Baron & Budd Investigating Medicare and Medicaid Fraud in Patient Assistance Programs for Specialty Drugs

Whistleblowers play key role highlighting fraudulent charities that target public insurance programs

September 24, 2018 WASHINGTON — Today, the national law firm Baron & Budd announced that it is dedicating significant resources from its whistleblower practice to the investigation of Medicare and Medicaid fraudulent kickbacks paid through so-called Patient Assistance Programs (PAPs) in order to induce the purchase and use of specialty drugs. Accounting for 19 percent of total drug spending in 2004, specialty drugs have grown to one-third of government’s drug spend in 2015 and are expected to reach 50 percent in the next 10 years, making them a prime target for drug company fraud schemes.

Specialty drugs are medications classified as high cost, high complexity, high touch, and/or requiring special handling or distribution. Used to treat complex or rare chronic conditions, they are purchased through a specialty pharmacy and often administrated as an injection or in an infusion by a physician or infusion clinic. Included in this category are biologics (drugs derived from living cells) and so-called “orphan drugs,” which were developed specifically to treat rare medical conditions. The cost per patient for many such specialty drugs can run into hundreds of thousands of dollars per year. Many patients taking these drugs are covered under public insurance programs such as Medicare or Medicaid.

Set up as charities with funds received from drug makers, PAPs are typically focused on a particular disease and are frequently used to help low-income patients cover the out-of-pocket cost of expensive specialty drugs. While drug makers are permitted to contribute financial assistance and products to such organizations, the Department of Health and Human Services has provided compliance guidance intended to ensure that drug makers do not exert control over which doctors or patients receive the financial support or how it is used.

“Public health insurance programs like Medicare and Medicaid have guidelines and regulations to ensure that a particular treatment meets specific criteria before insurance will approve a medication benefit,” says Baron & Budd Shareholder Scott Simmer, who heads the firm’s whistleblower practice. “While these programs evaluate the efficacy of all available treatments, they also encourage physicians and patients to try equally effective, but less costly treatments first before considering the most expensive options. By covering co-pay costs for expensive drugs, PAPs potentially remove this important safeguard, resulting in patients receiving drugs that are wildly expensive and often no more effective than much cheaper alternatives.”

Simmer, whose team has represented numerous whistleblowers in fraud recovery actions for Medicare and Medicaid, goes on to explain why monitoring drug marketing fraud in this area is difficult. “State and federal governments have had significant success in policing fraud in the marketing of medications sold through retail pharmacies under programs like Medicaid and Medicare Part D. But specialty drugs are a ‘buy and bill’ product sold to doctors and/or infusion centers, who then bill for their treatment through programs like Medicare Part B. This creates new opportunities for fraud that potentially circumvent the government’s monitoring mechanisms. Several potential whistleblowers who have already contacted us are sickened by the idea that their employers are using a charity front for the purpose of preying on very ill patients for the sole purpose of milking public insurance programs.”

If you are aware of a PAP that is potentially defrauding public insurance programs, including Medicare or Medicaid, you may qualify to serve as a whistleblower. If the allegations you bring to light are successfully prosecuted by the federal government, you may be entitled to a monetary reward. Please call [phone=”press”] if you would like more information.


Baron & Budd, P.C. is among the largest and most accomplished plaintiffs’ law firms in the country. With more than 40-years of experience, Baron & Budd has the expertise and resources to handle complex litigation throughout the United States. As a law firm that takes pride in remaining at the forefront of litigation, Baron & Budd has spearheaded many significant cases for hundreds of entities and thousands of individuals. Since the firm was founded in 1977, Baron & Budd has achieved substantial national acclaim for its work on cutting-edge litigation, trying hundreds of cases to verdict and settling tens of thousands of cases in areas of litigation as diverse as dangerous pharmaceuticals and defective medical devices, asbestos and mesothelioma, environmental contamination, fraudulent banking practices, motor vehicles, employment, and other consumer fraud issues.

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