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U.S. is discouraging free drugs for seniors
By Susan Jaffe
Plain Dealer Reporter, November 8,2005
Drug companies that provided Americans with free medicine worth $4.1 billion in 2004 will be less generous to seniors in 2006, when Medicare begins paying for their drugs.
That's because a federal anti-kickback law prohibits companies from offering incentives-such as free or discounted products-to persuade seniors to use their drugs, according a special advisory issued Monday by the Department of Health and Human Services' inspector general.
The inspector general looked into the issue after drug companies expressed concern that their drug giveaway would not be counted as part of a Medicare drug plan participants' out -of-pocket expenses.
A lawyer for the drug industry said earlier this year that the companies were trying to persuade the government to allow them to defray these expenses. The discussion included how to determine the dollar value of the donated drugs.
Medicare drug benefit estimated to cost $724 billion over 10 years. In the typical Medicare plan, coverage stops when the member and the plan have spent $2,250 on drugs, excluding any deductibles. Coverage resumes after the member spends $2,850 more for drugs.
The drug companies wanted the value of there free of nearly free medicine to be included in that $2,850, as a charitable donation. Members are allowed to accept charitable donations in reaching the $2,850 threshold.
Once coverage restarts, Medicare will pay 95 percent of the drug bills.
The inspector general's advisory said that Medicare plan members can get credit for charitable donations, but not from drug makers because the companies cannot influence the members' choice of medicine.
If company officials violate the anti-kickback law, they could face fines of up to $25,000, fiver years in jail, or both.
Some 150 companies offer hundreds of free or very low-cost drugs through their patient-assistance programs.
Lawyers for the Pharmaceutical Research and Manufacturers of America are reviewing the government warning, said Ken Johnson, a spokesperson for the industry group.
"It doesn't look too promising," he said.
"It clearly doesn't take into account that our only interest is to provide free or nearly free medicine to people who cannot afford them today."
The advisory says companies can donate medicine to a charitable foundation or other independent organization that would not limit or direct the patient to a particular drug.
A spokeswoman for AstraZeneca, makers of the popular stomach acid medication Nexium, said the company would no longer offer its patient-assistance program to people eligible for Medicare.
Bristol-Myers Squibb will not allow Medicare drug plan members in its patient-assistance program, and Eli Lilly is ending it program next May, according to the New York Times. Johnson & Johnson will accept Medicare drug plan members only if they have been rejected for the plan's financial assistance.
A spokesperson for Merck, which produces the cholesterol-lowering drug Zocor, said seniors should consider enrolling in a Medicare drug plan.
But if they do not, they can still participate in Merck's program if they meet the income requirements.
Other drug makers said they were still reviewing the government's advisor