As prescription drug spending continues to increase, governments continue to scrutinize arrangements between pharmaceutical companies, healthcare providers, assistance programs, and patients. For example, recently, two non-profit foundations – Chronic Disease Fund, Inc. (“CDF”) and Patient Access Network Foundation (“PANF”) – have agreed to pay $2 million and $4 million, respectively, to resolve allegations that they violated the False Claims Act by enabling pharmaceutical companies to pay kickbacks to Medicare patients taking their drugs.

The press release issued by the Department of Justice describes government allegations that CDF and PANF “worked with various pharmaceutical companies to design and operate certain funds that funneled money from the companies to patients taking the specific drugs the companies sold. These schemes enabled the pharmaceutical companies to ensure that Medicare patients did not consider the high costs that the companies charged for their drugs. The schemes also minimized the possibility that the companies’ money would go to patients taking competing drugs made by other companies.”

The Department of Justice further explains that CDF and PANF functioned not as independent charities, but as “pass-throughs” for specific pharmaceutical companies to pay kickbacks to Medicare patients taking their drugs. As a result, in additional to paying monetary penalties, the two companies entered into a three-year Integrity Agreement with the federal government.

Based on this enforcement action and previous advisory opinions, pharmaceutical patient assistance programs should not (1) provide manufacturers with the internal information, such as drug utilization; (2) funnel manufacturers’ contributions exclusively to assist with the purchase of their own product (contributions should be evenly spread out). Further guidance on pharmaceutical assistance programs.