Charity As A Form Of Kickback

Pharmaceutical prices are way too high:

As drug prices have soared in recent years and insurers have increased co-payments, a new type of charity has blossomed to fill a vital niche — helping patients pay the steep out-of-pocket costs for their medicines.

But the largest of these co-payment assistance charities, the Chronic Disease Fund, is now in turmoil after questions have arisen about its relationship with a pharmaceutical company that is itself under investigation for its marketing practices.

The practice is casting light on what has long been an open secret: The bulk of the contributions to these charities come from the pharmaceutical companies. The foundations not only help hundreds of thousands of patients a year, they also raise drug company sales and profits.

After all, if a patient cannot afford out-of-pocket costs of $5,000 for a $100,000-a-year drug, the drug company gets nothing. But if the manufacturer or the charity pays the $5,000, the patient gets the drug and the company receives $95,000 from the patient’s insurance company or Medicare.

...Critics say co-pay assistance helps keep drug prices high and circumvents efforts by insurers to control drug spending by making consumers bear part of the cost.

“These subsidies are unfortunately used to promote the overutilization of expensive brand-name drugs,” said Wells Wilkinson, a lawyer at Community Catalyst, a consumer advocacy organization.

The charities counter that any benefit to the drug companies is secondary to helping patients.

“Look at the alternative,” said Dana Kuhn, founder and president of Patient Services, one of the charities. “If they didn’t donate their dollars, people would die.”

Drug companies often directly subsidize the co-payments for privately insured patients. But they cannot do so for patients covered by federal programs like Medicare’s Part D drug benefit, because that would be considered a kickback, an illegal inducement to use a drug.