Legal Opinion Paves Way to Continuing Drug Assistance Programs

Drug manufacturers with prescription assistance programs may have an avenue to continue providing free medications to Medicare patients without running afoul of the law, according to an April 18 opinion (PDF file: 10 pages / 34.2 KB. More about PDFs.) from HHS' Office of Inspector General, or OIG.

The opinion may help address drug manufacturers' concerns about a November 2005 HHS Special Advisory Bulletin on patient assistance programs (PDF file: 6 pages / 79.4 KB. More about PDFs.). The bulletin raised concerns among manufacturers that, under Medicare Part D, prescription assistance programs, or PAPs, would violate federal anti-kickback laws. In February, several manufacturers announced they would end their assistance programs for Medicare patients on May 15 -- the deadline to enroll in Part D -- to avoid unintentionally breaking the law.

Although limited to Schering-Plough Corp., the opinion issued by the OIG outlines the parameters by which other drug manufacturers may be able to continue their PAPs.

"While the advisory opinion is effective only for the company that requested it, such opinions can provide useful guidance to other companies," said Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America, in an April 18 PhRMA statement. "We have sent a copy of the opinion to our members, and undoubtedly, they are reviewing it and comparing it to their own programs."

The OIG opinion said Schering-Plough's PAP contained enough safeguards to "substantially mitigate the risk that the free drugs are or will be used to tie Medicare beneficiaries to particular outpatient prescription drugs payable by the Medicare Part D program or that the free drugs are or will be used to increase costs to the Medicare Part D program."

The program steers clear of problems by

The opinion came a day after Republican and Democrat leaders of the Senate Committee on Finance urged the OIG to clarify the legality of drug manufacturers' PAPs. Without such clarification, Medicare patients may lose access to life-preserving medications, said Sens. Charles Grassley, R-Iowa, chair of the Senate Finance Committee; Orrin Hatch, R-Utah; Max Baucus, D-Mont.; and John Rockefeller IV, D-W.V., in an April 17 letter (PDF file: 3 pages / 32.2 KB. More about PDFs.) to the HHS inspector general.

"It's good to finally have this advisory opinion from the inspector general," said Grassley in an April 18 statement (PDF file: 3 pages / 31.3 KB. More about PDFs.) responding to the OIG opinion. "I urge the inspector general to provide similar assurance to other companies quickly as the May 15 deadline is fast approaching. These companies also need to provide any additional information requested by the inspector general in a timely way."

Many Medicare Part D enrollees continue to need PAP help because they rely on life-preserving but extremely expensive drugs that have no generic equivalent. Among people most affected are

Schering-Plough offers two PAPs. The first, limited to drugs for cancer and hepatitis, is available to enrollees, including Medicare Part D enrollees, with household incomes up to 325 percent of the federal poverty level; the second, which covers drugs for conditions other than cancer and hepatitis, is available to enrollees with household incomes up to 250 percent of the poverty level. In both PAPs, patients must already have spent at least 3 percent of their household income on outpatient prescription medications during that coverage year.

"We believe this approach complements the new Medicare drug benefit, while providing both the uninsured and Medicare enrollees access to free medicines as needed," said Fred Hassan, chair and CEO of Schering-Plough, in an April 18 news release.