Disease-Specific Copay Fund Kickbacks: A Disease Name With Room for Only One Drug

Disease-specific copay fund kickbacks use charitable assistance to cover patients’ healthcare costs for a manufacturer’s own drug and generate prescriptions paid by Medicare. The disease name on the fund can conceal the commercial choice underneath it. Eligibility may follow a drug class, a particular symptom or a treatment type that leaves competing products outside. If you write fund definitions, negotiate donations or manage patient access, you may know who asked for that boundary and whose patients it was meant to admit.

The Justice Department’s account of the Chronic Disease Fund and Patient Access Network Foundation arrangements described manufacturers and charities allegedly designing funds to send assistance to patients taking the donors’ drugs. The arrangements also reduced the chance that a donation would help someone taking a competitor’s product. The patient received help with a bill. The manufacturer sought a sale paid largely by Medicare, while patients taking competing drugs could be left outside.

Disease Fund Eligibility Defined Around One Drug

Disease fund eligibility defined around one drug can make the product restriction look like a medical category. The practical question is which treatments the definition leaves out, and who chose the words that exclude them.

The Department of Health and Human Services’ Office of Inspector General warned about this design in its 2005 patient-assistance bulletin. It described disease categories drawn so narrowly that donations effectively subsidized one or very few of a donor’s products. Its examples included categories based on symptoms, symptom severity or the way a drug is administered, rather than a diagnosis or broadly recognized disease.

Androgen Receptor Inhibitor Funds Favored Xtandi

Astellas allegedly asked two foundations to open funds limited to androgen receptor inhibitors. Both opened funds limited to that drug class in July 2013, with Astellas as their sole donor. According to the government’s account, the company then promoted the funds to medical providers as an advantage for Xtandi over competing drugs.

The foundation-side account adds the reason for that choice. The government alleged that Chronic Disease Fund, which operated as Good Days, understood Astellas wanted its money earmarked for Xtandi patients. Those patients received nearly all the money the fund disbursed.

Astellas agreed to a $100 million civil settlement in April 2019. The alleged advantage reached the sales conversation: access to charitable money became another reason to prescribe the donor’s drug.

A Radioisotope Category Followed Xofigo

Bayer allegedly approached Patient Access Network Foundation about a fund covering only radioactive drugs for metastatic castrate-resistant prostate cancer before Xofigo received approval. Xofigo was a radioactive treatment. None of the other major drugs for that disease was radioactive, according to the government’s foundation account.

The FDA approved Xofigo on May 15, 2013. The foundation opened its Radioisotope Treatment of Metastatic Castrate Resistant Prostate Cancer fund the next day. The restriction followed the treatment’s physical characteristic, narrowing the assistance available within the same disease.

For someone drafting a fund definition, the exclusion is the revealing part. A patient could have the named cancer and still fall outside the category because the treatment came from a different part of the market.

Flare-Up Funds Left Other Treatments Outside

Questcor allegedly requested separate Chronic Disease Fund programs for exacerbations, or flare-ups, of multiple sclerosis, lupus and rheumatoid arthritis. The multiple sclerosis fund excluded other drugs that treated the disease while covering Acthar.

That design used a symptom boundary to favor a product. It is the kind of narrowing the earlier Inspector General bulletin had described: assistance attached to a selected feature of the illness, with other treatments for the illness left outside.

One Fund Covered Afinitor and Excluded Sutent

The government’s account also described a fund requested and financed by Novartis. It covered Afinitor but excluded Sutent, the other drug approved for the same condition.

A Fund Could Favor a Drug by Staying Out of Sight

Jazz allegedly knew that a fund supporting Prialt did not appear on the foundation’s website, reducing the number of patients taking other drugs who sought its help. A patient who never learned the fund existed could not compete for its assistance.

The Justice Department’s Jazz settlement announcement described a separate obstacle in a narcolepsy fund. Patients taking competing products had to obtain a denial letter from another assistance plan before the fund would help them. Jazz was the sole donor.

A General Fund Kept Xenazine Copays Flowing

The same announcement alleged that Lundbeck referred Xenazine patients with other conditions to a foundation’s Huntington’s Disease fund, which paid their copays for unapproved uses. When the foundation stopped, Lundbeck repurposed some earlier donations to a general fund. The disease restriction changed, but the donor found another way to pay for the same drug.

Patient Need and the Donor’s Instructions

A fund’s financial-need standard and its treatment rules show whether the charity or the donor controls assistance. The Inspector General’s guidance calls for a reasonable, verifiable and uniform measure of need, applied consistently. It also calls for awards made independently of the manufacturer’s interests and the patient’s choice of product, provider or drug plan.

The whistleblower’s complaint concerning US WorldMeds alleged the opposite. It said The Assistance Fund approved virtually every application arriving through the company, regardless of the patient’s financial condition or other circumstances, and confirmed coverage directly to company personnel. That allegation puts the referral source beside the need assessment: what mattered was whether an Apokyn patient came through the manufacturer’s channel.

Patient Services Inc. supplies a different example of donor influence. In the conduct described in its January 2020 civil settlement announcement, Patient Services Inc. acknowledged working with Insys to create a Breakthrough Cancer Pain fund with Insys as its only donor. The charity knew Insys was sending patients who did not have cancer, yet made stopping off-label use depend on whether the donor wanted it stopped.

The disease name promised one boundary. The donor’s wishes determined how that boundary operated.

Alexion’s alleged arrangement also tied assistance to a product. In the same announcement that described Jazz and Lundbeck, the government alleged that Alexion told a foundation not to support patients for reasons other than Soliris therapy. A referral portal then reported back which Soliris patients the foundation approved.

The Donation Bought a Medicare-Paid Prescription

Covering the patient’s copay can generate revenue on the rest of the prescription. In the Amgen case, the government alleged that payments to a fund covering Sensipar copays cost the company more than providing free Sensipar would have cost. The attraction was that foundation assistance generated Medicare claims and revenue for Amgen.

The distinction between a free-drug program and a copay fund is central to the economics. Moving a patient from free medicine to a foundation can turn that patient into a reimbursed sale while continuing to remove the patient’s immediate out-of-pocket cost.

The Inspector General’s 2014 manufacturer-coupon bulletin explains the price incentive. Cost sharing encourages patients and physicians to consider drug costs and alternatives. Removing that cost can also remove a market constraint on the manufacturer’s price. The Inspector General acknowledged that assistance can help patients stay on treatment when copays are unaffordable, and pointed manufacturers toward independent charities for federal-program beneficiaries.

Manufacturer coupons provide direct support for a particular medicine. Independent disease funds depend on the charity separating its assistance decisions from the donor’s product interests. The cases turn on how manufacturers and foundations allegedly connected those interests again.

Regeneron’s Calculation Followed Eylea Patients

The government’s amended complaint against Regeneron alleged that management wanted a financial return from payments to Chronic Disease Fund. It described the calculation in concrete terms:

In the government’s account, charity had become a sales investment. Product-specific information let the company connect a charitable payment to a sales return.

The same complaint alleged that Regeneron chose an Eylea launch price toward the higher end of the range it considered because it could pay more to the foundation to cover the higher Medicare copays. In that account, assistance helped support the price itself.

Incyte’s Complaint Described the Move From Free Drugs

A former Incyte compliance executive’s complaint alleged that the company moved some Jakafi patients from potential free-drug support toward foundations that paid Medicare copays. The whistleblower alleged that Incyte then received foundation data confirming that Jakafi patients’ copays had been funded.

In its separate settlement account, the government alleged that Incyte managers used calls and emails to pressure a foundation to assist ineligible patients. The company agreed to a $12.6 million civil settlement in May 2021.

Opening Time and Pharmacy Data Could Favor the Same Product

A broadly named disease fund can favor one manufacturer’s patients through the timing of applications. Advance information about funding lets an intermediary prepare the donor’s patients for the moment assistance becomes available.

Advanced Care Scripts acknowledged relaying foundation data to Teva so Teva could compare its payments with spending on Copaxone patients. When funds were closed, the pharmacy reported how many eligible Copaxone patients were waiting for assistance. Teva sometimes gave the pharmacy advance notice of its donations.

Once a fund reopened, the pharmacy promptly sent a batch file made up almost entirely of Copaxone applications. It often received confirmation that most or all had been approved. The acknowledged conduct connected the waiting patients, the donation, the reopening and the approvals.

Benefits-investigation staff and specialty pharmacies can therefore see a part of the arrangement that the fund’s public description leaves out. The application file shows whose patients were ready. The communications show who knew when to send it. Those details explain how a fund open to a broader disease population could repeatedly deliver assistance to one product’s patients.

A Copay Travel Fund Used Primarily for One Drug

Travel assistance can create the same product preference without paying the pharmacy copay. In its Amgen settlement account, the government described a fund ostensibly covering health care travel for patients taking any multiple myeloma drug. It alleged that the fund was actually used almost exclusively for patients taking Kyprolis.

The foundation-side account described Chronic Disease Fund’s travel arrangement for Onyx and said staff sometimes called it the Kyprolis Travel fund internally. The outside description covered a disease. The internal name identified a product.

The Records Behind the Fund Definition

The Inspector General’s foundation guidance addresses the information flowing back as well. It calls for manufacturers neither to seek nor receive data that would let them match the amount or timing of donations to subsidized prescriptions for their own products. Its 2014 supplemental bulletin specifically addressed donors trying to correlate funding with support for their drugs.

That makes a product-level spending report or return calculation consequential. Someone inside finance may know why a donation was approved. Someone in patient access may know which applications were waiting for it. Someone at the foundation may know why another treatment was excluded. We connect those parts with you to understand who shaped the fund and what the funding produced.

A whistleblower case under the False Claims Act can pay 15 percent to 30 percent of what the government recovers.

When You Know Who Drew the Boundary

If you know why a fund covered one treatment, excluded another or made exceptions for a donor’s patients, speak to one of our whistleblower experts. We work with you to build your strongest copay fund whistleblower case around those decisions and the government-paid prescriptions they generated. We stay beside you throughout the case and bring in pharmaceutical kickback whistleblower lawyers who know copay-fund arrangements.