Corrupt or Charitable? Patient Assistance Programs and the Case for Narrowing the Breadth of the Federal Anti-Kickback Statute

Isaac Strauss (Yeshiva University), Corrupt or Charitable? Patient Assistance Programs and the Case for Narrowing the Breadth of the Federal Anti-Kickback Statute, 44 Cardozo L. Rev. 2 (2022):

This Note surveys how the Federal Anti-Kickback Statute serves to penalize helpful healthcare arrangements in which pharmaceutical companies seek to assist patients with their cost-sharing obligations under Medicare Part D.

Even under Medicare, prescription drug cost-sharing obligations result in many Medicare beneficiaries shouldering the burden of high prescription drug costs. Absent a legislative overhaul of the healthcare market, prescription drug costs will continue to remain high. Despite this problem, pharmaceutical companies find themselves subject to criminal and civil sanctions when they spearhead subsidy programs to assist Medicare beneficiaries with meeting their cost-sharing obligations under their health insurance plan. Federal courts and the DOJ interpret the Federal Anti-Kickback Statute as prohibiting any pharmaceutical manufacturer from giving benefits to a patient that may be reimbursed by a federal healthcare program.

This Note argues that federal scrutiny of PAPs demonstrate the problems involved with the AKS's emphasis on inducement. Any subsidy, even if intended to help a patient with cost-sharing obligations, could be seen as an illegal inducement if it removes financial barriers that would otherwise prevent the patient from receiving the medication. Because of this, courts should interpret the AKS in the spirit of its original purpose: to prohibit remuneration to an individual with the corrupt intention of improperly influencing a physician's decision-making. I further propose a safe harbor solution that narrows the judicially crafted "one purpose" inducement test making it more akin to the gratuity test that is applied under the Federal Bribery Statutes.