Are Copayment Assistance Nonprofits to Funneling Kickbacks to Patients?

In recent years, the federal government has reviewed the issue of copayment assistance organizations that purport to help Medicare and Medicaid beneficiaries with their pharmaceutical copayments, but has not yet taken any public enforcement action to our knowledge. Now, the media seems to be taking a closer look, as seen in a recent Bloomberg article titled, “How Big Pharma Uses Charity Programs to Cover for Drug Price Hikes.”

The concern is that pharmaceutical companies may be using these organizations to illegally funnel kickbacks to beneficiaries. This became a heightened concern since 2006, when the Medicare Part D coverage gap (or so-called “Medicare donut hole”) required beneficiaries to come out of pocket for drug costs after they reached the initial coverage limit and until they reached the catastrophic-coverage threshold. This temporal “donut hole” can costs drug beneficiaries thousands of dollars per year.

However, HHS-OIG has repeatedly stressed that donations to these organizations from pharmaceutical manufacturers are not per se violations of the federal Anti-Kickback Statute (AKS). Instead, through various Advisory Opinions, HHS-OIG has announced various factors that must exist to shield the donor-pharmaceutical manufacturers and the recipient-organizations from AKS liability.

For example, in a 2015 Advisory Opinion, HHS-OIG stressed that the organization must be an “independent, bona fide charitable assistance program.” HHS-OIG stated that such an “interposition” between patients and pharmaceutical manufacturers should “provide sufficient insulation so that the [organization’s] assistance to patients should not be attributed to any of its Donors.”

With the assistance of inside employees, the government will look behind the supposed “independent” façade of some of these charitable assistance programs, ultimately finding, we predict, outliers with culpable conduct.

More information for whistleblowers is located at the Nolan Auerbach & White website.