Patient Access Network Foundation: A New Drug, a New Fund the Next Day

In the Patient Access Network Foundation settlement, the foundation agreed to pay $4 million to resolve False Claims Act allegations of Medicare copay kickbacks through funds designed around donors’ drugs. The government’s account reaches into the work of running a foundation: a manufacturer’s request, a new eligibility category and assistance flowing almost entirely to patients taking that manufacturer’s product. For someone who helped create or administer those funds, the important decisions happened before a patient applied.

The Department of Justice announced the civil settlement on October 25, 2019. It alleged that Bayer, Astellas, Dendreon and Amgen used PANF as a conduit for copay kickbacks from 2011 through 2014. The government based the settlement amount on the foundation’s ability to pay.

The manufacturers faced larger bills: in separate copay settlements announced that April, Astellas agreed to pay $100 million and Amgen $24.75 million.

This pharmaceutical fraud case turns on who decided what a charitable fund would cover. The alleged result was assistance that followed the donor’s product even when competing treatments existed. Medicare and its taxpayers paid for prescriptions, while patients taking competing drugs could fall outside the donor’s chosen fund.

How Do Pharmaceutical Kickbacks Work?

Pharmaceutical kickbacks can work through a charity that pays Medicare patients’ share of a manufacturer’s drug bill. In the PANF case, the government alleged that manufacturers used copay assistance funds to support purchases of their own drugs while minimizing assistance for competing products.

Medicare Part B and Part D patients may owe a copayment, coinsurance or a deductible for a covered drug. The Justice Department explains that Congress included this cost sharing partly to put a check on health care costs, including drug prices. The Anti-Kickback Statute prohibits manufacturers from paying patients, directly or indirectly, to induce purchases of drugs covered by Medicare.

The commercial incentive is straightforward. Relieving the patient’s share can keep a prescription moving while Medicare pays its share. Removing the copayment removes a market constraint on the manufacturer’s price. Assistance addresses the patient’s immediate bill while preserving the manufacturer’s revenue.

The USC Schaeffer Center’s 2020 paper, The Association Between Drug Rebates and List Prices, adds another reason that bill matters. Its analysis of branded drugs from 2015 through 2018 found that increases in rebates were associated with increases in list prices, with a stronger relationship for drugs without generic competition. The paper explains that patients whose deductibles or coinsurance depend on list prices remain exposed to those prices. A discount elsewhere in the distribution system can leave the patient needing help at the counter.

PANF’s Broad Funds Came Before the Subfunds

According to the government’s account, the foundation already had funds that covered competing treatments before it created the narrower prostate-cancer subfunds. A prostate-cancer fund covered copays for any drug treating that disease.

A second fund covered metastatic castration-resistant prostate cancer. The government’s account lists Xofigo, Xtandi and Provenge among the drugs the mCRPC fund covered, alongside competing products. The later subfunds narrowed assistance within that treatment area.

According to the government, Bayer, Astellas and Dendreon worked with the foundation to create smaller funds that primarily, and sometimes exclusively, covered the drug of the company financing each fund. That is the central disease-specific fund allegation: the eligibility category selected the donor’s patients before the foundation assessed an individual application.

The public name could describe a treatment class. Inside the foundation, the practical question was which medicines fit that class and which patients would therefore receive the donor’s money. PANF’s fund sequence makes the difference concrete.

RIT Opened One Day After Xofigo’s Approval

According to the government, the foundation opened its RIT fund one day after the FDA approved Bayer’s Xofigo. The allegation connects that timing to a category that distinguished Xofigo from the other major drugs treating the same disease.

Xofigo is a radioactive therapeutic agent. The FDA approved it to treat mCRPC on May 15, 2013. The government alleged that Bayer had already approached the foundation about covering only radioactive drugs for that condition. None of the other major mCRPC treatments was radioactive, according to its account.

The government’s account says the foundation opened the radioisotope-treatment fund on May 16, with Bayer alone financing it. Xofigo patients received nearly all the money it disbursed.

The category did the selecting. A patient could have the same cancer and take a competing drug, yet fall outside this new fund because the drug was not radioactive. The manufacturer’s request, the treatment restriction and the distribution of assistance explain why the opening mattered. Taken together, they describe a fund built to follow a product as it reached the market.

Other Fund Categories Followed the Donor’s Drug

The government’s account describes the same narrowing through different eligibility rules. Astellas sought a drug-class fund, Dendreon sought an immunotherapy fund, and Amgen had already worked with PANF on a separate fund for Sensipar.

Astellas’s ARI Fund Favored Xtandi

The government alleged that Astellas contacted the foundation after learning about the RIT fund and sought a fund covering only androgen receptor inhibitors for mCRPC. Xtandi was an androgen receptor inhibitor. The government’s account says Astellas alone financed the ARI fund and that Xtandi patients received the great majority of its disbursements.

Here, the narrower definition was a drug class within the disease. The allegation again connects the company’s request to a fund it alone financed and to assistance concentrated on its own drug. A foundation employee reviewing those steps would see how the coverage rule carried the donor’s preference into awards of assistance.

Dendreon’s GU Fund Favored Provenge

The government alleged that Dendreon and the foundation discussed an immunotherapy-only fund after RIT opened. Its account describes the resulting GU fund as financed entirely by Dendreon, with nearly all its disbursements reaching Provenge patients.

Provenge already fell within the broader mCRPC fund described by the government. The new category put assistance for immunotherapy into a fund supported by the manufacturer of that immunotherapy.

Amgen’s SHPT Fund Covered Only Sensipar

The government’s account places the Sensipar arrangement earlier, in 2011, when Amgen approached the foundation about a fund for secondary hyperparathyroidism. Although the FDA had approved other drugs for the condition, the government alleged that the foundation and Amgen worked out coverage parameters that would cover only Sensipar.

The government alleged that Amgen alone financed the SHPT fund and that Sensipar patients received all its disbursements until June 2014.

This example puts the alleged design decision plainly: other approved drugs existed, but the foundation and the donor set coverage around one product. The disease name was broader than the assistance available through the fund.

What Independence Was Supposed to Mean

In its 2005 patient-assistance guidance, the Office of Inspector General at the Department of Health and Human Services called for separation between a manufacturer’s donation and the charity’s decisions about whom to help. Healthcare charities were to award aid based on financial need, without donor control or regard to the patient’s choice of product.

The guidance also addressed information going back to the donor. A manufacturer was not to receive data allowing it to connect the amount or frequency of its donations with subsidized prescriptions for its drugs. A narrowly drawn disease category could effectively reserve assistance for a donor’s product.

The 2014 supplement addressed the limits of a charity’s favorable advisory opinion. The charity’s opinion did not protect a donor’s separate effort to match funding with support for its own products.

The foundation’s settlement included a three-year Integrity Agreement with the Inspector General’s office. It required measures to support independence and lawful dealings with pharmaceutical donors, board compliance certifications and detailed independent reviews. The obligations reached the relationship at the center of the allegations: who controlled the funds.

What the Donor Learned About the Patients

Product-level reports can show a donor where its money went. In the same announcement, Chronic Disease Fund, also known as Good Days, agreed to pay $2 million. The department described a separate reporting allegation against that foundation. Dendreon allegedly received counts of patients taking Provenge and competing drugs, along with average assistance amounts. That information let it confirm that its donations primarily supported Provenge copays.

PANF’s fund-design allegations and that separate reporting allegation expose different decisions inside a foundation. One concerns who qualifies for assistance. The other concerns what the donor learns afterward.

A specialty pharmacy can carry that information between the parties. In Pfizer’s separate May 2018 settlement, the government alleged that Pfizer used a specialty pharmacy to move patients to a foundation, then received confirmation through the pharmacy that the foundation had paid their copays. The company could learn the result of its funding through an intermediary.

The whistleblower’s complaint against Incyte described a similar feedback channel. It alleged that Incyte moved some Medicare patients who might have qualified for free Jakafi to foundations whose copay payments generated Medicare claims:

The government’s amended complaint against Regeneron describes the calculation on the donor’s side. Employees allegedly asked Chronic Disease Fund how much it needed for Eylea patients alone, estimated the Medicare revenue and calculated an expected return of over 400% on the payments. Regeneron then allegedly paid exactly what the foundation said it needed for those patients.

These parallels make the information valuable to an insider. A donation request can describe charitable need while a product report shows the commercial return the donor expects.

The Decisions an Insider Can Explain

For foundation staff, the PANF allegations point to the work behind a new fund: who requested it, how its coverage criteria changed, who financed it and which patients received assistance. The person administering applications may see the effect of a restriction that looks unremarkable in a funding proposal.

Manufacturer market-access and patient-support employees may know why the company wanted that category and what information came back. Pharmacy and hub staff may see the movement from a patient needing help to an approved copay payment. In other cases, coordinated application timing has connected the donor’s payment to the patients who secured assistance when a fund reopened.

We work with pharmaceutical whistleblowers to connect those business decisions to the prescriptions and government payments they supported. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Saw How the Fund Was Built

If you saw a donor’s request become a coverage rule, or assistance reports return to the company selling the drug, speak to one of our whistleblower experts about how that fund was built. We build your strongest pharmaceutical whistleblower case with you and bring in pharmaceutical kickback whistleblower lawyers who understand foundation funding, patient support and Medicare claims. You bring the view from inside the arrangement, and we stay alongside you as your partners throughout the case.