Life Science Compliance Update

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June 07, 2016

Jazz Pharmaceuticals Discloses DOJ Subpoena on Patient Assistance Program

Jazz Pharmaceuticals recently revealed, in a filing with the Securities and Exchange Commission, that it received a documents subpoena from the United States Attorney's Office for the District of Massachusetts. The subpoena requested documents related to Jazz' support of 501(c)(3) organizations that provide financial assistance to Medicare patients.

Jazz also received requests about documentation about the provision of financial assistance to Medicare patients who receive the prescription Xyrem, a narcolepsy drug and Jazz' top-selling product.

The patient assistance programs at issue in Jazz' case involved a free product voucher program for Xyrem and copayment coupon programs for Xyrem and other products. Jazz also makes grants to independent charitable foundations that help financially needy patients with their premium, copayment, and coinsurance obligations.

Jazz Isn't the Only Company to Face Subpoenas

In 2015, Valeant Pharmaceuticals International, Inc., received similar subpoenas from the U.S. Attorney's offices in Massachusetts and Southern District of New York, seeking information on its patient assistance programs, drug distribution, and pricing decisions.

Other industry companies that have received recent subpoenas include: Merck & Co., Johnson & Johnson, and Endo International. Those government subpoenas sought information on a different topic, however: their contracts with pharmacy benefit managers related to specific drugs. These subpoenas came from the U.S. Attorney's Office for the Southern District of New York.

Health and Human Services Office of the Inspector General Guidance

For companies who value providing patient assistance, the Health and Human Services (HHS) Office of the Inspector General (OIG) recently modified an existing advisory opinion, originally published in 2006, on manufacturer grants to independent charitable foundations that provide financial assistance to patients in need. The OIG has also issued recent opinions on how the government views such programs.

What Does This Mean?

This recent subpoena for Jazz is the latest sign of the government's increasing interest in drug pricing, including scrutiny of drug companies' financial assistance programs. Patient assistance programs, which help Medicare patients pay for their drugs, have been criticized by some for steering patients to use the more expensive, brand-name products, instead of less costly generics or other alternatives. We encourage companies to review HHS OIG guidance on the topic before drafting their own plan to provide patient assistance.

In the disclosure document, Jazz noted its intention to cooperate with the subpoena.

What's Next?

It is possible that the issue of patient assistance programs will be the next "big thing" that the media focuses on when it comes to pharmaceutical companies. Foreshadowing that idea is Bloomberg Businessweek. A few weeks back, the magazine had a cover story, "Big Pharma is Here to Help."

The story opened with the story of Martin Shkreli and Daraprim, as many anti-pharma critics are wont to do. The story then went on to discuss Patient Services, Inc. (PSI), a charity that helps people meet insurance copayments on costly prescriptions. Turing and PSI supposedly got together to make Daraprim more affordable, right after Shkreli decided to raise the price of Daraprim by more than 5000%.

The article continues, expounding upon PSI, other patient assistance programs, and Turing (and Valeant, too), and the way they work together to raise drug prices while "getting rich" off of patients and Medicare beneficiaries.

The article did eventually, however, recognize that patient assistance programs are not all bad. The authors spoke with Daniel Klein, chief executive officer of PAN Foundation, who stated that his organization has nothing to do with the pricing of drugs, and that industry does not coordinate with patient assistance programs to take advantage of the consumer. "We are unaware of any data demonstrating that the help provided by charitable patient assistance organizations such as PAN has any impact on drug prices." According to the authors of the article, the "heads of several other copay charities also stressed their independence from donors."

It will be interesting to see if other news outlets begin to run with this idea, or if Bloomberg will be the only one. In any event, it serves as a wakeup call to review your current policies and ensure you are in full compliance with federal and state regulations.


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