The Office of Inspector General (“OIG”) recently posted an Advisory Opinion approving a pharmaceutical manufacturer’s direct-to-patient product sales program. While this Advisory Opinion cannot be relied upon by anyone other than the requestor, it potentially opens the door for manufacturers to develop similar direct-to-patient discount arrangements for brand name drugs facing generic competition.
Under the arrangement, the pharmaceutical manufacturer sells one of its brand name drugs (for which there is a generic equivalent) at a discount to any patient who has a valid prescription for the product. The discounted sales price for a 30-day supply of the drug product is much lower than the manufacturer’s wholesale acquisition cost (“WAC”). The patient may be uninsured, have commercial insurance, or be insured by a federal health care program – including Medicare or Medicaid. The patient pays for the drug out-of-pocket and no insurer – governmental or non-governmental – is charged for the cost of the drug. Additionally, Part D patients cannot include the amounts they pay for the product under the arrangement in any submission for true-out-of-pocket expense (“TrOOP”) calculations under a prescription drug plan.
According to the manufacturer, the arrangement operates entirely outside of all federal health care programs. The pharmacy under contract with the manufacturer to dispense the product under this arrangement is prohibited from filing any claim for payment under any federal health care program or any commercial prescription drug insurance plan. All patients must be processed as cash-paying customers. The pharmacy collects the cash payment and sends the full amount of the cash payment to the manufacturer. In turn, the pharmacy is paid a flat fee for its services. The manufacturer does not directly advertise the program to the patients. Patients hear of the arrangement from their health care professionals and the manufacturer’s website.