Senior Citizens May
Break Federal Law Using Drug Copay Coupons in Medicare
These discount coupons used in drug program for a specific brand name
drug are considered kick-back and federal crime
By Tucker Sutherland, editor, SeniorJournal
Sept. 22, 2014 – Maybe it is much-to-do-about-nothing, but a warning – actually a “Special Advisory Bulletin” – has
been issued by the Office of the Inspector General for Health and Human
Services warning senior citizens not to use discount coupons from
pharmaceutical manufacturers for a specific brand name drug in the
Medicare Part D drug program. It is considered a kick-back and a federal
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, according to the
Office of Evaluation and Inspections.
In two surveys by outside
groups, approximately 6 percent to 7 percent of seniors surveyed
reported using coupons to purchase prescription drugs, according to OEI.
These coupons constitute remuneration offered to
consumers to induce the purchase of specific items. When the item in
question is one for which payment may be made, in whole or in part,
under a Federal health care program (including Medicare Part D), the
anti-kickback statute is implicated.
The anti-kickback statute makes it a criminal
offense to knowingly and willfully offer, pay, solicit, or receive any
remuneration to induce or reward the referral or generation of business
reimbursable by any Federal health care program.
Section 1128B(b) of the Social Security Act (the
Act).2 Where remuneration is paid purposefully to induce or reward
referrals of items or services payable by a Federal health care program,
the anti-kickback statute is violated.
A claim that includes items or services resulting
from a violation of the anti-kickback statute constitutes a false or
fraudulent claim for purposes of the False Claims Act. Section 1128B(g)
of the Act.3 The False Claims Act imposes liability for knowingly
presenting or causing to be presented a false claim for payment by the
United States. 31 U.S.C. § 3729.4
The special advisory notes that copayment coupons
are defined as any form of direct support offered by manufacturers to
insured patients to reduce or eliminate immediate out-of-pocket costs
for specific prescription medications. They include print coupons,
electronic coupons, debit cards, and direct reimbursements, as described
in OIG report entitled, Manufacturer Safeguards May Not Prevent
Copayment Coupon Use for Part D Drugs, OEI-05-12-00540 (OEI Report).
2 42 U.S.C § 1320a-7b(b).
Cost-sharing requirements for Federal health care
program drugs serve an important role in protecting both Federal health
care programs and their beneficiaries. These cost-sharing requirements
(1) prudent prescribing and purchasing choices by physicians
and patients based on the true costs of drugs and
(2) price competition
in the pharmaceutical market. While copayment coupons provide an
immediate financial benefit to beneficiaries, they ultimately can harm
both Federal health care programs and their beneficiaries.
availability of a coupon may cause physicians and beneficiaries to
choose an expensive brand-name drug when a less expensive and equally
effective generic or other alternative is available. When consumers are
relieved of copayment obligations, manufacturers are relieved of a
market constraint on drug prices. Excessive costs to Federal programs
are among the harms that the anti-kickback statute is intended to
The pharmaceutical industry is aware of the
anti-kickback statute and its application to copayment coupons.
Copayment coupons typically bear a statement that the coupon may not be
used by beneficiaries of Federal health care programs.
“The Office of Inspector General, Office of
Evaluation and Inspections (OEI), conducted a study analyzing the
measures pharmaceutical manufacturers use to prevent their coupon
programs from inducing the purchase of drugs paid for by Part D.
“In circumstances in which the offer or acceptance
of copayment coupons may induce a beneficiary to use a particular
practitioner or pharmacy, a violation of this statute may occur.
“We recognize that copayment support may benefit
beneficiaries by encouraging adherence to medication regimens,
particularly when copayments are so high as to be unaffordable to many
“Manufacturers that desire to assist Federal health
care program beneficiaries who cannot afford their copayments have the
option of donating to independent charities that provide financial
support to patients without regard for the particular medication a
patient may be using.
“Like the OEI report, this Special Advisory
Bulletin focuses on the measures used by pharmaceutical manufacturers in
connection with the copayment coupons they offer. However, pharmacies
that accept manufacturer coupons for copayments owed by Federal health
care program beneficiaries also may be subject to sanctions under the
anti-kickback statute, the beneficiary inducement CMP, and the False
“The OEI Report describes measures that surveyed
manufacturers report they have in place to prevent use of copayment
coupons to fund copayments for drugs paid for by Part D and concludes
that these measures may not prevent all such use.
“It states that all manufacturers place notices on
the coupons or coupon materials that Federal program beneficiaries are
not eligible to use them, for at least some coupon formats. However, not
all manufacturers use such notices on all coupon formats. In addition,
while most manufacturers also use claims edits in the processing of at
least some of their coupons, the OEI Report concludes that these claims
edits may not reliably identify all claims submitted in connection with
drugs paid for by Part D.
“The OEI Report also finds that coupons are not
transparent in the pharmacy claims transaction system to entities other
than manufacturers, which impedes Part D plans and others from
identifying and monitoring the use of coupons for drugs paid for by Part
“The OEI Report recommends that the Centers for
Medicare & Medicaid Services (CMS) cooperate with industry stakeholder
efforts to improve the reliability of mechanisms to determine when
copayment coupons are used in connection with the purchase of drugs paid
for, in part, by Part D.
“These mechanisms include improving the reliability
of claims edits and making copayment coupons universally identifiable in
pharmacy claims transactions. Such transparency with respect to coupon
use would permit all Federal health care program payors - not just the
sponsors of Part D plans - to recognize coupon transactions.
“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 health care program items or services, including, but not
limited to, drugs paid for by Medicare Part D. Failure to take such
steps may be evidence of intent to induce the purchase of drugs paid for
by these programs, in violation of the anti-kickback statute.”
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