How Specialty Pharmacies Can Safeguard Against Fraud When Using Patient Assistance Programs

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Bass, Berry & Sims PLC

Specialty pharmacies should carefully evaluate their relationships with drug manufacturers and charitable assistance programs in light of an August $3.5 million settlement between the United States Department of Justice (DOJ) and specialty pharmacy Advanced Care Scripts (ACS). This case demonstrates the importance of properly establishing patient assistance programs to avoid allegations of kickbacks.

The Case Against ACS and Teva

The DOJ alleged ACS worked in a closely orchestrated process to effectively “pass through” to government program beneficiaries with prescriptions for Copaxone donations from Teva Neuroscience, Inc. (Teva) to charitable assistance programs. The government has also filed suit against Teva arising from the same arrangement.  In that complaint, the government describes the arrangement between Teva and ACS in detail.

Allegedly, during Teva’s budgeting process, ACS provided Teva with information regarding how much money each foundation would need to cover existing Medicare Copaxone patient copays in the following year, and Teva donated to each foundation amounts sufficient to cover those patients. Also, the government alleges that during the benefit year, ACS would provide reports to Teva on the number of new Copaxone patients awaiting Medicare co-pay coverage. When the number of patients reached a “substantial number” waiting for support, Teva would donate to the charity in an amount sufficient to cover those patients’ support plus the foundation’s administrative fee. Teva would then notify ACS of the donation and ACS would send a “batch file” of patient applications for support to the foundations. Teva’s donations to the charitable foundations from 2006-2015 coincided with an increase in the price of Copaxone from $17,000 per year to over $73,000 per year.

Since late 2015, multiple U.S. Attorney’s offices have issued subpoenas to a large number of pharmaceutical manufacturers, charities and vendors requesting information related to patient assistance program activities. For example, in May 2018, Pfizer agreed to a five-year corporate integrity agreement and settled for $23.85 million to resolve allegations it used a foundation as a conduit to pay the copay obligations of patients.

It is well established that drug manufacturers should not seek data about the use of funds to which it makes donations and should not work to tie contributions to the funding of a particular patient. However, specialty pharmacies have typically not been the target of enforcement actions related to such activity. The ACS settlement highlights the risks to specialty pharmacies providing data to manufacturers regarding patient copay status and charitable assistance availability.

Safeguarding Against Fraud in Patient Assistance Programs

Here are some best practices that specialty pharmacies can implement related to patient assistance programs:

  1. Carefully review data elements provided to drug manufacturers in data reports to ensure information about charitable support or status of a charitable support request is not provided.
  2. Do not enter into contractual arrangements with drug manufacturers to coordinate charitable foundation support. Assisting patients in identifying such funding should be conducted as part of the pharmacy’s core services and not as directed by a drug manufacturer.
  3. Train staff to avoid any coordination with pharmaceutical manufacturers on the provision of charitable funding to patients. This includes not only through contractual agreements but also by avoiding such discussions informally or in scheduled business reviews.
  4. Ensure robust contractual language is in place clearly prohibiting pharmaceutical manufacturers from utilizing data provided by the specialty pharmacy to make charitable funding decisions.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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