Bass, Berry & Sims attorney Jennifer Michael discussed the financial tension that exists when pharmaceutical companies and drug manufacturers contribute money to nonprofit patient assistance charities and programs that exist to offset the high cost of some medications. While these programs and charities are intended to help curb drug costs for patients, in the long-run, because patient cost sharing is lower, it can discourage the drug providers from accepting lower drug costs from insurers which keeps drug prices high for everyone.

As Jennifer points out, “The problem is that the harm is incredibly difficult to quantify and it’s going to happen in the future, some indeterminate time in the future, whereas the beneficiary who can’t afford his or her drugs, that’s a now problem. How do you say to a beneficiary who needs a drug but can’t afford it, ‘No, no, no. What’s really best for everyone is that you don’t get help paying for your co-payment because it’s going to harm Medicare and all the beneficiaries.’ That statement’s going to lose 10 out of 10 times. That’s the problem.”

Jennifer added, “This is an incredibly difficult problem to solve because everyone who’s studied this issue agrees that it’s going to harm the Medicare program, because drug manufacturers have the ability to raise their price almost without consequence because of the way Medicare reimburses for drugs – which is based on list price – the only check on pricing co-pays. When you eliminate the only check on pricing, you basically can charge whatever you want. It’s a unique problem.”

The full article, “Study: Pharma Companies Often Profit From Donations to Patient Assistance Charities,” was published by AIS Health – RADAR on Drug Benefits on September 22 and is available online (subscription required).