Medicare Part D squashes charity drugs

Washington -- Millions of low-income seniors and disabled people have come to rely on free or discounted medications offered by drug companies through their patient assistance programs. With the start of the Medicare drug benefit less than a month away, this might be about to end.

The Dept. of Health and Human Services Office of Inspector General recently released a special advisory bulletin that puts new restrictions on how drug firms can give away medications to Medicare beneficiaries. If a senior who has been getting free drugs directly from a manufacturer signs up for the new Medicare drug benefit, he or she no longer will be able to accept charity prescriptions.

If seniors accept both drug donations and Medicare-subsidized drugs, they run the risk of inadvertently participating in what the government would view as a kickback scheme designed to enrich drugmakers, the OIG stated.

Patient assistance programs offer drugs made by the sponsoring companies. The agency argues that if drug firms fill gaps in the Medicare benefit, it could drive seniors to use certain medications. When federal coverage kicked in, the government would be left footing a potentially larger bill.

The ruling threatens to cut off a source of drug assistance on which many Medicare-eligible people have come to rely, said Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America. The OIG rules generally make it more difficult for these programs to help low-income Medicare beneficiaries, he said.

Within a matter of weeks, the individual drug companies that in 2004 donated a combined $4.1 billion worth of drugs to needy patients must decide whether they will continue to offer the programs to Medicare-eligible people who decide against participating in Part D.

Some companies already have decided that they will stop offering prescription assistance to any beneficiary, even those who have decided not to sign up for the Medicare drug benefit. The AstraZeneca Foundation patient assistance program, for instance, will continue to offer free drugs to individuals who make less than $18,000 per year and couples who make less than $24,000, but it will end assistance for anyone who is eligible for Medicare Part D.

Other firms, such as Bristol-Myers Squibb and Merck, have decided to allow seniors to stay on their programs' rolls as long as they do not enroll in Medicare drug coverage. Assistance program participants younger than 65 will remain unaffected by the change.

Yet another choice to make

The revelation that many Medicare seniors have yet another decision to make in coming weeks and months when it comes to prescription drug coverage came as a surprise to many.

AARP sent a bulletin to members at the beginning of November -- before the OIG released its advisory --saying that prescription assistance programs could coexist with Medicare Part D. John Rother, AARP's policy director, said the group would need to mail out a correction to set seniors straight.

Confused seniors might turn to physicians for advice about whether to enroll in Part D or stick with a charity program.

For many patients who are eligible for both the assistance programs and Medicare drug coverage, the new federal benefit will likely be the clear winner when the two are compared, Rother said. The government program will offer financial assistance -- in some cases substantial amounts -- to beneficiaries who are below 150% of the poverty level.

"It's obviously going to be a hardship for some, but people who qualify for those assistance programs will also qualify for a very generous drug benefit and will not be restricted to a particular list of drugs or a particular manufacturer," Rother said. "Most will be better off enrolling in Medicare's program."

Drug companies that will discontinue the assistance for Medicare-eligible people say they only designed programs to fill a gap in coverage that the federal government was not addressing. Now that Part D is about to launch, low-income seniors have a better alternative to finding help than seeking out special assistance from multiple independent sources, said Andy Izquierdo, a spokesman for AstraZeneca.

"A lot of seniors are on different medications from different companies, so a lot of times they have to get their medications cobbled together from different programs," Izquierdo said. "But with Medicare Part D, you go under one plan to get all of your medications."

Other options available

Despite the agency's decision, drug companies and the seniors they help are not completely out of options, said HHS Inspector General Daniel Levinson.

"The OIG is mindful of the importance of ensuring that financially needy beneficiaries who enroll in Part D receive medically necessary drugs," he said. "Accordingly, the bulletin makes clear that lawful avenues exist for pharmaceutical manufacturers and others to help ensure that all Part D beneficiaries can afford medically necessary drugs."

Nothing in the Medicare statute, for instance, prevents a drug firm from crafting a more narrow program that provides free drugs completely outside the new drug benefit and without the use of federal funding -- especially if Medicare itself doesn't cover the particular drug in question.

But the appeal of such a program could be limited, because the value of the drugs cannot be counted as out-of-pocket costs, which must reach $3,600 before richer catastrophic benefits kick in and cover the majority of the remainder of costs.

Several pharmaceutical companies are asking the OIG to reconsider this portion of the guidance, PhRMA's Johnson said.

"PhRMA had hoped that government policies would preserve rather than restrict flexibility in how [assistance programs] may operate in connection with Medicare," he said.

In the meantime, the agency said it would not aggressively pursue programs that inadvertently violate the rules in the coming months as long as the sponsors are making a good-faith effort to transition to a different assistance model.