- OIG Issues Special Advisory Bulletin and Report Emphasizing Prohibition on Copay Coupons for Federally Reimbursable Medications (Including Part D Covered Drugs), Notes Potential Antikickback Violations
- October 14, 2014
- Law Firm: Loeb Loeb LLP - Los Angeles Office
According to the OIG, “Pharmaceutical manufacturers that offer copayment coupons may be subject to sanctions if they fail to take appropriate steps to ensure that such coupons do not induce the purchase of Federal health care program items or services.”
The OIG issued a special advisory bulletin and report in September regarding the prohibition on using copay coupons for medications that are paid for by Medicare Part D. For the report, the OIG surveyed the 30 drugmakers that manufacture the top 100 Part D brand-name drugs for which coupons are offered and generate the highest Medicare expenditures.
The report included the following findings:
- All surveyed manufacturers provide notices to beneficiaries and pharmacists that copayment coupons may not be used in federal healthcare programs. These notices state that copayment coupons may not be used to purchase drugs paid for by federal healthcare programs, including Medicare Part D. Notices to beneficiaries and pharmacists are more prevalent for print coupons, which is the most commonly offered coupon format according to the manufacturers surveyed. The coupons, normally delivered via print, websites or advertisements, ask eligibility questions, and if patients indicate that they are enrolled in federal healthcare programs, these manufacturers notify them that they are not eligible to access the coupon. While most forms of advertising used these questions to qualify for eligibility, only 3 percent of websites had a tracking mechanism to prevent a patient from changing his or her answer to the eligibility question to obtain the coupon. Two-thirds of the surveyed manufacturers responded that they provide notices to pharmacists for at least one of the coupon formats they offer.
- Most surveyed manufacturers use pharmacy claims edits to prevent copayment coupons from being processed for drugs paid for by Part D. Twenty-eight of the 30 manufacturers surveyed use claims processing edits for at least one of the coupon formats they offer.
- Surveyed manufacturers’ pharmacy claims edits may not prevent copayment coupons from being processed for drugs paid for by Part D. Pharmaceutical manufacturers’ claims processing edits currently in use may not stop all coupons from being processed for drugs paid for by Part D, because manufacturers cannot accurately identify a beneficiary’s Part D enrollment status. Manufacturers’ claims processing edits use proxies that are substitutes for, but do not replicate, actual enrollment information.
- Part D plans and other entities cannot identify copayment coupons within pharmacy claims. It is difficult for entities other than manufacturers to identify coupons as they are processed through the pharmacy claims transaction system or after they are adjudicated. Coupons are not transparent in the pharmacy claims transaction system to entities other than manufacturers. This vulnerability impedes other entities, including Part D plans, other primary insurers and pharmacies, from preventing the use of coupons for drugs paid for by Part D and oversight entities, such as CMS and OIG, from monitoring the use of coupons.
As the bulletin relates, “where remuneration is paid purposefully to induce or reward referrals of items or services payable by a Federal healthcare program, the anti-kickback statute is violated.” Measures that would undermine the antikickback statute diminish the benefits of cost-sharing requirements for federal healthcare program drugs, including “prudent prescribing and purchasing choices by physicians and patients based on the true costs of drugs” and price competition in the pharmaceutical market.
The bulletin concludes by emphasizing coupon offerors are ultimately liable for compliance: “Regardless of future actions by CMS, the offerors of coupons ultimately bear the responsibility to operate these programs in compliance with Federal law. Pharmaceutical manufacturers that offer copayment coupons may be subject to sanctions if they fail to take appropriate steps to ensure that such coupons do not induce the purchase of Federal healthcare program items or services, including, but not limited to, drugs paid for by Medicare Part D.”
To help mitigate further issues, the OIG recommended CMS find a way to work with drugmakers to improve the reliability of pharmacy claims and verify enrollment. CMS should also explore ways to make coupons universally identifiable.