Patient Services Inc.: Donor Control and Off-Label Referrals

The Patient Services Inc. copay settlement required the foundation to pay $3 million to resolve allegations that it served as a channel for drug manufacturers to pay Medicare patients’ copays. The amount reflected what the foundation could afford after a financial review.

The Department of Justice announced the settlement on January 21, 2020. This pharmaceutical fraud case concerned a foundation based in Midlothian, Virginia, and its connections with Insys, Aegerion and Alexion. Patient Services also entered a three-year Integrity Agreement with the Department of Health and Human Services’ Office of Inspector General.

What the Patient Services Inc. Copay Settlement Was About

Patient Services’ alleged role was to move manufacturers’ money into assistance for Medicare patients taking their drugs. In copay charity kickback arrangements, the manufacturer finances the patient’s share through a foundation, allowing the prescription to generate a government payment for the rest. The foundation sits between the donation and the drug sale.

A manufacturer benefits when assistance makes its prescription payable. The government’s case turns on the donor’s influence over the assistance and its connection to sales of the donor’s drugs.

The industry’s prices help explain the pressure. The USC Schaeffer Center’s 2020 paper, The Association Between Drug Rebates and List Prices, found that increases in rebates were associated with increases in list prices. It also explains that insured patients whose deductibles or coinsurance depend on list prices remain exposed to those prices. A manufacturer-funded copay fund can cover that patient’s share while preserving the drugmaker’s sale.

The allegations against Patient Services follow the decisions behind that support: who could qualify, whose drug the fund supported and what the manufacturer learned about the patients receiving help.

Insys and the Breakthrough Cancer Pain Fund

Insys sold Subsys, a sublingual form of fentanyl approved for breakthrough cancer pain in opioid-tolerant patients. The government alleged that Patient Services worked with Insys to create the Breakthrough Cancer Pain fund, with Insys as its only donor, and let Insys see the status of each patient it referred, including whether the patient had received copay assistance and how much. According to the government, the foundation knew that Insys was referring patients who did not have cancer. Its stated willingness to prevent off-label use depended on whether the donor wanted that restriction enforced.

The diagnosis in the fund’s name and the diagnosis of the patients being referred had come apart. The charity’s stated response depended on the company financing the fund.

For someone inside patient services, the important records would connect those facts. What diagnosis accompanied the referral? Who at the foundation recognized the mismatch? What did the donor say, and how did the foundation respond? A fund description shows the public-facing eligibility category. The referral and the response show how the people running it treated an actual patient.

We examine how referrals, prescriptions and information sent to the payer connect when assessing off-label conduct and the resulting payment claims.

Aegerion and Patients Who Would Have Received Free Drug

Aegerion allegedly used Patient Services to cover Juxtapid copays for patients who otherwise would have received free medicine. Juxtapid was approved to treat high cholesterol in patients with homozygous familial hypercholesterolemia, a rare genetic disease. In the Patient Services settlement, the government alleged that the foundation created a fund for that disease in 2013 at Aegerion’s request, let Aegerion take part in setting the eligibility criteria it used to cover Juxtapid patients’ copays, and that the fund allowed Aegerion to pay Medicare patients’ copays to eliminate any price sensitivity among the physicians prescribing Juxtapid and the patients taking it.

The Justice Department’s Aegerion civil settlement announcement alleged that Aegerion funneled funds through the foundation to cover patients’ copayment obligations in violation of the Anti-Kickback Statute. The announcement described Patient Services as promoting its ability to create a “reimbursement vehicle” for Aegerion from patients who otherwise would have received free drug.

Those words explain the attraction to the manufacturer. Providing free medicine generates no drug-sale revenue. Paying a patient’s copay through a foundation can turn the prescription into a paid claim. In the alleged arrangement, Medicare and the taxpayers behind it picked up the bill for medicine the manufacturer otherwise would have supplied for free.

The government also alleged that Aegerion employees altered or falsified statements of medical necessity and prior authorizations submitted to federal health care programs.

A separate whistleblower complaint against Incyte described the same financial incentive in unusually direct terms:

The parallel is the change in who pays for the drug. That complaint alleged that moving patients from free medicine to foundation assistance generated Medicare claims. The Aegerion announcement put the foundation’s advertised reimbursement role at the same junction.

Alexion and the Information Coming Back

Alexion’s alleged arrangement connected assistance for Soliris patients with information confirming which patients had been approved. In the government’s account of the Alexion settlement, the company allegedly told the foundation that it wanted support for patients with the fund’s diagnoses to be tied to Soliris therapy. The alleged arrangement used a referral portal to report back to Alexion confirming approved Soliris patients. In the Patient Services settlement, the government alleged that Alexion approached the foundation in January 2010 to request the fund, and that, except in rare instances, the foundation paid assistance from its Complement Mediated Diseases fund only if a patient was taking Soliris.

The information matters as much as the contribution. A manufacturer that learns which of its patients received assistance can see how the fund supports its product. The Inspector General’s independence guidance addresses that connection between donations and subsidized prescriptions.

This part of the Patient Services story concerns both the fund’s product focus and the information returned to the donor. An eligibility rule explains which patients can enter. An approval report explains what the manufacturer can learn afterward. Together they make the relationship visible to people working on opposite sides of the donation.

Why Donor Control and Patient Data Matter

Independence has to extend to eligibility, financial need and the information returned to a manufacturer. The Inspector General’s November 2005 patient-assistance bulletin describes assistance awarded without manufacturer control or regard to the donor’s interests and the patient’s choice of product. It calls for a reasonable, verifiable and uniform measure of financial need, applied consistently.

The same bulletin addresses data that would let a manufacturer correlate the amount or frequency of its donations with subsidized prescriptions for its own products. The donor’s view into the fund is part of the arrangement, just as its influence over the eligibility rules is.

The agency also warned about disease funds narrowed around a manufacturer’s product, including categories defined by symptoms or methods of administering drugs. That concern appeared in the separate Chronic Disease Fund case. The government alleged that the foundation opened a fund at Novartis’s request, financed solely by Novartis, that covered Afinitor copays while excluding Sutent, another approved treatment for the disease.

That comparison sharpens what is distinctive about the government’s Insys allegation against Patient Services. The Chronic Disease Fund allegation concerned a fund designed to favor one drug. The Patient Services allegation concerned referrals outside the disease in the fund’s name and the foundation’s stated willingness to let the donor determine the response. Both put the manufacturer’s preferences inside the foundation’s decisions.

What Evidence Is Needed to Prove Fraud?

The useful evidence connects manufacturer funding, the foundation’s assistance decisions and information sharing, and the resulting drug claims. It also shows who understood those connections. Our assessment of healthcare fraud follows those decisions across the manufacturer and the foundation.

A donation ledger may show what the company contributed. Communications about the fund can explain what it expected the money to accomplish. The Insys allegation makes the response to an eligibility mismatch especially relevant. The Aegerion allegations make the choice between free drug and reimbursed prescriptions relevant. The Alexion allegations make the information returned through a referral portal relevant.

Someone working in foundation operations may understand the referral fields, eligibility decisions and reports sent to a donor. Someone in manufacturer patient access may know why patients were directed to assistance and how those approvals affected reimbursement. A compliance employee may have seen the discussion that connected a donor’s request with a change in practice. Those are different views of the same transaction, and we work with insiders to establish how they fit.

For pharmaceutical whistleblowers, the value lies in explaining the decision behind the paperwork: how a noncancer referral was handled, why assistance replaced free medicine, or why the donor received product-specific results. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Who Made the Assistance Decision

If you handled referrals, fund rules or donor reports and saw a manufacturer’s wishes determine who received help, speak to one of our whistleblower experts about how that decision was made. We build your strongest case with you around the funding, the assistance and the government claims, and bring in pharmaceutical kickback whistleblower lawyers who understand foundation arrangements. We remain your partners through the pursuit of the case.