Anti-Kickback Alert: Pharmaceutical Manufacturer Copayment Coupons and Medicare Part D

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Pharmaceutical manufacturers routinely offer copayment coupons to reduce or eliminate the cost of patients’ out-of-pocket payment for specific brand name drugs. On Friday, the Department of Health and Human Services’ Office of Inspector General (HHS-OIG) released a report that such coupons may run afoul of the federal anti-kickback statute if they encourage the purchase of drugs paid for by Medicare Part D.

OIG notes that approximately six to seven percent of surveyed seniors reported using manufacturer coupons toward their copayment for prescription drugs purchased through their Medicare prescription plans. “Applying these results to the population of 36 million Part D beneficiaries, the utilization of copayment coupons to obtain prescription drugs paid for by Part D could exceed 2 million beneficiaries,” states the report.

The anti-kickback statute prohibits manufacturers from giving or offering to give anything of value to someone to induce the purchase of any item or service for which payment may be made by a Federal health care program. This includes Medicare Part D.

Essentially, the government is worried that companies will offer Medicare patients the co-pay reimbursements to entice them to choose expensive brand-name drugs that the government will have to pay for, potentially instead of readily available generics.

The report states that a 2013 study from the New England Journal of Medicine found that 58 percent of coupons were for brand-name drugs where lower cost generics were available. “While copayment coupons provide an immediate financial benefit to beneficiaries, they ultimately can harm both Federal health care programs and their beneficiaries,” OIG notes.

OIG acknowledges that “copayment support may benefit beneficiaries by encouraging adherence to medication regimens, particularly when copayments are so high as to be unaffordable to many patients.” However OIG states that manufacturers should instead donate to “independent charities that provide financial support without regard for the particular medication a patient may be using.” 

Appropriate Steps to Keep Coupons Away from Medicare Part D

The Office of Inspector General, Office of Evaluation and Inspections (OEI), conducted a study analyzing what measures 30 of the top pharmaceutical manufacturers have in place to prevent their coupons from inducing the purchase of drugs paid for by Part D. The OEI Report concluded that many such measures may not actually prevent such use.

“The pharmaceutical industry is aware of the anti-kickback statute and its application to copayment coupons,” states OIG. However, they may not be doing enough to prevent copayments going to Part D drugs. According to an accompanying special advisory bulletin, “manufacturers are at risk of sanctions if they fail to take appropriate steps to ensure that their copayment coupons do not induce the purchase of Federal health care programs items or services, including but not limited to, drugs paid for by Medicare Part D.” (emphasis added)

All surveyed manufacturers noted that they provide beneficiary and pharmacist notices indicating that coupons could not be used for drugs covered by Federal health care programs. In OIG’s review of 40 coupons offered by surveyed manufacturers, they found that nearly all of the coupons had a notice printed on them, and 80 percent had a notice printed on the coupon Web site.

Seventy-five percent of manufacturers also had an eligibility question online or over the phone. For example, eligibility questions may ask patients: “Do you purchase your prescription medication through Medicare, Medicaid, or a similar Federal or State prescription drug program?” If patients indicate that they are enrolled in Federal health care programs, these manufacturers notify them that they are not eligible to access the coupon. However, OIG notes that only 3 percent had a tracking mechanism on their Web sites to prevent a patient from changing his or her answer to the eligibility question to obtain the coupon.

OIG also criticized the size and placement of the notice of eligibility on individual co-pay cards. “In some instances, notices to beneficiaries, particularly those downloaded and printed from the Internet, are on pages following the coupons and not on the coupons themselves,” OIG notes. 

Copay Picture

OIG also found the same size and placement issues for notices aimed at pharmacists. These notices may include statements such as “Pharmacist: When you use this card, you are certifying that you have not submitted and will not submit a claim for reimbursement under any Federal, State, or other Governmental programs for this prescription.” However, these “warnings” were often very small and somewhat difficult to identify. 

Additionally, 28 of the 30 manufacturers used “pharmacy claims edits” to prevent coupons from being processed for drugs covered by Part D. “However, manufacturers’ edits may not reliably prevent coupons from being processed for drugs paid for by Part D,” OIG states. “In particular, most manufacturers’ claims edits only approximate Part D coverage using proxy data that may be unreliable.” Patient data may be de-identified for privacy concerns, but this contributes to incorrect insurance information. 

OIG also finds that “a lack of coupon transparency impedes Part D plans from distinguishing coupon claims from secondary insurance claims as they are processed. Because entities other than manufacturers cannot identify coupons within pharmacy claims, Part D plans cannot implement their own edits to stop coupon claims as they are processed.”

OIG Recommendation

The OIG recommends that the Centers for Medicare and Medicaid Services (CMS) “cooperate with industry stakeholder efforts to identify a solution to prevent coupons from being used to purchase drugs paid for by Part D.”

“These mechanisms include improving the reliability of claims edits and making copayment coupons universally identifiable in pharmacy claims transactions. Such transparency with respect to coupon use would permit all Federal health care program payors not just the sponsors of Part D plans to recognize coupon transactions.”

CMS agreed with the recommendation, stating it will “work with relevant stakeholders to improve the reliability of pharmacy claims edits that facilitate verification of Part D enrollment and to explore how best to make coupons universally identifiable and transparent in pharmacy claims data.”

Despite the recommendations for CMS to engage with industry, “the offerors of coupons ultimately bear the responsibility to operate these programs in compliance with Federal law,” OIG notes. “Pharmaceutical manufacturers that offer copayment coupons may be subject to sanctions if they fail to take appropriate steps to ensure that such coupons do not induce the purchase of Federal health care program items or services, including, but not limited to, drugs paid for by Medicare Part D.”

Manufacturers that use, or are considering using, copayment coupons should review OIG’s Report to determine whether they need additional safeguards to keep the co-pay coupons far away from Medicare Part D. 


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