OIG adds to increased scrutiny of how patients pay for rising share of drug costs

May 27th, 2014 - Scott Kraft   
Categories:   Compliance   Insurance   Office of Inspector General (OIG)  
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Charity programs that help patients pay for the rising cost-sharing obligations of needed drugs may run afoul of anti-kickback rules when the charity’s scope is so narrow that it guides the patient toward specific drugs for treatment or providers, the HHS Office of Inspector General said last week.

The OIG’s Supplemental Special Advisory Bulletin for Independent Charity Assistance Programs makes clear that the OIG still believes that properly structured patient assistance programs (PAPs) can help patients to afford costly new drug treatments.

The key is that financial contributions made to these charity programs by drug manufacturers and others are made to bona fide charitable programs, including those that operate independently and that the scope of the charity’s efforts around a particular disease or disease treatments are not so narrow that the funds end up being directly primarily to specific drugs.

This could include, according to the OIG, directing patients to specific providers under the belief that the patients would be given specific drugs.

Put plainly, what the OIG wants to avoid is pharmaceutical companies funneling money through charity organizations in a way that ensures most or all of the charitable funds are directed toward the patient’s share of a drug treatment, while the federal government continues to pay for its portion of the drug.

The biggest implication for the physician’s office is an indirect one – those who prescribe the same company’s drug and, as a result, have additional patients referred by a charity supported by that drug’s manufacturer, may get swept up in the added scrutiny of the OIG. Though, to be clear, the OIG’s primary target is the donor.

Private payers also trying to crack down
The strictness of the anti-kickback laws have helped to shield Medicare and Medicaid from the increasing efforts of drug manufacturers to increase use of costly drugs by heavily subsidizing the patient’s cost.

The typical method is a prescription discount card issued to the patient to use to defray the cost of the copay. The card is sometimes issued by the prescribing provider, or obtained through the drug company’s web site or other marketing effort.

A card could offer the patient, for example, a discounted copay of $20 for a drug that the insurance company has in the most expensive tier of its formulary. Hypothetically, a drug might cost $700 a month, with the patient expected to pay $70 of that cost. The drug company discounts the patient’s copay to $20, but the insurance company continues to pay its full share.

As the insurance companies increasingly see it, these efforts thwart the whole purpose of the tiered formulary, which is to incentivize the patient to seek lower cost treatment opportunities.

UnitedHealthcare backed away from an effort earlier this year to outright disallow the use of copay reduction cards or coupons for its insured patients, amid complaints from providers and pharmacies that the ban would be very difficult to enforce. Not to mention patient pressures.

Don’t expect insurance companies to give up, which may ultimately change the way patients seek drugs for treatment and the way providers prescribe. Drug companies are already pushing patients to move toward prescription delivery by mail, in some cases offering the patient a better deal, such as access to a 90-day supply at a lower cost or automated refill delivery.

As drug vendors continue to create and push more expensive drugs, expect this struggle to continue, as CMS and private insurers alike face enormous pressure to cover any drug approved by the FDA for therapeutic benefit to patients.

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