September 2022
Article
Health Affairs

Giving a Buck or Making a Buck? Donations by Pharmaceutical Manufacturers to Independent Patient Assistance Charities

By: Leemore Dafny, Christopher Ody and Teresa Rokos

Abstract

The federal Anti-Kickback Statute prohibits biopharmaceutical manufacturers from directly covering Medicare enrollees’ out-of-pocket spending for the drugs they manufacture, but manufacturers may donate to independent patient assistance charities and earmark donations for a condition treated by their drugs. To assess whether this law and its associated regulations prevent manufacturers from profiting from their donations, we analyzed drug spending of more than three million Medicare Advantage enrollees in 2010 and 2017, together with data on conditions and drugs covered by these charities. We found that donations by the leading manufacturer of drugs for each condition were often likely to be profitable, even if relatively few patients were induced to use the manufacturer’s drugs as a result. This was particularly true among the ten costliest conditions, where the leading manufacturer accounted for 67 percent of sales in 2010 and 89 percent in 2017, on average, indicating that manufacturers could effectively assist in the purchase of their own medications by contributing to condition-specific charities. We conclude that the current regulations or enforcement permit donations that violate the spirit of Medicare’s Anti-Kickback Statute.