August 18, 2020

Pharmacies Not Immune From Enforcement Action for Role in Patient Assistance Programs

Holland & Knight Healthcare Blog
Jeremy M. Sternberg | Jeffrey W. Mittleman | Andrew I. Namkung
Healthcare Blog

A recent U.S. Department of Justice (DOJ) settlement should serve as a reminder that pharmaceutical manufacturers are not the only entity in the drug supply chain that are susceptible to enforcement actions with respect to patient assistance programs and charitable assistance foundations. Specifically, the government's civil settlement with Advanced Care Scripts Inc. (ACS), a specialty pharmacy, announced on Aug. 13, 2020, highlights the risks to specialty pharmacies in direct interactions with co-pay assistance foundations.

In particular, the settlement (in which ACS agrees to pay $3.5 million) details some of the government's allegation regarding ACS' role in causing false claims to be submitted to the government by facilitating kickbacks to Medicare beneficiaries for their copays for the expensive multiple sclerosis drug Copaxone. More specifically, the settlement agreement, which required ACS to "acknowledge" the facts set forth in it, describes the following actions by ACS with respect to its relationship with the manufacturer of Copaxone and two co-pay assistance foundations that supported it:

  • ACS maintained data on the number of Copaxone patients it helped obtain Medicare Part D coverage and/or foundation co-pay coverage, and ACS shared that data with the manufacturer and knew that the manufacturer used the data to correlate its payments to the foundations.
  • When the foundations lacked funding, ACS provided updates to the manufacturer on the number of Medicare Part D patients serviced by ACS who had prescriptions for Copaxone, met the criteria for foundation coverage and were awaiting foundation co-pay coverage, ACS understood that the manufacturer would use this information to determine its next payment to the foundations.
  • Once ACS learned that the foundations were funded, ACS sent the foundation Copaxone patients' applications for co-pay coverage, most or all of which were approved.

The DOJ settlement provides a clear roadmap of interactions by specialty pharmacies with manufacturers and copay assistance foundations that the government finds to be illegal. For obvious reasons, specialty pharmacies, particularly those that dispense high cost medicines, may be in a position to interact with copay foundations or be a liaison between copay foundations and manufacturers.

The government has historically been wary of relationships between pharmaceutical manufacturers and patient assistance programs, particularly where there is an exchange of information and data that allows the manufacturer to correlate the amount or frequency of its donations with the value or volume of the manufacturer's products supported by the assistance program, and pharmacies are uniquely positioned to become entangled in these highly scrutinized relationships.1 Indeed, the government described ASC's role as "enabl[ing]" and "a [willing] pawn in the kickback scheme." In light of the ACS settlement, it is important to examine these interactions and ensure that they are not implicating any of the conduct or broader concerns addressed by it.


1The government has specifically noted, at least in the direct manufacturer copay coupon context, that "pharmacies that accept manufacturer coupons for copayments owed by Federal health care program beneficiaries also may be subject to sanctions under the anti-kickback statute, the beneficiary inducement CMP, and the False Claims Act." Special Advisory Bulletin: Pharmaceutical Manufacturer Copayment Coupons, Office of Inspector General (Sept. 2014).

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