In recent years, many life sciences and pharmaceutical companies have begun supplementing their traditional role of discovering, marketing and selling medicines with providing support and solutions to their patients. Such programs often focus on a holistic approach to guiding patients through diseases, providing services such as educational and emotional support, as well as financial relief through discounted or free product programs, coupons and copayment assistance programs. While valuable, these programs can also be prone to federal kickback provisions.
Patient support initiatives typically manifest through the following channels:
- Patient support programs (PSPs): Pharmaceutical manufacturers utilize third parties, hub vendors or specialty pharmacies to manage PSPs to offer copayment coupons or debit cards to reduce or eliminate the cost of insured patients’ out-of-pocket expense.
- Patient assistance programs (PAPs): Pharmaceutical companies have established programs to help supply patients who are under financial hardship and need assistance obtaining medication. These programs allow patients with limited or no insurance to receive medicine at limited or no cost.
- Independent charitable copay foundations (ICCFs): These programs are dedicated to helping to mitigate the cost for prescribed medications for those with limited financial means often in the area of chronic illness and rare diseases.
PSPs have become a prevalent part of our health care system. A study conducted at the National Institute of Health showed that PSPs are beneficial in ensuring that patients have the access they need to the right medicines, are correctly using these medicines and continue to seek treatment. As a result, PSPs increase patient adherence to treatment and quality of life by more than 60 percent.[i]
While studies have shown the benefit that support programs bring to patients, recent investigations have highlighted concerns that pharmaceutical and medical device or product manufacturers may be tempted to take advantage of PSPs to gain preferential treatment for their products, potentially in violation of the Anti-Kickback Statute (AKS) and False Claims Act (FCA). According to the Department of Justice (DOJ), its civil division has received referrals, investigations and qui tam actions for approximately 800 qui-tam and non-qui-tam matters in 2017.[ii]
According to the Office of Inspector General (OIG), “The anti-kickback statute prohibits the knowing and willful offer or payment of remuneration to a person to induce the purchase of any item or service for which payment may be made by a federal health care program.” Manufacturers may be liable under the anti-kickback statute if they offer coupons to induce the purchase of drugs paid for by federal health care programs, including Medicare Part D.[iii]
Further, federal enforcement agencies, like the DOJ, have stated, “Our office is committed to protecting patient safety and the integrity of federal health care programs, and we will continue to use our criminal and civil authority to ensure that drug companies play by the rules that protect the public, ensure quality of care and preserve patient privacy.”[iv] Thus, while there may be an incentive for manufacturers to donate to PAPs to ensure a patient copay is rebated, refunded or waived, the risk of criminal and civil penalties exists if this market conduct is only applied to the donor’s drug.
In 2017, a large retail pharmacy chain paid a $50 million settlement for claims that the company violated the federal AKS and FCA statutes by enrolling hundreds of thousands of beneficiaries of government health care programs in its savings club. It was alleged that the pharmacy violated the AKS and FCA by providing government beneficiaries with discounts and other monetary incentives related to their program, in order to induce them to use the pharmacy for all of their prescription drug needs.
Further, the pharmacy understood that it was in violation of the AKS, but continued to market the program to government beneficiaries while paying its employees bonuses for each customer they enrolled in the program.
A recent study by the OIG evaluated how pharmaceutical manufacturers are taking measures to prevent discount coupons and copay cards from being issued to patients receiving federal benefits. The OIG found that manufacturers do give notice of the restriction to both patients and pharmacists, but several vulnerabilities remain to existing safeguards.
The identified vulnerabilities expose pharmaceutical manufacturers to significant risk, and organizations must take steps to help ensure compliance, so that discount coupons and copay cards are not used to influence patients to purchase federal health care programs and services.