Bloomberg fiction writers Robert Langreth and Ben Elgin are pushing the idea that contributions from a pharmaceutical company to a patient assistance programs (PAPs) run by non profits operate on the edges of anti-kickback law or outright illegal. Or put another way: they craft a compelling story that drug companies are using poor patients to launder money and reap profits.
Relying mostly on unsealed documents from a private case brought by an ex-Celgene employee, the duo cite an expert witness that the donations “were actually illegal kickbacks designed to hide the fact that Celgene was contributing these payments to the foundations to get Medicare patients to use more” of Celgene’s cancer drugs, Thalomid and Revlimid.’
Their reporting is, as the movie disclaimer goes: “Inspired by a true story” which begins here:
First, PAP’s have been around for decades to help patients with limited financial ability to pay for out of pocket health care costs, including medicines.
In 2006, the Medicare Part D benefit kicked in. Beneficiaries no longer qualified for assistance under traditional PAP eligibility criteria whereby companies provided support directly to patients because they could run afoul of federal anti-kickback statutes and other law. But many patients who did not qualify for low income subsidies still needed financial help. Hence, the Department of Health and Human Services Office of Inspector General drew up regulations to allow cost-sharing subsidies provided by bona fide, independent charities unaffiliated with pharmaceutical manufacturers… even if the charities receive manufacturer contributions.” These regulations have been continually updated and PAPs are strictly regulated by HHS.
Elgin opines that such arrangements are a ‘grey area.’ He might tell that to HHS and the Department of Justice since they are not a party to this private lawsuit. (More on the intricacies of the suit later. )
Second, drugs not covered on the Medicare Part D plan formulary or drug list are not counted towards the out of pocket costs. The PAP's assistance on behalf of the PAP enrollee does not count towards a Part D beneficiary's true-out-of-pocket cost (TrOOP). In other words, PAP assistance would not fill the donut hole and push patients into the catastrophic part of Part D where the program pays 95 percent of all drug costs.
Third, there are many other patient assistance programs that have also been around for decades to help people with HIV, Hepatitis C and many rare diseases. Apparently the dynamic duo also believe these are “schemes” to gain billions.
Fourth, in addition to ignoring that PAP assistance does NOT boost catastrophic drug spending, Langreth and Elgin rely heavily on the expert testimony provided on behalf of the plaintiff who makes these sweeping claims. (More on the inventive path the expert took to estimate Celgene raked in $19 billion in excess sales over the last decade in another post.)
Fifth, they also ignore the vast body of evidence that co-pay assistance often helps patients whose drugs are not covered and who’s copay or cost sharing have increased much faster than drug prices net of rebates. And often these rebates are generated agreements that specify a “competitor’s drug must have a higher copayment than that of the rebated drug. Other agreements require the sponsor to exclude a competitor’s drugs from its formulary altogether. Rebates were often larger when fewer competitors’ drugs were given preference on the formulary. For example, one sponsor received a 35-percent rebate when the drug was one of two preferred drugs in its class, but a 40-percent rebate when the drug was the only preferred drug in its class on the formulary. “
But I guess helping patients who are powerless to fight such decisions should suffer and die. Perhaps Langreth and Elgin feel that's a small price to pay to strike a blow for tort lawyer settlements.
Here’s what Mick Kolassa, one the world’s experts on drug pricing and reimbursement (and a great blues artist) concludes: “Insurers can argue that these offset programs drive patients to use costlier branded drugs (in lieu of cheaper branded options or generics), but studies have shown that more than 40% of the time, in the absence of a copay-offset program, if the patient cannot pay the OOP expenses, they won’t switch to a cheaper drug—they will simply forgo the medication. The insurance industry will end up losing considerably more money over the long run, in terms of covering related medical expenses that arise when the patients don’t control their conditions through the use of medication.”
To sum up, Langreth and Elgin allege that drug companies and PAPs are colluding to evade anti-kickback laws and overbill Medicare. So they are alleging that the relationship is nothing less than money laundering and racketeering.
I am sure that the article has gotten a lot of clicks. Call me old-fashioned, but I’d trade clicks and self-serving media exposure for being fair and truthful.
Relying mostly on unsealed documents from a private case brought by an ex-Celgene employee, the duo cite an expert witness that the donations “were actually illegal kickbacks designed to hide the fact that Celgene was contributing these payments to the foundations to get Medicare patients to use more” of Celgene’s cancer drugs, Thalomid and Revlimid.’
Their reporting is, as the movie disclaimer goes: “Inspired by a true story” which begins here:
First, PAP’s have been around for decades to help patients with limited financial ability to pay for out of pocket health care costs, including medicines.
In 2006, the Medicare Part D benefit kicked in. Beneficiaries no longer qualified for assistance under traditional PAP eligibility criteria whereby companies provided support directly to patients because they could run afoul of federal anti-kickback statutes and other law. But many patients who did not qualify for low income subsidies still needed financial help. Hence, the Department of Health and Human Services Office of Inspector General drew up regulations to allow cost-sharing subsidies provided by bona fide, independent charities unaffiliated with pharmaceutical manufacturers… even if the charities receive manufacturer contributions.” These regulations have been continually updated and PAPs are strictly regulated by HHS.
Elgin opines that such arrangements are a ‘grey area.’ He might tell that to HHS and the Department of Justice since they are not a party to this private lawsuit. (More on the intricacies of the suit later. )
Second, drugs not covered on the Medicare Part D plan formulary or drug list are not counted towards the out of pocket costs. The PAP's assistance on behalf of the PAP enrollee does not count towards a Part D beneficiary's true-out-of-pocket cost (TrOOP). In other words, PAP assistance would not fill the donut hole and push patients into the catastrophic part of Part D where the program pays 95 percent of all drug costs.
Third, there are many other patient assistance programs that have also been around for decades to help people with HIV, Hepatitis C and many rare diseases. Apparently the dynamic duo also believe these are “schemes” to gain billions.
Fourth, in addition to ignoring that PAP assistance does NOT boost catastrophic drug spending, Langreth and Elgin rely heavily on the expert testimony provided on behalf of the plaintiff who makes these sweeping claims. (More on the inventive path the expert took to estimate Celgene raked in $19 billion in excess sales over the last decade in another post.)
Fifth, they also ignore the vast body of evidence that co-pay assistance often helps patients whose drugs are not covered and who’s copay or cost sharing have increased much faster than drug prices net of rebates. And often these rebates are generated agreements that specify a “competitor’s drug must have a higher copayment than that of the rebated drug. Other agreements require the sponsor to exclude a competitor’s drugs from its formulary altogether. Rebates were often larger when fewer competitors’ drugs were given preference on the formulary. For example, one sponsor received a 35-percent rebate when the drug was one of two preferred drugs in its class, but a 40-percent rebate when the drug was the only preferred drug in its class on the formulary. “
But I guess helping patients who are powerless to fight such decisions should suffer and die. Perhaps Langreth and Elgin feel that's a small price to pay to strike a blow for tort lawyer settlements.
Here’s what Mick Kolassa, one the world’s experts on drug pricing and reimbursement (and a great blues artist) concludes: “Insurers can argue that these offset programs drive patients to use costlier branded drugs (in lieu of cheaper branded options or generics), but studies have shown that more than 40% of the time, in the absence of a copay-offset program, if the patient cannot pay the OOP expenses, they won’t switch to a cheaper drug—they will simply forgo the medication. The insurance industry will end up losing considerably more money over the long run, in terms of covering related medical expenses that arise when the patients don’t control their conditions through the use of medication.”
To sum up, Langreth and Elgin allege that drug companies and PAPs are colluding to evade anti-kickback laws and overbill Medicare. So they are alleging that the relationship is nothing less than money laundering and racketeering.
I am sure that the article has gotten a lot of clicks. Call me old-fashioned, but I’d trade clicks and self-serving media exposure for being fair and truthful.
