Whistleblowers Play Key Role in Identifying Fraudulent Patient Assistance Programs

Are you one of the many physicians, caregivers, therapists and patients attending this week’s Patient Assistance Programs conference in Baltimore, Maryland? If so, then please be aware that some of these programs may, in fact, be defrauding federal health insurance programs.

Continuing an investigation launched last year, the Qui Tam lawyers at Baron & Budd have been dedicating significant resources from their whistleblower practice to the investigation of fraudulent kickbacks paid through Medicare and Medicaid to so-called Patient Assistance Programs (PAPs) for “specialty drugs.” While PAPs were ostensibly created for the purpose of providing patients with access to expensive therapies used to treat rare diseases, they are now frequently being used instead to circumvent insurance program cost controls.

A 2016 study of IRS data found that charitable expenditures by the 10 leading manufacturer PAPs rose from $376 million in 2001 to $6.1 billion in 2014, and contributions by five independent charity PAPs increased from $2 million to $868 million during the period. Not surprisingly, the percentage of Medicare and Medicaid spending on specialty drugs has risen in tandem, from 19 percent of total pharmaceutical spending in 2004 to a full one-third in 2015. At the current rate, spending on specialty drugs in public insurance programs will likely reach 50 percent within the next decade.

The provision of copayment assistance to Medicare and Medicaid beneficiaries is subject to the federal Anti-Kickback Statute (AKS), which makes it a criminal offense to knowingly and willfully offer, pay, solicit or receive any remuneration to induce or reward referrals of items or services. The law defines “remuneration” as the transfer of anything of value, directly or indirectly, overtly or covertly, in cash or in kind.

By covering co-pay costs for expensive drugs, PAPs potentially remove the incentive for doctors to try equally effective, but less costly treatments first before considering the most expensive options. Under the guise of a charitable organization, a pharmaceutical company can steer doctors toward prescribing drugs that are wildly expensive and often no more effective than much cheaper alternatives. This practice potentially violates the AKS and, puts the sustainability of public insurance programs at risk.

Health care providers are on the front lines of fraud prevention and should be on the lookout for offers that seem too good to be true. The conference will convene more than 450 representatives from drug manufacturers, copay foundations, non-profits, advocacy organizations and hospitals, according to its brochure. You might not be able to tell at first glance if the vendor in front of you is genuine or if it is a front for a major pharmaceutical conglomerate trying to steer you to an expensive drug that is no better than medicine readily available at lower cost. Be discerning. Use your intuition.

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 contact the Qui Tam lawyers at Baron & Budd or call us at 866-401-5971 if you would like more information.

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