HHS Clarifies Legality of Drug Assistance Programs
HHS Inspector General Daniel Levinson on Tuesday issued an advisory opinion to Schering-Plough confirming that two of the company's patient-assistance programs for low-income Medicare beneficiaries are lawful under the prescription drug benefit, the New York Times reports (Pear, New York Times, 4/19).
Some pharmaceutical companies have said they will end their PAPs on May 15 because they are concerned that the programs could violate federal anti-kickback laws that prohibit drug makers from steering beneficiaries toward their own products (California Healthline, 4/18).
The companies cited a guidance document issued by Levinson last November that said PAPs potentially could be considered unlawful if, for example, drug makers arranged to pay for a beneficiary's prescriptions during the so-called "doughnut hole" in Medicare coverage only if the beneficiary agreed to use the manufacturer's product (New York Times, 4/19). At the time, Levinson said pharmaceutical companies can lawfully continue to provide assistance to low-income beneficiaries, in part by contributing to charities that administer the PAPs (California Healthline, 4/18).
In Levinson's new advisory opinion, issued in response to a request from Schering-Plough, he clarified that pharmaceutical companies can legally operate PAPs that meet certain specifications. The two Schering-Plough PAPs Levinson addressed were Commitment to Care, which covers the company's cancer and hepatitis drugs, and SP-Cares, which includes most of its other prescription treatments. Schering-Plough officials said the PAPs cited in the document provided more than $125 million in products to more than 120,000 patients (Reichard, CQ HealthBeat, 4/18).
Schering-Plough, which was not identified by name in the opinion, confirmed Tuesday that it requested the guidance. Levinson said the programs are lawful because they would operate completely separate from the drug benefit, with no claim being filed to Medicare and none of the drugs' costs counting toward the $3,600 out-of-pocket cost threshold for catastrophic coverage. In addition, Levinson said, eligibility for the programs will be "based solely on patients' financial need," without regard to beneficiaries' choices of drug plans (New York Times, 4/18).
Levinson said the two safeguards show there is "minimal risk of fraud and abuse" with the two programs (Freking, AP/Long Island Newsday, 4/19).
Levinson said, "This advisory opinion illustrates that lawful avenues exist for pharmaceutical manufacturers to give assistance to financially needy patients, including Medicare beneficiaries enrolled" in drug plans (New York Times, 4/19).
HHS Secretary Mike Leavitt, said, "This is excellent news for the many people with Medicare who have relied on these valuable patient-assistance programs" (AP/Long Island Newsday, 4/19).
Pharmaceutical Research and Manufacturers of America Senior Vice President Ken Johnson said in a statement, "While the advisory opinion is effective only for the companies that requested it, such opinions can provide useful guidance to other companies, ... [and] certainly we believe it will provide an impetus for many of our companies to continue." Johnson said copies of the guidance had been distributed to PhRMA members (CQ HealthBeat, 4/19).
According to the Philadelphia Inquirer, it is "unclear how other big [drug] companies might alter their programs" in response to the advisory opinion (Ginsberg, Philadelphia Inquirer, 4/19).
Sen. Edward Kennedy's proposal to change the drug benefit to allow beneficiaries to obtain drug coverage directly from Medicare "may cause dangerous side effects including outdated medicine, stifled research and reduced life expectancy" for beneficiaries, Sally Pipes, president and CEO of the Pacific Research Institute, writes in a Boston Herald opinion piece. According to Pipes, Kennedy supports a Medicare drug benefit "modeled after the [Veterans Affairs] benefit," but while "[t]he VA provides an important service, ... it is rarely held up as a model for providing cutting-edge medicine."
She notes that the VA formulary is "extremely restricted" and includes "[o]nly 19% of drugs approved by the FDA since 2000." Pipes adds that "a VA-styled system of Medicare price controls" would force pharmaceutical companies to "take a big hit to their bottom lines" and cause them to "stop inventing drugs." She says, "If we mandate price controls here, more life-saving breakthroughs will be lost" (Pipes, Boston Herald, 4/19).
NBC's "Nightly News" on Tuesday reported on mobile teams promoting enrollment in the Medicare prescription drug benefit. The segment includes comments from Kathleen Gmeiner, project manager at the Access to Benefits Coalition; Ron Pollack, executive director of Families USA; and Medicare beneficiaries (Reid, "Nightly News," NBC, 4/18). A transcript of the segment is available online. The complete segment is available online in Windows Media.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.