Free Medication for Medicare Beneficiaries

Drug Makers Get OK for Charity to Seniors

By KEVIN FREKING
Associated Press Writer
April 18, 2006, 8:12 PM EDT

WASHINGTON -- In a legal opinion that could help many thousands of Medicare beneficiaries, drug manufacturers were told Tuesday that they can continue giving free medicine to poor people even if they're enrolled for the new drug benefit.

Each year, large drug companies routinely give millions of free prescriptions to the poor. However, most of the drug companies had said they would discontinue this practice for senior citizens now that they could get coverage through Medicare.

In particular, the drug companies had concerns that continuing to operate their patient assistance programs for Medicare beneficiaries would violate federal anti-kickback laws. Conceivably, they could use the programs to steer patients to a particular drug and reduce the patients' incentive to locate and use less expensive drugs. Such steering could also raise the costs of the program for taxpayers and participants.

Health and Human Services Inspector General Dan Levinson clarified his position on Tuesday that "lawful avenues exist for pharmaceutical manufacturers to give assistance to financially needy patients, including Medicare beneficiaries."

Levinson told one manufacturer seeking advice, Schering-Plough, that its proposal had two important safeguards that present "minimal risk of fraud and abuse."

First, the company will ensure that no Medicare payment is sought for the free drugs provided to poor beneficiaries. Second, it will ensure that assistance is based solely on financial need, using a methodology that does not take into account an enrollee's choice of a drug plan.

"Taken as a whole, these safeguards substantially mitigate the risk that the free drugs are or will be used to tie Medicare beneficiaries to particular outpatient prescription drugs," Levinson said.

CMS Administrator Mark McClellan said the review could help some beneficiaries save substantially on their medicine by getting free medicine in certain cases when they need help for a certain expensive condition, such as rheumatoid arthritis. Then, they could use the Medicare drug benefit for help dealing with their other illnesses.

"This is excellent news for the many people with Medicare who have relied on these valuable patient assistance programs," HHS Secretary Mike Leavitt said.

The patient assistance programs generally help people whose income is less than 200 percent of poverty. Medicare's low-income subsidy extends only to those with incomes below 150 percent of poverty. So, many beneficiaries face the prospect of paying for something that they had been getting for free.

Just how many seniors and disabled beneficiaries rely on patient assistance programs is unclear. However, the trade association for drug manufacturers said Tuesday that its members provided 35 million free prescriptions last year worth an estimated $5.1 billion.

About a quarter of those people getting the free prescriptions are senior citizens, estimated Ken Johnson, senior vice president for the Pharmaceutical Research and Manufacturers of America.

Johnson said the inspector general's opinion, while effective only for the company that asked for it, would provide guidance to other companies.

"We have sent a copy of the opinion to our members and undoubtedly they are reviewing it and comparing it to their own programs," Johnson said.

Rollin Thoren of L'Anse, Mich., is an example of a Medicare beneficiary who could potentially be helped through continuation of the patient assistance programs. Last year, his wife received free medicine worth more than $19,000 from the Novartis program.

He was told he could no longer get that free medicine now that he could get coverage through Medicare. So they enrolled in the program.

"Please try to throw out this monstrosity," he wrote to his congressman. "The country can't afford it and we certainly can not."

http://oig.hhs.gov/