Subject to sanctions: Entities offering copayment coupons for Part D drugs will bear ultimate responsibility for operating in compliance with federal law.



The Department of Health & Human Services Office of Inspector General (OIG) recently released a Special Advisory Bulletin on the fraud and abuse implications of pharmaceutical manufacturers offering copayment coupons to reduce or eliminate the cost of out-of-pocket copayments for brand-name drugs.

The Special Advisory Bulletin and the concurrent OIG Office of Evaluations and Inspections Report (OEI Report) focus specifically on implications when those coupons are used by federal healthcare program (Federal Program) beneficiaries, including individuals covered by Medicare Part D. The reports outline current safeguards used by pharmaceutical manufacturers to prevent copayment coupon use for Part D drugs and conclude that such safeguards may not adequately prevent coupons from being used for drugs covered by Part D.

Although the OEI Report and Special Advisory Bulletin focus on the measures used by pharmaceutical manufacturers in connection with their copayment coupons, OIG is clear that pharmacies that accept such coupons for copayments owed by Federal Program beneficiaries also may be subject to sanctions under the Anti-Kickback Statute and other federal laws.

OEI Report
The Anti-Kickback Statute prohibits the knowing and willful offer or payment of remuneration to a person to induce the purchase of any item or service for which payment may be made by a Federal Program. Pharmaceutical manufacturers may be liable under the Anti-Kickback Statute if they offer coupons to induce the purchase of drugs paid for by any Federal Program, including but not limited to
Medicare Part D.

According to recent surveys, approximately six to seven percent of seniors report using manufacturer coupons toward their copayments for Part D drugs. Although coupons are sometimes offered by manufacturers to encourage patients to comply with their medication regimen, one concern with coupons is that they may encourage Medicare beneficiaries to select more expensive brand-name drugs
over lower cost alternatives, thus increasing costs to Part D.

In order to identify and analyze the safeguards used by pharmaceutical manufacturers to prevent copayment coupons from being used to purchase drugs paid for by Part D, OIG’s Office of Evaluations and Inspections (OEI) surveyed 30 manufacturers of the top 100 Part D brand-name drugs with coupons and the highest Medicare expenditures.

The OEI Report concluded that current manufacturer safeguards may not prevent all copayment  coupons from being used for drugs paid for by Part D. Specifically, the OEI Report found the following:

? To reduce potential risk under the Anti- Kickback Statute, all manufacturers surveyed for the OEI Report claimed to provide notices to Medicare beneficiaries and pharmacists stating that coupons may not be used to purchase drugs paid for by Federal Programs. The format of such notices varied widely, with most notices printed in small font. Additionally, not all manufacturers used notices on all coupon formats.

? Most manufacturers reported using pharmacy claims edits to prevent coupons from being processed for Medicare beneficiaries. However, OEI found that many of these edits do not prevent coupons from being processed because manufacturers cannot access a beneficiary’s actual Medicare enrollment status.

? OEI noted that entities such as Part D plans, other primary insurers and pharmacies have difficulty identifying coupons as they are processed or after they are adjudicated due to limitations with pharmacy claims transaction systems.

The Special Advisory Bulletin, released concurrently with the OEI Report, summarizes the OEI Report and cautions that pharmaceutical manufacturers offering copayment coupons may be subject to sanctions if they do not take appropriate steps to ensure that such coupons do not induce the purchase of drugs paid for by Part D.

The Special Advisory Bulletin further clarifies that regardless of any future action by CMS, entities that offer copayment coupons bear ultimate responsibility for operating coupon programs in compliance with federal law.

Susan Bizzell is with Hall, Render, Killian, Heath & Lyman in Indianapolis, Ind.