THE BURNED OVER DISTRICT

As drug prices have soared in recent years and insurers have increased co-payments, a new type of charity has blossomed to fill a vital niche — helping patients pay the steep out-of-pocket costs for their medicines.

But the largest of these co-payment assistance charities, the Chronic Disease Fund, is now in turmoil after questions have arisen about its relationship with a pharmaceutical company that is itself under investigation for marketing practices.

The practice is casting a spotlight on what has long been an open secret: The bulk of the contributions to these charities come from the pharmaceutical companies themselves. The foundations not only help hundreds of thousands of patients a year, they also raise drug company sales and profits.

After all, if a patient cannot afford out-of-pocket costs of $5,000 for a $100,000-a-year drug, the drug company gets nothing. But if the manufacturer pays the $5,000, the patient gets the drug and the company receives $95,000 from the patient’s insurance company or Medicare.

The contributions — which also provide tax deductions to drug makers — are legal as long as a company does not require that the money it donates be used exclusively to pay for its own drugs.

But articles circulating in the investment world have suggested that the Chronic Disease Fund might be showing improper favoritism toward Questcor Pharmaceuticals, which sells an expensive drug for immune diseases. Moreover, the articles noted that the charity was purchasing millions of dollars a year in services from for-profit companies owned by the charity’s founder and president, Michael Banigan.

// posted by montag @ 4:25 PM