How Insurers Take Advantage of Copay Assistance Programs

By Barby Ingle, PNN Columnist 

With the prices of many medications soaring, copay assistance programs are gaining in popularity. Drug manufacturers create copay programs to help insured patients afford expensive medications by covering all or part of their deductible, copays and other out-of-pocket expenses. That can save patients hundreds or even thousands of dollars on a single prescription.

But when insurers, pharmacy benefit managers (PBMs) and employers no longer count the copay assistance toward a deductible, it can lead to unexpectedly high bills for patients, including many who are chronically or terminally ill. The patient is often shocked when they receive a bill for a medication that is significantly higher than usual.  

“When insurers and PBMs do not count the value of copay assistance toward cost-sharing requirements, patients often experience a ‘copay surprise’ at the pharmacy counter and may be forced to walk away without their needed medication because they cannot afford it,” says California Assemblymember Akilah Weber, MD, (D-La Mesa).

Weber recently introduced AB 2180 to ban these copay “accumulator” programs by requiring PBMs and insurers to apply copay assistance towards a patient’s deductible and other out-of-pocket expenses. The goal is to ensure that copay assistance helps the people it is intended for – patients -- rather than lower an insurer’s costs. 

Accumulator programs, also known as "accumulator adjustments" or "copay maximizers,” have already been banned in 19 states, including Arkansas, Arizona, Colorado, Connecticut, Delaware, Georgia, Illinois, Kentucky, and Louisiana.

Over 80 national and California advocacy organizations that make up the All Copays Count in California Coalition have endorsed AB 2180, saying it would protect the most vulnerable patients from “harmful and deceptive insurance schemes.” According to one study, up to 70% of patients abandon their prescriptions when their out-of-pocket costs reach $250 or more.

“Chronic and terminal illnesses create tremendous financial challenges for patients and their families. When insurers utilize copay accumulator policies which do not count third-party payment towards the deductible or out-of-pocket maximum, patients often cannot afford their medications, which has serious health implications,” Siri Vaeth, Executive Director of the Cystic Fibrosis Research Institute, said in a statement.

But PBM’s and insurers say the criticism is unfair. They say copay assistance programs are often little more than marketing ploys by the drug industry to discourage patients from switching to lower cost medications. Insurers say capturing that copay money – by not applying it towards deductibles -- helps them slow the rising cost of premiums. Some are working with third-party companies like PrudentRX and SaveOnSP to identify and implement more of these costs savings.  

There has been bipartisan legislation introduced in Congress at the federal level, which will require financial assistance to count toward deductibles and other out-of-pocket costs. The Help Ensure Lower Patient Copays Act would apply to plans not already subject to state rules. The bill was introduced last year, but has yet to get past the committee stage. 

As the healthcare industry continues to evolve, it is likely that insurers will create more of these “maximizer” programs. If you are paying for more out of pocket expenses due to insurance policies, I encourage you to share your story here and on social media.  

Barby Ingle is a reality TV personality living with multiple rare and chronic diseases. She is a chronic pain educator, patient advocate, motivational speaker, and the founder and former President of the International Pain Foundation. You can follow Barby at www.barbyingle.com. 

U.S. Pain Foundation Pockets $210,000 from Insys Therapeutics

By Pat Anson, PNN Editor

The U.S. Pain Foundation has decided to keep over $210,000 leftover from a controversial co-pay prescription drug program funded by Insys Therapeutics, a disgraced Arizona drug maker blamed for the overdose deaths of hundreds of pain patients.

The funds have been designated as “unrestricted grant revenue” by the Connecticut based-charity, which at one time claimed to be the nation’s largest non-profit advocacy group for pain patients. The decision to keep the money, which was being held in an escrow account, reverses a previous pledge by U.S. Pain in 2018 that it “will not accept funding from Insys going forward.”

“It has been determined that the funds may be used for charitable purposes consistent with the tax-exempt purpose of USPF in assisting people living with chronic pain. Going forward these funds will be allocated for such purposes,” U.S. Pain disclosed in a recent audit statement. “The escrow reserve of $210,974 was reversed in 2019 and the unrestricted funds were recorded as unrestricted grant revenue.”

Insys and U.S. Pain launched the “Gain Against Pain” program in 2016 with $2.5 million donated by the company. The stated goal of the co-pay program, which was administered by NeedyMeds, was to help patients obtain medication for breakthrough cancer pain.

But the program was apparently only used to generate prescriptions for Subsys, an expensive and potent fentanyl spray that was Insys’ flagship product. A four-day supply of Subsys can cost nearly $24,000.

The Gain Against Pain program was shut down in 2018 after Insys executives were charged with racketeering, fraud, bribery and other criminal charges over their marketing of Subsys. Insys filed for bankruptcy in 2019 and its founder sentenced to 66 months in prison.

Controversy over the co-pay program and other financial irregularities also led to the resignation of Paul Gileno, the founder and CEO of U.S. Pain. Gileno later pleaded guilty to charges of fraud and tax evasion, and served a few months in federal prison.

“We now know that Insys Therapeutics advanced this program using predatory practices and were assisted in doing so by U.S. Pain Foundation via access to the vulnerable populations served by that organization,” said Stefanie Lee Berardi, a patient advocate and grant writer who worked in nonprofit management.

“Nonprofits receiving large charitable donations have a duty to ensure the source of those funds is both legal and ethical before those funds are accepted. Once the funds are accepted, it is very difficult to give those funds back.”

The $210,000 in leftover co-pay funds would be a significant amount of money for most charities. U.S. Pain had over $1.4 million in revenue according to its 2019 tax return, about 30% less than the year before. The charity also disclosed in its audit statement that it received $92,805 this year from the federal government’s Payroll Protection Loan Program.

Questionable Spending

Under Gileno’s leadership, there was virtually no oversight of spending at U.S. Pain, which used donated funds to pay for highly questionable purposes, such as operating a money-losing bakery, loans to Gileno’s brothers and a family vacation to Universal Studios in Florida. The charity now has a chief financial officer and a new board of directors, and says it has other safeguards in place to prevent further fraud.

U.S. Pain CEO Nicole Hemmenway, who was vice-president and board chair under Gileno, did not respond to a request for comment for this story.

The charity’s audit statement indicates the $210,974 was received in two checks from NeedyMeds and had not been spent or earmarked for any program. Classifying the funds as unrestricted grant revenue means they can be used for any purpose – not just helping cancer patients.

“What I am really not understanding is why U.S. Pain chose to accept these as unrestricted funds, rather than to a restricted fund that would help individuals and families who were harmed by Insys’ co-pay program,” Berardi said in an email.

“Given that they haven’t yet done so, it is now imperative that they clearly define how those monies will be used. It is still possible for them to do the right thing. Should they choose to, they may find that they can mitigate the reputational harm sustained as a result of unethical and illegal business practices for which their CEO went to prison and an irresponsible board of directors who failed to meet their duty of care.”

Another critic believes U.S. Pain should donate the money to another charity.

“Given what has come out about both Insys and the U.S. Pain Foundation, the ethical thing to do would have been to give the money to a nonprofit organization that provides treatment for opioid use disorder,” said Adriane Fugh-Berman, MD, Director of PharmedOUT, a program at Georgetown University that seeks to expose deceptive marketing in the healthcare industry.

Co-pay prescription drug programs – also known as co-pay charities – are ostensibly designed to help needy patients pay for prescription drugs. But in recent years, several major pharmaceutical companies have paid heavy fines to settle fraud allegations that they used co-pay programs to steer Medicare patients to their high-priced drugs.

The assistance programs typically pay only a small amount for the prescriptions, with the rest of the cost picked up by Medicare. Federal anti-kickback laws prohibit drug companies from making any kind of payment to induce Medicare patients to purchase their drugs.

Co-Pay Assistance Programs Fail to Help Uninsured Patients

By Pat Anson, PNN Editor

Co-pay assistance programs – also known as co-pay charities – are ostensibly designed to help needy patients pay for prescription drugs. But a new study by researchers at the Johns Hopkins Bloomberg School of Public Health found that nearly all co-pay programs fail to cover uninsured patients who need financial help the most.

The researchers also found that co-pay programs were more likely to cover high-cost, brand-name prescription drugs, despite the availability of lower-priced generic medications. The findings are published online in JAMA.

“Independent patient assistance programs favor higher-priced drugs, and the higher the drug price, the higher the likelihood of it being covered,” says co-author Gerard Anderson, PhD, professor in the Bloomberg School’s Department of Health Policy and Management. “Unfortunately patients with the greatest financial needs -- people without health insurance -- do not qualify for these programs.”

Anderson and his colleagues looked at the six largest charity organizations, which ran 274 different patient assistance programs in 2018.

Most of the programs only covered drugs for cancer-related conditions or genetic and rare diseases. None offered free drugs and typically they only covered the most expensive medications.

“Only covering insured patients may help these programs cover more patients with their limited funds,” said lead author So-Yeon Kang, MPH, a research assistant in the Bloomberg School’s Department of Health Policy and Management. “But leaving out the uninsured diminishes the charitable aspects of these organizations supported by tax-exempted donations.”

Misconduct Widespread

Patient assistance programs run by independent charities are usually funded by pharmaceutical companies. Federal investigations into several co-pay assistance programs led to multimillion-dollar settlements with drug companies for allegedly steering patients to their higher-priced drugs.

Over the past year, Pfizer, Amgen, Jazz Pharmaceuticals, Astellas Pharma, Lundbeck and Alexion have all paid heavy fines to settle allegations that they used co-pay programs to defraud Medicare. Federal anti-kickback laws prohibit pharmaceutical companies from making any kind of payment to induce Medicare patients to purchase their drugs. The prohibition includes co-pays.

“We are committed to ensuring that pharmaceutical companies do not use third-party foundations to pay kickbacks masking the high prices those companies charge for their drugs,”  U.S. Attorney Andrew Lelling said in a statement. “This misconduct is widespread, and enforcement will continue until pharmaceutical companies stop circumventing the anti-kickback laws to artificially bolster high drug prices, all at the expense of American taxpayers.”

Similar allegations were made against Insys Therapeutics and the “Gain Against Pain” co-pay program run by the U.S. Pain Foundation. Insys donated over $3.1 million to U.S. Pain, with most of the money going to its co-pay program to help patients pay for Subsys, an expensive fentanyl spray made by Insys. A four-day supply of Subsys can cost nearly $24,000.

The founder of Insys and four former executives were recently found guilty of racketeering charges unrelated to the co-pay program. The company also agreed to pay $225 million in fines and penalties to settle criminal and civil investigations. U.S. Pain ended the “Gain Against Pain” program in 2018 and said it would no longer accept funding from Insys.

In an editorial, Katherine Kraschel, a lecturer at Yale Law School, and Gregory Curfman, MD, deputy editor of JAMA, called for more oversight of co-pay programs to make sure they help patients who truly need it.

“Although patient assistance programs may provide important financial relief for patients, the current patient assistance program structure largely neglects uninsured individuals,” they wrote.  “Absent other regulatory interventions, the Department of Justice needs to continue to scrutinize patient assistance program practices, and the Internal Revenue Service and state attorneys general should examine the tax-exempt status of patient assistance programs.”

CreakyJoints Under Scrutiny for Ties to Drug Makers

By Pat Anson, PNN Editor

Patient advocacy groups are coming under scrutiny again for their financial ties to drug companies. The latest is the Global Healthy Living Foundation (GHLF), a non-profit charity that created CreakyJoints, a website and social media platform that raises awareness about arthritis and other chronic illnesses. 

According to Bloomberg News reporter Ben Elgin, the foundation and CreakyJoints have long had a cozy relationship with Pfizer, Amgen, Johnson & Johnson and other corporate donors. Pfizer has donated nearly $1 million to the foundation over the past decade and one of its vice-presidents even serves on GHLF’s board of directors.

In a speech to drug makers in 2010, GHLF president Seth Ginsberg reportedly sought their donations -- while at the same time promising the companies “higher profits” and “sales rep participation in our programs.”

Ginsberg, who was diagnosed with spondyloarthritis as a teenager, co-founded GHLF in 1999 with marketing executive Louis Tharp.

In addition to CreakyJoints, GHLF has two other “grassroots” programs, Fail First Hurts and the 50-State Network, which advocate for healthcare policies that often align with the interests of its donors.  

According to GHLF’s 2017 tax return, the foundation had over $5 million in annual revenue. Ginsberg was paid a salary of $384,000, while Tharp received $220,000 as Executive Director.  Nearly $300,000 was also paid to a for-profit marketing company established by the two men, although it’s unclear what the payment was for.

Bloomberg reported that GHLF’s tax returns “reflect errors and unexplained entries that have obscured the amounts of money flowing to its cofounders.”

“Are they operating in a way that is extremely transparent? It’s safe to say they’re not,” Brian Mittendorf, a professor of accounting at Ohio State University told Bloomberg. “From looking at their disclosures, you have no idea how closely they’re related to some of the entities it pays.”

At least one GHLF board member and several patient volunteers reportedly left the organization because they were troubled by its relationships with donors.

GHLF did not grant an interview to Bloomberg, but replied to questions in writing.

“The only time we engage in advocacy is when it helps patients. If it doesn’t help patients, we don’t do it,” the foundation said in a statement. “Our mission is to engage in patient-centered research, provide advocacy for access-to-care, and to support people living with chronic disease by providing a supportive environment and accessible education.”

In a related story, Bloomberg reported that several other recently formed non-profits – such as the U.S. Rural Health Network --  appear to be little more than front organizations for the pharmaceutical industry.

“There are a number of groups created by pharma companies that look and act like patient organizations, but they’re 100 percent funded by industry,” said Marc Boutin, chief executive officer of the National Health Council. “They sound and look like patient organizations, but they take positions that industry wants.”

Drug Companies Fined for Co-Pay Programs

Last week two drug companies agreed to pay $125 million in fines to settle allegations that they used charitable foundations as front organizations to bilk Medicare.

Amgen and Japanese drug maker Astellas Pharma paid the foundations to establish co-pay prescription drug programs for Medicare patients. Federal prosecutors say the programs were primarily designed not to help patients, but to illegally pay their co-pays for Astellas and Amgen products.

Federal anti-kickback laws prohibit pharmaceutical companies from making any kind of payment to induce Medicare patients to purchase their drugs. The prohibition includes co-pays.

“The companies’ payments to the foundations were not ‘donations,’ but rather were kickbacks that undermined the structure of the Medicare program and illegally subsidized the high costs of the companies’ drugs at the expense of American taxpayers,” U.S. Attorney Andrew Lelling said in a statement.

“When pharmaceutical companies use foundations to create funds that are used improperly to subsidize the co-pays of only their own drugs, it violates the law and undercuts a key safeguard against rising drug costs,” said U.S. Assistant Attorney General Jody Hunt.

Last year, Pfizer paid nearly $24 million to settle allegations that it also used a co-pay program to pay Medicare for the company’s prescription drugs.

U.S. Pain Foundation Co-Pay

The U.S. Pain Foundation is under investigation by the U.S. Senate Finance Committee for a similar co-pay program established with Insys Therapeutics, a controversial Arizona drug company. Insys makes Subsys, an expensive and potent fentanyl spray blamed for hundreds of overdose deaths.

U.S. Pain received $2.5 million from Insys to launch the “Gain Against Pain” program, which ostensibly helped Medicare patients pay for drugs prescribed for breakthrough cancer pain. Critics say the program was primarily used to increase prescriptions for Subsys, which can cost $24,000 for just a four-day supply.

Former U.S. Pain CEO Paul Gileno initially defended the co-pay program, saying the money from Insys “does not influence our values,” but later resigned over allegations that he misappropriated $2 million from his own charity.

The Gain Against Pain program was subsequently shutdown in August 2018 and U.S. Pain said it would no longer accept funding from Insys.

Sen. Ron Wyden (D-OR), the ranking member of the Senate Finance Committee, sent a lengthy letter last December to U.S. Pain interim CEO Nicole Hemmenway asking a series of questions about the Insys co-pay program. According to the senator’s office, Wyden has still not gotten a full response.  

“The U.S. Pain Foundation has yet to provide a substantial amount of the information that Senator Wyden requested in his letter. Staff is in communication with the organization in order to get to the bottom of the organization’s financial relationship with pharmaceutical manufacturers, including Insys, and its compliance with applicable federal laws,” a Wyden spokesperson said in a statement to PNN.

A federal jury in Boston is currently in its third week of deliberations in a criminal case against Insys founder John Kapoor and four former executives of the company, who are accused of bribing doctors to boost sales of Subsys. 

U.S. Pain also remains under investigation by the Connecticut Attorney General’s office for financial irregularities that led to Gileno’s resignation.