DOJ) has been targeting these programs, looking for corruption and financial kickbacks.
In this post, we’ll cover the importance of effective patient assistance programs, specific DOJ cases, and how pharmaceutical companies can act compliantly with statutes.
Many Americans struggle to pay for their prescriptions. That includes both insured and uninsured consumers. A new study by GoodRx found that nearly 40% of patients find it difficult to pay for their medications. This is a result of loss in income due to the pandemic, as individuals have had to tap into their savings and make hard choices about how to use their money.
The study also revealed that the out-of-pocket costs for prescriptions went up for 29.9% of respondents. Those realities caused consumers to delay getting refills, rationing, or make other changes to their regimen not proposed by their providers. There are severe consequences of medication nonadherence, which cost the healthcare system in the U.S. substantially every year, such as hospitalizations that would have otherwise been unnecessary.
To combat medication nonadherence and ensure patients receive the treatments they need, the use of patient assistance programs can be beneficial — that's the positive side. The dark side deals with kickback, fraud, and deceptive practices, as uncovered by the DOJ.
From a consumer standpoint, the criticism extends from confusion and lack of transparency. Patients argue that it’s hard to understand criteria and that the registration process is overly complex. Acceptance into a program also locks the consumer into taking a brand-name drug, even if there are less expensive alternatives.
Those criticisms could certainly bring reputational harm to drugmakers, but don't demonstrate illegal activity. Recent DOJ probes regarding compliance in assistance programs, however, do.
The DOJ’s interest in assistance programs started with looking at charities serving as channels for illegal kickbacks. At the end of 2019, the DOJ ordered three charities to pay $10 million to settle claims. Pharmaceutical companies were also implicated, with the DOJ alleging that the foundations were actually paying patients to use their drugs.
A patient assistance program should be an opportunity for patients to receive much-needed treatments, but manufacturers and funds weren’t always playing by the rules. The most important being these charitable arms are supposed to operate independently from the manufacturers that contribute financially as to not violate the federal Anti-Kickback Statute.
The three cases in 2019 include the organizations Good Days, the Patient Access Network Foundation (PANF), and The Assistance Fund (TAF). The DOJ’s complaint stated that these entities violated federal law by engaging in questionable activity. This included reserving donations from manufacturers for patients taking their medications, implementing policies that only benefitted certain companies, and other illegal use of funds.
The DOJ asserted that the organizations used funds to urge patient purchases, drive up usage statistics, increase sales of the drug, and cause the incurrence of more costs to Medicare and Medicaid.
In addition to paying fines, the organizations entered into integrity agreements with the U.S. Department of Health & Human Services (HHS) for three years. This agreement serves as a way to ensure their work going forward complies with federal laws.
After these settlements, legislators urged HHS to update the 2014 Special Advisory Bulletin on Patient Assistance Programs. The demands included public disclosure by programs on what treatments they cover, coverage of generic drugs, removing exclusions regarding a patient's insurance status, earmarking of funds by manufacturers, and requiring annual reports.
Any updates or reformations on this bulletin remain outstanding. Even after these cases in 2019, another even bigger case occurred in 2020 with Novartis.
The DOJ in the District to Massachusetts announced in July 2020 that Novartis would pay over $51 million to settle False Claim Acts allegations relating to co-pay foundations.
The law states pharmaceutical companies cannot directly pay Medicare patients to purchase their drugs. However, that’s what the DOJ alleges Novartis did. They accused the company of conspiring with three co-pay foundations to funnel money through their foundations to patients taking their drugs. The U.S. attorney in the case said the donations weren’t “charitable” but rather a “kickback scheme.” It was a plan to illegally subsidize the high costs of the company’s drugs, with U.S. taxpayers picking up the cost.
The DOJ said Novartis attempt to “game the system to boosts its bottom line at the expense of sick patients facing economic hardship.” Novartis also entered into a corporate integrity agreement for five years in addition to paying the fine.
For drugmakers, there are risks in supporting these programs. When you follow the federal parameters, both patients and the healthcare system benefit. The ability to afford prescriptions is only getting harder for millions of Americans.
Ideally, you should have a charitable donation compliance program in place to manage these activities and ensure compliance. You can do this all digitally with the right software platform, which can organize documents, streamline data intake, and monitor programs. MedCompli’s CompliSpend module can simplify this process and ensure that you’re compliant for donations to patient assistance programs and any other nonprofits.
Explore how it works today by requesting a demo with our compliance experts.
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