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May 27, 2016

Drug Firms Subpoenaed in Review of Ties to Co-Pay Charities

Three pharmaceutical companies have been subpoenaed as part of a widening federal investigation of the industry’s relationship with nonprofits that help patients pay for costly lifesaving medications, Bloomberg reports. In federal filings in recent weeks, Biogen, Jazz Pharmaceuticals, and Gilead Sciences said they have received demands for documents related to their ties with so-called “co-pay” charities.

The charities, which are funded almost entirely by drug companies, help people cover insurance and Medicare co-payments for expensive treatments. Bloomberg Businessweek magazine reported earlier this month on questions over whether the industry donations served as public-relations cover for massive price increases on specific drugs and prevented patients from seeking less costly alternatives.

Pharmaceutical companies are barred from giving money directly to help people on Medicare buy particular drugs, but they are permitted to donate to independent charities that offer co-pay assistance. If a charity supported a donor firm’s drug over another treatment for the same condition, it could violate Medicare’s anti-kickback rules, according to Bloomberg.