Jim Edwards or Brandweek reported that Lilly dropped its Prescription Assistance Program (PAP) for the poor as of December 31, 2006.
At least one Wall Street analyst — Merrill Lynch’s David Risinger — points out that Lilly’s bottom line is benefiting significantly from this action: “Many prescriptions were transitioned to Medicare Part D and other funding sources, which compensate Lilly at a dramatically higher level for prescriptions. Hence, Lilly is realizing a significant net price benefit in 2007 (vs. 2006) for a number of products (in particular Forteo).”
Risinger implies that Lilly had no choice but to drop its PAP due to Medicare Part D rule. While it may be true to say that Medicare Part D rules prohibit drug company PAP programs, companies can and have had their PAP programs approved by the OIG (see OIG’s Advisory Opinion here):
“PAPs operating outside of Medicare Part D that offer free or reduced-cost prescription drugs – mostly to persons with low incomes and no insurance – may still be able to offer assistance to Medicare beneficiaries, according to an advisory opinion released April 18 by the Office of the Inspector General (OIG) [OIG Advisory Opinion No. 06-03]. The opinion warns that its approval applies only to programs offered by the company that requested the opinion (Schering-Plough), and urges each individual PAP to seek an approval, rather than use this advisory opinion as guidance.
The continued existence of PAP assistance for Medicare beneficiaries was put into question recently with the strict rules governing pharmaceutical companies’ ability to contribute to beneficiary’s drug costs without violating the anti-kickback statute. That statute prohibits offering or receiving payment to increase the use of products or services (in this case, to steer prescription drug use) at the cost of federal health care programs. The latest opinion offers qualified confirmation that PAPs are permissible provided they function within certain parameters, while pointing out that that PAP drugs will not count toward an individual’s Medicare Part D true out-of-pocket (TrOOP) costs and cannot be billed to any third party, including Medicare.” [Prescription drug Patient Assistance Programs (PAPs) May Work For Some Medicare Part D enrollees]
Some pharmaceutical companies have taken advantage of OIG approval of their PAP programs, including:
Cut and Run Away From Patients in Need
It’s been tough — profit-wise — for Lilly lately. But PR-wise this can be tougher for Lilly because it demonstrates that when things get tough, the Lilly’s of this world cut and run away from patients in need to buttress their bottom lines. Shame on Lilly!