Lifesavers or kickbacks? Critics say patient-assistance programs help keep drug prices high

He says it was a choice between covering his mortgage and paying for his cancer drug.

That was the predicament facing Andre Rucker, a Baltimore heavy equipment mechanic, when he was diagnosed with multiple myeloma, a blood cancer, nearly six years ago.

Rucker's union health plan covered most of the cost of his medication, Revlimid, a maintenance therapy drug manufactured by Summit, N.J.-based Celgene with an average cost of $142,000 a year. But he still had to shell out nearly $500 a month out-of-pocket for the drug.

Then Rucker's doctor told him about the Patient Access Network Foundation, a patient-assistance program. He applied for a grant, and PAN soon was helping him cover the cost of his Revlimid, for which there is no generic alternative. “Without them, I don't think I'd be here right now,” said Rucker, 58. “I wouldn't have been able to afford it.”

Such patient-assistance programs, which often are funded largely by drugmakers, have helped many Americans like Rucker afford the medications they need. But these programs' ties to pharmaceutical companies carry a high cost for the healthcare system, critics say. It's an issue with growing resonance as drug prices continue to climb. Prescription drug spending grew 13% in 2014, compared with 5.6% growth of healthcare spending overall, according to a recent Altarum Institute report.

Critics say patient-assistance programs help manufacturers keep prices high and demand for their branded products strong, and discourage patients and doctors from switching to cheaper alternative medications. Even though some drugmakers have publicly disclosed their contributions to these programs—many of which purport to be independent charities—information about contributors remains incomplete. That makes it difficult to discern how much influence the donors have.

MH Takeaways While some drugmakers have publicly disclosed their contributions to these programs, information about contributors remains incomplete, making it hard to figure out how much influence the donors have.
The federal government has raised questions about whether some independent patient-assistance programs funded by drugmakers constitute illegal kickback schemes. And some researchers have urged that drugmakers' contributions to these programs be disclosed through the CMS' Open Payments website established by the Physician Payments Sunshine Act.

Health insurers also aren't happy about these assistance programs, including coupons offered by drugmakers to help patients afford their drug copays. Insurers say the programs drive up overall drug costs and therefore increase premiums. “Efforts that only make drugs affordable for a certain group of individuals are not addressing the underlying problem, which is the price of the drug,” said Clare Krusing, a spokeswoman for America's Health Insurance Plans.

“These are very effective PR programs because it's like, 'We'll help anyone out who can't afford our drugs, so stop bugging us about how much money our drug costs,' ” said Dr. Adriane Fugh-Berman, an associate professor in pharmacy at Georgetown University and director of the PharmedOut project, which educates healthcare professionals about pharmaceutical marketing practices.

But supporters of patient-assistance programs say there's no good alternative for helping insured and uninsured patients pay the often-steep out-of-pocket costs for their drugs. PAN, which is independent but almost entirely funded by pharmaceutical companies, has provided more than $700 million in assistance to more than 360,000 patients since 2004 to help them afford their out-of-pocket healthcare costs, according to the foundation.

Criteria for patient-assistance programs How to stay on the right side of the federal anti-kickback law

The pharmaceutical company cannot exert any direct or indirect influence over the charity.

The charity must offer assistance based on uniform measures of financial need. It must award assistance in an independent manner with no link between a drugmaker's funding and the beneficiary.

Drugmakers cannot receive data from the charity that would help them draw connections between the amounts they donate and the number of subsidized prescriptions for their products.

Source: 2005 bulletin from HHS' Office of Inspector General
“There's really nowhere else for them to go,” said Dan Klein, CEO of the Washington-based PAN Foundation. “There are places where people fall through the cracks, and they might not be able to afford critical treatment for life-threatening or chronic or rare diseases without organizations like ours.”

Advocates of patient-assistance programs note that if patients don't take their medications because of cost concerns, they may wind up needing more expensive treatments and care later, boosting costs to the overall system. “When patients don't have immediate access to modern cancer medicines, healthcare and disability costs rise as the patient's health deteriorates,” a Celgene spokesman said.

Many drugmakers run their own assistance programs for patients. But they typically offer assistance only to privately insured and uninsured patients, not to Medicare or Medicaid patients because of the federal anti-kickback statute, said Tom Bulleit, a partner at Ropes & Gray in Washington who represents drug companies. That law bars the exchange of anything of value meant to influence the referral of federal healthcare program business.

In addition, drugmakers often contribute to outside groups, including patient-assistance programs such as PAN, that help patients pay for medications.

“Of course there’s an interest on the part of the pharmaceutical companies for people to buy drugs they make. But there’s also an altruistic purpose for making contributions so people can take the drugs that are prescribed.”
John Wyand, principal at Squire Patton Boggs in Washington “Of course there’s an interest on the part of the pharmaceutical companies for people to buy drugs they make. But there’s also an altruistic purpose for making contributions so people can take the drugs that are prescribed.”
John Wyand, principal at Squire Patton Boggs in Washington
HHS' Office of Inspector General has issued a number of guidance documents over the years on how such independent patient-assistance programs may work without violating the anti-kickback law. The guidances discourage these programs from setting up narrowly defined disease funds covering a limited number of drugs in order to favor only certain products. A May 2014 special advisory bulletin cautioned that industry-funded assistance programs, if not properly structured, have the potential for abuse. That bulletin warned that patient-assistance programs that help only patients with certain symptoms, severity of symptoms or methods of administration of medications might be at risk of violating federal law.

“What the federal guidance recognizes is if the drug companies are directly giving money to patients, they are concerned under the kickback law because it could have the effect of not only increasing healthcare costs, but driving people to use certain drugs,” Bulleit said.

Holly Campbell, a spokeswoman for the Pharmaceutical Research and Manufacturers of America, said the drug industry's Partnership for Prescription Assistance program helped uninsured and underinsured patients get 3.6 million prescriptions in 2013. That partnership offers a single point of access to more than 475 public and private programs, including nearly 200 offered by pharma companies. “This is really an opportunity to help patients maintain these medications, especially those with chronic conditions, which in turn can lead to lower healthcare services overall,” Campbell said.

But research by Sheila Rothman, a professor of public health at Columbia University, has shown that drug companies contribute to organizations most closely aligned with the drugs they manufacture. She and her colleagues studied patient-advocacy organizations, which are different than patient-assistance programs in that they often focus on lobbying and other efforts related to particular diseases, not necessarily on providing financial assistance. The researchers compared Eli Lilly and Co.'s charitable contributions to its drug sales in a 2011 study published in the American Journal of Public Health. They found that 45% of Eli Lilly's sales in 2007 came from drugs related to neurosciences. During the first two quarters of that year, 66% of the company's grants to advocacy organizations went to those related to neurosciences.

The authors recommended that the Affordable Care Act's Sunshine Act provisions, which require public disclosure of medical manufacturers' payments to doctors and teaching hospitals, be amended to include drug company payments to patient-advocacy organizations. They also recommended that federal tax regulations require public disclosure of advocacy organization donors.

“If these changes were implemented, legislators, regulators and the public would more easily be able to follow the money and evaluate possible biases and conflicts of interest,” Rothman and her colleagues wrote. In an interview, she said reporting of drugmakers' contributions should apply to patient-assistance programs and patient-advocacy programs.

Tax-exempt 501(c)(3) patient-assistance programs and advocacy groups are generally required to list in their annual Form 990 filed with the Internal Revenue Service any donors who contribute $5,000 or more. Although a tax-exempt organization must make available for public inspection its annual 990, the IRS has said that it does not need to disclose the name and address of any contributors in copies of its Form 990 made available to the public, said Donald Stuart, a partner at Waller Lansden Dortch and Davis in Nashville. So, that information is usually redacted in copies provided to the public or on their websites.

John Wyand, a principal at the law firm Squire Patton Boggs in Washington who represents pharmaceutical companies, said drugmaker-funded patient-assistance programs can be a win-win for both the companies and for patients. “Of course there's an interest on the part of the pharmaceutical companies for people to buy drugs they make,” he said. “But there's also an altruistic purpose for making contributions so people can take the drugs that are prescribed.”

Rucker, the multiple myeloma patient, said he finds it difficult to question an arrangement that may have saved his life. He has good days and bad ones medically, but he says Revlimid has allowed him to continue to work and live a productive life. He got married a year and a half ago.

“I know it's drug (company)-funded,” Rucker said. “But without that, I wouldn't be sitting here talking to you right now.”

Follow Lisa Schencker on Twitter: @lschencker



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