September 11, 2009 – Safety-net providers know only too well the challenges of implementing and maintaining patient assistance programs (PAPs), designed to help indigent Americans access much-needed drugs.
So they were encouraged to learn of a recent legal opinion stating – hopefully once and for all – that so-called bulk PAPs are not a violation of the federal anti-kickback law as long as such programs contain certain safeguards.
Bulk PAPs, or replacement, programs allow the pharmacy to contract with a pharmaceutical company to receive large shipments of charity drugs that they can then dispense to eligible patients – a model usually favored by pharmacists and patients.
In its July 21 opinion, the Department of Health and Human Services Office of Inspector General determined for the first time that hospital “bulk replacement programs” are legal and won’t trigger penalties against the companies that operate such programs when handled correctly. This should encourage more manufacturers to offer bulk PAPs, and ease any concerns that existing programs may prompt unfavorable audits.
“As a pharmacy business manager at a hospital that recovers more than $2 million a year from PAP drugs, I’m always amazed at the excuses companies give me when I ask them about PAP programs and why they don’t offer them,” said Donald Price, pharmacy services business manager at Virginia Commonwealth University Health System in Richmond, Va. “It always goes back to the legal department. (The OIG opinion) will very much ease their concerns.”
The lingering question of whether bulk PAPs induce hospitals to favor certain drugs and suppliers over others has had a chilling effect on the development of bulk PAP programs — especially after the OIG issued an advisory opinion in 2005, raising concerns about PAPs for Medicare Part D patients. (See Monitor, Oct. 2008)
Bulk Programs Shrinking
Although an estimated 15 to 20 drug manufacturers now offer bulk replacement, some safety-net hospitals report that such charity programs are in decline.
The Harris County Hospital District in Houston, Tex., for example, saw a 37-percent decline in bulk replacement during fiscal 2008, reports Pharmacy Operations Manager Tam Nguyen.
“The OIG advisory opinion may encourage more manufacturers to offer bulk PAP programs and it would make a tremendous difference,” he agreed.
Federal law prohibits manufacturers from offering charity drugs to patients who are eligible for Medicare or Medicaid. As a result, most manufacturers are now requiring pharmacies to reassign within six months every bulk replacement product originally intended for patients who later became eligible for Medicare or Medicaid to another patient eligible for the PAP, Nguyen said. This is because the drug makers worry about hefty fines if the drugs end up in the hands of already-covered patients, he said.
So any communication from the federal government easing manufacturer concerns over potential problems associated with their charity programs will help pharmacists and patients on the ground, Nguyen said.
Risks are small, OIG says
In its July opinion, the OIG scrutinized a bulk PAP program proposed by a leading manufacturer to determine whether it would pose legal risks.
The agency concluded that there was little risk the company would use the PAP to make hospitals favor its products over those of other manufacturers because hospitals participating in the program would not be chosen based on the size or type of drug orders they place. The fact that the PAP would serve outpatients only and that hospitals and prescribing physicians would receive no financial compensation also prevented kickback risks, the OIG wrote.
The agency also noted that the PAP program would provide drugs to needy patients at hospitals that may not have the manpower or time to help such patients apply to individual PAP programs. Also known as traditional PAPs, such programs require patients to apply for charity help directly from the manufacturer, a cumbersome paperwork process that many patients are unable to complete on their own.
Drug maker: “We’re pleased.”
No surprisingly, manufacturers with well-established PAP programs also welcomed the fact that there’s now a legal opinion in place to justify their activities.
“We were pleased with the OIG opinion on bulk PAP programs,” said Jennifer McGovern, AstraZeneca’s manager of patient assistance programs. “Having a bulk PAP program ourselves, we know how important they are in getting patients the medicines they need.”
Some estimates have shown that bulk PAP programs cost health care providers 80 percent less in paperwork and staff resources than do traditional, or individual, PAP programs. That’s according to John Doster, senior vice president and managing director of the Franklin Group, which administers traditional and institutional patient assistance programs along with reimbursement programs for large manufacturers.
They also benefit patients who can access drugs immediately with a bulk PAP, compared with traditional PAPs that can take between two and four weeks to process patient applications, depending on the manufacturer and its particular rules, Doster said.