Regulatory Focus™ > News Articles > HHS' OIG to PhRMA: Free Pharmaceuticals Needed in 2018

HHS' OIG to PhRMA: Free Pharmaceuticals Needed in 2018

Posted 05 January 2018 | By Zachary Brennan 

HHS' OIG to PhRMA: Free Pharmaceuticals Needed in 2018

With a nonprofit that paid almost $100 million in 2015 financial grants to patients now saying that it will not offer such payments in 2018, Gregory Demske, chief counsel to the Department of Health and Human Services' Office of the Inspector General (OIG), sent a letter on Thursday seeking help from the pharmaceutical industry group PhRMA in providing free drugs. 

The situation arises as OIG found that the nonprofit, known as the Caring Voice Coalition (CVC), may have improperly acted as a conduit for transfering financial assistance from drug companies to patients.

"Based on contacts from patients and other interested persons, OIG understands that the absence of CVC support may affect patients' access to critical drugs," Demske wrote regarding CVC's decision.

The letter came on the same day that CVC CEO Greg Smiley said: "The Caring Voice Coalition Board of Directors has evaluated all options available to our organization regarding financial assistance requests in light of the decision by the U.S. Department of Health and Human Services Office of Inspector General to rescind our Advisory Opinion. After considering all options and our current circumstances, I deeply regret to announce that CVC will not open financial assistance for any disease fund in 2018."

The advisory opinion, according to a letter from Demske sent in November, found that CVC increased the risk that the patients who sought assistance from it would be steered to federally reimbursable drugs that the manufacturer donor sold.

"This type of steering can harm patients and the Federal health care programs, because, for example, patients may be urged to seek, and physicians may be more likely to prescribe, a more expensive drug if copayment assistance is available for that drug but not for less expensive but therapeutically equivalent alternatives," OIG explained. "In these circumstances, manufacturers may have greater ability to raise the prices of their drugs while insulating patients from the immediate out-of-pocket effects of price increases, leaving Federal health care programs like Medicare (and the taxpayers who fund those programs) to bear the cost."

Now, Demske is calling on PhRMA to talk to its member companies about providing certain drugs free of charge and with some caveats.

"One potential avenue for patients to receive such drugs is for a Drug Company to provide such drugs without charge to the patient or any Federal health care program," Demske wrote. "In fact, OIG has previously issued advisory opinions approving of specific arrangements under which Drug Companies provide free drugs. Nevertheless, OIG has also noted that free drug programs that are not properly structured can implicate, and potentially violate, the Federal anti-kickback statute."

The letter also noted that OIG has determined that drugmakers will not be subject to OIG administrative sanctions if they provide free drugs in 2018 to federal health care program beneficiaries as long as: "The free drugs are provided in a uniform and consistent manner to Federal health care program beneficiaries who: (i) were receiving cost sharing assistance from eve for the same drug(s) as of November 28, 2017; and (ii) have been impacted by CVC's decision not to provide assistance in 2018. The free drugs are awarded without regard to the beneficiary's choice of provider, practitioner, supplier, or health plan. The free drugs are not billed to any Federal health care program, counted toward the beneficiary's Medicare Part D true out-of-pocket costs (TrOOP), resold, or otherwise billed to a third-party payor. The provision of the free drugs is not contingent on any future purchases or orders of the drugs or any other item or service. The Drug Company maintains accurate, contemporaneous, and complete records of the free drugs it furnishes to Federal health care program beneficiaries."

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