It is not uncommon for pharmacies to apply manufacturer’s coupons to assist patients with high deductibles. But when applied incorrectly, the pharmacy may face recoupments, audits/investigations, and large settlements as recent cases illustrate.
The U.S. Attorney’s Office has recently reached a $3.5 million settlement with specialty pharmacy Advanced Care Scripts, Inc. (ACS), to resolve allegations that it conspired with Teva for paying kickbacks to Medicare patients taking Copaxone (a Teva drug approved for treatment of multiple sclerosis). The press release issued by the government reminded that “the Anti-Kickback Statute prohibits pharmaceutical companies from offering or paying, directly or indirectly, any remuneration – which includes money or any other thing of value – to induce Medicare patients to purchase the companies’ drugs.”
The government alleged that ACS served as a contracted vendor for Teva and provided, among other things, benefits investigation services to certain patients who had been prescribed Copaxone. ACS acknowledged certain facts, including that it relayed data from two foundations, Chronic Disease Fund (CDF) and The Assistance Fund (TAF), to Teva so that Teva could correlate its payments to the foundations with the amounts of money the foundations spent on Copaxone patients. ACS further acknowledged that, when the foundations lacked funding and were not accepting new applications for Medicare co-pay coverage, ACS provided regular updates to Teva on the number of Medicare Part D patients serviced by ACS who had prescriptions for Copaxone, met the criteria for foundation co-pay coverage, and were awaiting foundation co-pay coverage. Teva sometimes provided ACS with advance notice of its payments to CDF or TAF. Once ACS learned that CDF or TAF had re-opened its co-pay fund, ACS promptly would send the foundation a “batch file” that consisted almost entirely of Copaxone patients’ applications for Medicare co-pay coverage. In other words, Teva was funding CDF and TAF based on the amount of patients that needed assistance with Teva’s drug.
FBI’s special agent in charge working on the case said in the press release: “Advanced Care Scripts (ACS) willingly served as a pawn in a kickback scheme, putting profit over patient needs, by helping Teva to time its foundation payments to boost sales of Teva’s own drug, which ACS then dispensed…Today’s settlement should be a warning to others that the FBI will continue to aggressively go after vendors like ACS who conspire with pharmaceutical companies to disguise kickbacks as charitable contributions, at the expense of hard-working taxpayers who support the Medicare program.”
The government has also settled with CDF and TAF and filed a complaint against Teva under the False Claims Act.
Another recent large settlement ($7.8 million) was with a Nashville pharmacy to settle allegations that the pharmacy routinely and improperly waived Medicare co-payments without an individualized assessment of those beneficiaries’ inability to pay, and improperly used pharmaceutical manufacturers’ copayment cards to pay the co‑payments of certain Medicare recipients in violation of the Anti-Kickback Statute and False Claims Act.
As these cases illustrate, any arrangements with manufacturers should be scrutinized by your legal counsel. Probably the most important point to remember is that financial assistance should not be used for any government sponsored programs. For example, the Office of Inspector General (OIG) has prepared a survey analyzing manufacturers’ compliance with copay programs. All surveyed manufacturers provide notices to beneficiaries and pharmacists that copayment coupons may not be used in Federal health care programs. Most manufacturers also had certain safeguards to prevent copayment coupon use for drugs paid for by government plans.
A manufacturer may, however, sponsor a charitable foundation which assists patients with copays as long as:
- The manufacturer or its affiliate does not exerts any direct or indirect influence or control over the charity or the subsidy program;
- The charity awards assistance in a truly independent manner that severs any link between the pharmaceutical manufacturer’s funding and the beneficiary (i.e., the assistance provided to the beneficiary cannot be attributed to the donating pharmaceutical manufacturer);
- The charity awards assistance without regard to the pharmaceutical manufacturer’s interests and without regard to the beneficiary’s choice of product, provider, practitioner, supplier, or Part D drug plan;
- The charity provides assistance based upon a reasonable, verifiable, and uniform measure of financial need that is applied in a consistent manner; and
- The manufacturer does not solicit or receive data from the charity that would facilitate the manufacturer in correlating the amount or frequency of its donations with the number of subsidized prescriptions for its products.
More information on the OIG’s analysis on how manufacturers may sponsor charitable programs.