Bass, Berry & Sims attorneys Clint Hermes and Jennifer Michael authored an article for Law360 examining the tension between the government and the pharmaceutical industry over drug assistance programs.

The article provides an overview of the two primary laws – the Anti-Kickback Statute and the civil monetary penalty provision for inducements to beneficiaries – and subsequent guidance that govern patient assistance programs, summarizes the U.S. Food and Drug Administration’s (FDA) recent drug approval controversy and what it could mean for the future of drug costs, and discusses the impact recent developments and legal challenges may have on how and when federal healthcare program beneficiaries may receive financial assistance.

Clint and Jennifer examine how “[t]he tension between pharmaceutical manufacturers and patient advocacy groups, on the one hand, and the government in its role as regulator, on the other, also manifests in debates about how the FDA reviews new drugs for approval.” The authors cite the FDA’s recent approval of the expensive Alzheimer’s drug – Biogen Inc.’s aducanumab – through the agency’s accelerated approval pathway as an example of this tension.

Finally, Clint and Jennifer outline a recent lawsuit brought by pharmaceutical company Pfizer challenging the idea that the Anti-Kickback Statute prohibits pharmaceutical companies from subsidizing Medicare beneficiaries’ cost-sharing obligations for the companies’ own drugs.

“With the government unable to negotiate drug prices on behalf of Medicare, Medicare traditionally covering labeled indications of FDA-approved drugs and the FDA increasingly willing to approve expensive drugs that have not clearly demonstrated a clinical benefit, Medicare could be in a predicament that only Congress can resolve,” write Clint and Jennifer. “Interpreting the scope of the Anti-Kickback Statute in a way that would allow drug manufacturers to heavily subsidize or even eliminate beneficiaries’ cost-sharing obligations could lead to what the government has characterized as a gold rush, with effectively no economic cap on pricing. So the industry finds itself at a crossroads: Does it allow pharmaceutical manufacturers to help individual beneficiaries with their cost-sharing obligations, potentially sacrificing the sustainability of the Medicare program and forcing Congress’ hand?”

The full article, “Sea Change In Drug Assistance Programs May Be On Horizon,” was published on July 15 by Law360 and is available online.