Charity drug programs get tentative go-ahead

Washington -- Some low-income patients who were facing a difficult choice between signing up for Medicare's drug benefit and continuing to receive charity medications were granted a reprieve last month.

The Dept. of Health and Human Services Office of Inspector General issued an advisory opinion April 18 that clarifies the ways in which drugmakers can use patient assistance programs to keep offering free or discounted medications to low-income seniors and disabled people -- even if the beneficiaries decide to opt for drug coverage through Medicare Part D.

Last year, the OIG issued an advisory bulletin that effectively prohibited companies from offering most kinds of patient assistance to drug benefit enrollees. The action resulted from concerns that drug firms could implement kickback schemes by offering free drugs to seniors during gaps in Medicare's coverage and then benefit from federal payments for these medicines once the coverage started up again.

In its more recent opinion, issued in response to a specific request by the drugmaker Schering-Plough, the OIG said two assistance programs offered by the firm would not be subject to administrative sanctions. While the possibility for kickbacks still exists under the arrangements, the programs would appropriately minimize this risk by operating completely outside of the Medicare benefit, wrote Lewis Morris, OIG's chief counsel. The programs neither would involve the use of any federal funds nor base medication support on beneficiaries choosing a particular Medicare drug plan, he wrote.

Some pharmaceutical firms, including Schering-Plough and Merck, announced after the opinion that they would continue to offer charity drugs to Medicare drug plan enrollees who meet their programs' income eligibility requirements. Other companies, including GlaxoSmithKline, plan to request additional OIG opinions on the legality of their own programs, spokesmen said.

Lawmakers immediately seized on the ruling as evidence that drug firms could continue offering vital assistance to poor Medicare drug benefit enrollees without fear of government penalties. After last year's opinion, some firms had announced that they would either let seniors decide between the programs and the drug benefit or discontinue the programs for all Medicare-eligible patients by the time the initial enrollment period ended.

"It is simply unacceptable for any pharmaceutical company to use the launch of the new Medicare prescription drug benefit as an excuse to limit their [patient assistance programs] as of May 15, particularly since there is now clear legal guidance from the OIG on ways to operate these programs," a bipartisan group of Senate Finance Committee leaders wrote in an April 21 letter to the Pharmaceutical Research and Manufacturers of America, a trade group representing drug firms.

Even though the opinion applies only to the two programs offered by Schering-Plough, the senators said the document can serve as a roadmap for other drugmakers to craft their own assistance programs that will pass federal muster.

But some companies still plan to restrict assistance only to eligible people who don't sign up for the Medicare drug benefit. Seniors and disabled people who enroll in Part D will not be able to receive free or discounted drugs from AstraZeneca, Bristol-Myers Squibb or Pfizer, for instance. Low-income people younger than 65 who are not disabled are not affected by the OIG ruling when it comes to patient assistance program eligibility.

PhRMA Senior Vice President Ken Johnson said the group's members are committed to helping low-income Medicare patients but that some remain concerned about running afoul of anti-kickback statutes. The OIG ruling, though putting drug companies on more firm legal footing, does not prevent the Justice Dept. from issuing sanctions against firms that continue their drug assistance, he said.

Drugmakers that are attempting to transition Medicare enrollees in their assistance programs over to the federal benefit said many beneficiaries at or near the poverty level would be better off under Part D. Many of these patients are eligible for extra government help with their drug bills based on income. In addition, the dollar value of charity drugs cannot count toward beneficiaries' annual out-of-pocket spending limits, above which the government pays nearly all of an enrollee's drug costs.