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Report (OEI-05-12-00540)

09-18-2014
Manufacturer Safeguards May Not Prevent Copayment Coupon Use for Part D Drugs

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Summary

WHY WE DID THIS STUDY

Pharmaceutical manufacturers offer copayment coupons to reduce or eliminate the cost of patients' out of pocket copayments for specific brand name drugs. 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 health care program. Manufacturers may be liable under the anti kickback statute if they offer coupons to induce the purchase of drugs paid for by Federal health care programs, including Medicare Part D. The anti kickback statute applies to all Federal health care programs, but this study focused on Part D. The use of coupons by Medicare beneficiaries could impose significant costs on the Part D program because many coupons encourage beneficiaries to choose more expensive brand name drugs over less expensive alternative drugs. In two surveys by outside groups, approximately 6 percent to 7 percent of seniors surveyed reported using coupons to purchase prescription drugs.

HOW WE DID THIS STUDY

To identify the safeguards pharmaceutical manufacturers employ to prevent their copayment coupons from being used for drugs paid for by Part D and to identify vulnerabilities in those safeguards, we surveyed 30 manufacturers of the top 100 Part D brand name drugs with coupons and with the highest Medicare expenditures. We also reviewed selected safeguards offered for a purposive sample of those drugs. In addition, we interviewed staff at various organizations involved in pharmacy claims transactions to understand other vulnerabilities associated with coupon use in Part D.

WHAT WE FOUND

Pharmaceutical manufacturers' current safeguards may not prevent all copayment coupons from being used for drugs paid for by Part D. All surveyed manufacturers provide notices directed to beneficiaries and pharmacists that coupons may not be used in Federal health care programs. Most surveyed manufacturers use pharmacy claims edits to prevent coupons from being processed for drugs covered by Part D. Most of these edits may not prevent all coupons from being processed for Part D covered drugs. Finally, Part D plans and other entities cannot identify coupons within pharmacy claims.

WHAT WE RECOMMEND

OIG's concurrent Special Advisory Bulletin affirms that pharmaceutical manufacturers are at risk of sanctions if they fail to take appropriate steps to ensure that their copayment coupons do not induce the purchase of Federal health care programs items or services, including but not limited to, drugs paid for by Medicare Part D. For this reason, manufacturers may engage industry stakeholders and CMS in an effort to identify a solution to ensure that coupons are not used for drugs paid for by Part D. CMS should cooperate with industry stakeholder efforts to improve the reliability of pharmacy claims edits and make coupons transparent. CMS concurred with our recommendation.

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