A new report has shed light on some pharmaceutical companies’ attempts to circumvent federal anti-kickback statutes by profiting from large donations to patient assistance organizations.
A new report has sheds light on the alleged attempts of some pharmaceutical companies to circumvent federal anti-kickback statutes by donating large sums to patient assistance organizations. These organizations, in turn, purchase medications from the companies at inflated prices.
The Health Affairs report showed donations made by pharmaceutical companies to independent patient assistance organizations between the years 2010 and 2017 ultimately boosted their bottom lines.
The report found that donations from leading drug manufacturers for different medical conditions ultimately led to profits for the companies, even if relatively few patients were induced to use the manufacturer’s drugs.
This was particularly true among the 10 costliest conditions, “where the leading manufacturer accounted for 67 percent of sales in 2010 and 89 percent in 2017, on average.” the report states.
The research team analyzed the spending of more than 3 million Medicare Advantage members during this time frame and found that spending estimated to qualify for charity assistance increased from 29 to 41%.
That finding indicates that manufacturers “could effectively assist in the purchase of their own medications by contributing to condition-specific charities,” the report stated.
As an example, the researchers pointed to Takeda and its short-bowel syndrome treatment, Gattex. The report showed that nearly all of Medicare spending for this indication was directed at Gattex. Following its approval in 2013, a charitable fund was established to help patients pay for the medication, Axios reported.
“We conclude that the current regulations or enforcement permit donations that violate the spirit of Medicare’s Anti-Kickback Statute,” the report stated.
The federal anti-kickback statute prevents pharmaceutical companies from providing financial coverage of Medicare copay payments that would encourage patients to purchase a company’s medication. Companies may donate money to non-profit charities, as long as they are independent of the company that does the donating.
A History of Profitable “Gifts”
Over the past several years, law enforcement has cracked down on charitable organizations that act as “pass-throughs” for pharmaceutical companies. This means they serve to bolster the bottom lines of these companies by acquiring medications at a higher rate using the funds provided by drug companies.
Some of these charitable organizations, such as Good Days and the Patient Access Network (PAN) Foundation, have faced millions of dollars in fines from the government. As BioSpace reported in 2019, those two groups agreed to pay a combined $6 million without admitting to wrongdoing.
Multiple companies have been caught up in the government’s sweeping probe of these kickbacks.
In 2018, Pfizer agreed to pay $23.8 million to resolve kickback allegations regarding its relationship with PAN Foundation. The government said Pfizer used the foundation to provide payment assistance for renal cell carcinoma drugs Sutent and Inlyta, as well as Tikosyn, which treats arrhythmia in patients with atrial fibrillation or atrial flutter.
In 2019, Astellas’ U.S. branch and Amgen agreed to pay $124.75 million to resolve Medicare-related kickback allegations. The government said that Astellas had used charitable foundations to cover the costs of the prostate cancer drug Xtandi. The government charged the company with promoting copay assistance funds that were used for Xtandi over competing drugs, resulting in a $100 million fine.
Similarly, Amgen paid $24.75 million to settle claims it used copay funds to support hyperparathyroidism drug Sensipar and multiple myeloma drug Kyprolis.
