Major pharmaceutical companies are donating to charities that then turn around and purchase their drugs at high rates, circumventing anti-kickback laws, according to a new study in Health Affairs.
Donations from drug manufacturers to nonprofits have often been profitable, even if only a small number of patients go on to purchase their products, the researchers from Harvard, Northwestern and the University of Southern California found. By targeting charities created for specific conditions — which often have very few treatments options — drug companies effectively paid for nonprofits to drive patients straight into their arms for years.
Drug manufacturers may have profited from donating to charities that help patients pay for costly medicines, a new study found.
Federal law is supposed to prevent manufacturers from realizing financial gains when they help subsidize patients’ drug copays. https://t.co/sdNtQF2tMm
— Axios (@axios) September 7, 2022
After examining the spending of three million Medicare Advantage patients between 2010 and 2017, researchers estimated that the portion of Medicare Advantage spending that qualified for charity assistance surged from 29% to 41% during that time period. Half the drug spending for any given medical condition could be tied to a single pharmaceutical company, on average.
Among the ten most expensive medical conditions covered by Medicare Advantage, the top pharmaceutical manufacturer in the space accounted for 89% of total spending in 2017. (RELATED: Big Pharma Can’t Figure Out How To Cash In On ‘Long COVID’)
One example of a company using the scheme is Takeda. The company sells a drug to treat short-bowel syndrome called Gattex, which held 99.6% of the market for the condition as of 2017. After the Food and Drug Administration (FDA) approved Gattex, a charity was set up to help short-bowel syndrome patients pay for treatments, which Takeda then donated to. Gattex costs nearly $43,000 per month, according to GoodRx.
Federal anti-kickback laws are designed to prevent this sort of inducing of payments, but cases like Takeda’s haven’t been prosecuted. The Department of Justice has taken action in some cases of this nature, including shutting down the Caring Voices Coalition for its ties to pharmaceutical companies.