April 17,2006

Senators seek continued assistance from drug companies for Medicare beneficiaries

WASHINGTON — Top health care policy makers in the U.S. Senate have asked for
prompt and definitive guidance from the government to help ensure that Medicare beneficiaries
with extraordinary needs can continue to access additional assistance from pharmaceutical drug
makers even after signing up for the new Medicare prescription drug benefit.
At issue is the continued availability of pharmaceutical manufacturer patient assistance
programs, known as PAPs. Sens. Chuck Grassley, Max Baucus, Orrin Hatch and John D. (Jay)
Rockefeller IV have urged the Inspector General for the Department of Health and Human
Services to make a clear statement as soon as possible addressing the legal concerns of drug
manufacturers so that the additional drug assistance that helps so many individuals through these
PAPs is not discontinued after May 15, the deadline for Medicare beneficiaries to sign up for the
new Medicare drug benefit.

“Clear-cut guidance is needed to help maintain the drug assistance that many older
Americans rely on, and we’ve been working to get that guidance for several months” Grassley
said. “These Medicare beneficiaries have extraordinary health care needs.”

“Many seniors simply wouldn’t get the drugs they need without patient assistance
programs, so it’s important that the government quickly provide appropriate advice on how these
programs can mesh with the new Medicare drug benefit,” said Baucus. “I believe it’s possible to
discourage Medicare fraud without discouraging drug manufacturers from providing these vital
programs, and I know the Inspector General will seek to strike a balance that works.”
“Unfortunately, the guidance issued by the OIG last November has had some unintended
consequences. I am pleased to join my colleagues in calling on the OIG to mitigate this situation
and to help ensure the continued availability of PAPs,” Hatch said.

“We have been pushing for a resolution on this issue since November,” said Rockefeller.
“We are less than a month away from having some drug companies terminate these vital
programs, and yet our seniors still have no assurance that they will be able to get the prescription
drugs they need from these programs. Nothing short of an immediate and complete clarification
of these rules is acceptable.”

The text of the Senators’ letter to the Inspector General follows here.

April 17, 2006

Mr. Daniel R. Levinson, Inspector General
Department of Health and Human Services
Room 5541 Cohen Building
330 Independence Avenue, S.W.
Washington, D.C. 20201

Dear Inspector General Levinson,

We are writing to express our support for the continued availability of pharmaceutical
manufacturer patient assistance programs (PAPs). As you know, manufacturer PAPs provide free
or subsidized medications to thousands of individuals, including Medicare beneficiaries, who
might not otherwise be able to afford their prescription drugs. Many seniors and individuals with
disabilities who participate in manufacturer PAPs have chronic conditions. These beneficiaries
must take very expensive prescription drugs – which often do not have generic drug equivalents
– to manage those conditions and to maintain their quality of life. Without assistance from a
PAP, some Medicare beneficiaries may not otherwise be able to afford their prescription drugs,
even if they are enrolled in the new Medicare prescription drug benefit.

We appreciate that your office issued the Special Advisory Bulletin on Patient Assistance
Programs last November. The goal of this Bulletin was to clarify the applicability of the federal
anti-kickback statute to all PAPs, including those offered by pharmaceutical manufacturers.
Unfortunately, it is our understanding that the Bulletin may have had the opposite effect. As a
result, several pharmaceutical manufacturers have indicated that they will discontinue their
prescription assistance to Medicare beneficiaries as of May 15.

Your office has achieved significant accomplishments in reducing waste, fraud and abuse
in the Medicare Part A and Part B programs. We applaud the OIG’s efforts in assisting,
developing and implementing a comprehensive strategy to identify and prevent fraud, waste and
abuse under Medicare Part D. Working with the Centers for Medicare and Medicaid Services
(CMS), the Federal Bureau of Investigation (FBI) and prosecuting attorneys at the Department of
Justice (DOJ), the OIG has recognized the importance of protecting Medicare beneficiaries and
taxpayers’ dollars. That said, we are troubled that the OIG’s Guidance may limit—albeit
unintentionally–beneficiary access to necessary medications. We are particularly concerned about
the ongoing availability of manufacturer PAPs for three groups of Medicare beneficiaries: 1)
low-income beneficiaries of limited means who do not qualify for the low-income subsidy; 2) lowincome
beneficiaries between 135 percent and 150 percent of poverty who qualify for the lowincome
subsidy, but pay 15 percent coinsurance for their prescriptions; and 3) higher-income
beneficiaries with catastrophic prescription drug needs who currently derive a significant benefit
from participation in pharmaceutical manufacturer PAPs.

It is our understanding that some companies have requested advisory opinions from the
OIG regarding the legality of the specific design of their PAPs. We understand that this process is
iterative and that the OIG often must ask the requester for additional information. We hope,
though, that the OIG will continue to work as expeditiously as possible in responding to these
requests, which may help mitigate this situation. Again, we urge you to work to further clarify the
legal guidance on the manufacturer PAPs as expeditiously as possible. We believe a resolution
can be achieved that allows pharmaceutical manufacturers to continue providing much needed
assistance to certain groups of Medicare beneficiaries in a manner that does not violate the
integrity of the Medicare program.

We thank you for your prompt attention to and consideration of this request. Because of
the seriousness of this matter, we are instructing our staff to contact your office Monday to
discuss this issue further.


Charles E. Grassley

Max Baucus
Ranking Minority Member

Orrin G. Hatch
Health Care Subcommittee

John D. Rockefeller IV
Ranking Minority Member
Health Care Subcommittee

cc: Michael Leavitt, Secretary, Health & Human Services