Given the lofty price of many drugs these days, one would assume that the so-called patient assistance programs for drugs would be beyond reproach. These programs offer drugs at reduced prices to patients with lower incomes. However, a recent article discusses how such program may actually serve to keep drug prices artificially high (see: Lifesavers or kickbacks? Critics say patient-assistance programs help keep drug prices high). Below is an excerpt from the article:
[P]atient-assistance programs, which often are funded largely by drug makers have helped many Americans...afford the medications they need. But these programs' ties to pharmaceutical companies carry a high cost for the healthcare system, critics say....Critics say patient-assistance programs help manufacturers keep prices high and demand for their branded products strong, and discourage patients and doctors from switching to cheaper alternative medications. Even though some drug makers have publicly disclosed their contributions to these programs—many of which purport to be independent charities—information about contributors remains incomplete....While some drugmakers have publicly disclosed their contributions to these programs, information about contributors remains incomplete, making it hard to figure out how much influence the donors have.
The federal government has raised questions about whether some independent patient-assistance programs funded by drugmakers constitute illegal kickback schemes. And some researchers have urged that drugmakers contributions to these programs be disclosed through the CMS' Open Payments website established by the Physician Payments Sunshine Act. Health insurers also aren't happy about these assistance programs, including coupons offered by drugmakers to help patients afford their drug copays. Insurers say the programs drive up overall drug costs and therefore increase premiums....PAN [Patient Assistance Network Foundation], which is independent but almost entirely funded by pharmaceutical companies, has provided more than $700 million in assistance to more than 360,000 patients since 2004 to help them afford their out-of-pocket healthcare costs, according to the foundation.
So how does providing financial assistance to patients to purchase drugs keep drug prices high? Here are some possible explanations of this theory:
- The drug companies can deflect criticism of their high prices by saying that assistance is being provided to those patient who can't afford them.
- Offsetting the cost of some very expensive drugs serves as an incentive for patients, and their prescribing doctors, to continue to use them rather than searching for less expensive but equivalent drugs.
- Given that the drug companies seems to be underwriting these patient-assistance programs, the cost of them needs to be made up in some way by the companies, thus contributing to the overall high price for drugs.
I don't know much about the definition of a kickback under the law and whether it applies to the end-users of some good. To me, these patient assistance programs seem to fall into such a category. Moreover, one needs to pose a very key question here. The patient assistance at first glance seem philanthropic. If this is the case, why would drug companies try to hide their financial support for them. A logical conclusion might be, firstly, that they have actually been designed by the pharma companies to maintain the high prices of drugs, the strategy referred to in the bulleted list above. A second reason is that the companies are nervous about whether they are legal. Unfortunately, Congress does not seem predisposed to take any action about high drug prices regardless of the underlying cause.