May 11,2006

Senators Call on Drug Company Leaders to Continue Drug Assistance Programs

WASHINGTON — Members of the Senate Finance Committee met today with top executives from eight pharmaceutical drug companies as part of an effort by senators to see that drug assistance programs continue alongside the new Medicare prescription drug benefit.

Finance Committee Chairman Chuck Grassley chaired the meeting, which was alsoattended by Sen. Max Baucus, the Committee’s Ranking Member, and Sen. Orrin Hatch, who isChairman of the Subcommittee on Health. Sens. Mike Crapo, Jeff Bingaman, and Gordon Smithalso attended the meeting. Sen. John D. (Jay) Rockefeller IV was unable to be at today’smeeting, though he has been a leader in trying to secure the patient assistance programs thatprovide prescription medicines to lower-income Medicare beneficiaries. Rockefeller is RankingMember of the Finance Subcommittee on Health.

The drug companies were represented at today’s meeting by the following individuals:

- Mr. David Brennan, CEO, AstraZeneca Pharmaceuticals PLC
- Mr. Peter R. Dolan, CEO, Bristol-Myers Squibb Company
- Mr. Sidney Taurel, Chairman and CEO, Eli Lilly & Company
- Dr. Jean-Pierre Garnier, Ph.D., CEO, GlaxoSmithKline
- Mr. William C. Weldon, Chairman and CEO, Johnson & Johnson
- Mr. Richard T. Clark, President and CEO, Merck & Co., Inc.
- Dr. Hank A. McKinnell, Ph.D., CEO, Pfizer, Inc.
- Mr. Fred Hassan, Chairman and CEO, Schering-Plough Corporation
- The Honorable Wilbert J. “Billy” Tauzin, Jr., President and CEO, PhRMA

Comments from Grassley, Baucus and Rockefeller follow here, along with previous newsreleases describing the work of these four senators on the drug company-sponsored benefit.

May 11th Statement of Senator Chuck Grassley of Iowa
Chairman, Committee on Finance

“The purpose of today’s meeting was to say to the drug companies that the new Medicaredrug benefit does not and should not prevent them from continuing to offer patient assistance programs to Medicare beneficiaries who enroll in Part D. It’s not a legitimate excuse for dropping the assistance programs. Out-of-pocket costs for hyper-expensive drugs can be an insurmountable barrier for many beneficiaries even with the new Medicare benefit. Drug companies should not penalize people who sign up for the Medicare drug benefit. I appreciate statements made in recent days by some pharmaceutical companies about continuing their programs or parts of their programs. There’s more to do. I’m not going to let up. Beneficiariesneed these programs.”

May 11th Statement of Senator Max Baucus of Montana
Ranking Member, Committee on Finance

“The Medicare drug benefit is making drugs more affordable for many seniors, but somestill need extra help. There’s absolutely no reason drug companies can’t keep serving people in need. The drug benefit must not be used as an excuse for ending patient assistance programs.Many manufacturers have already agreed to continue their programs, and I'd like to see the rest promise by next week to do the same.”

May 11th Statement of Senator John D. (Jay) Rockefeller IV of West Virginia
Ranking Member, Subcommittee on Health

“Patient Assistance Programs (PAP) are vital to those Medicare recipients who cannotafford the prescription drugs they need even with the help of the Medicare prescription drug plan.Some pharmaceutical companies in recent days have announced that they will continue their PAP programs for Medicare beneficiaries, and I hope more companies will follow suit. But more needs to be done. Many subsidy-eligible Americans will need additional assistance meeting their Medicare drug benefit co-insurance obligations, and I want to make sure that free clinics around the country do not lose access to the drugs they currently receive through PAPs. We are at a critical juncture in the decision-making process, and the decisions made by these companies overthe next few days will directly affect the health and well-being of thousands of people in West Virginia and throughout the nation.”

For Immediate Release
Monday, May 8, 2006

Senators invite drug company execs to discuss prescription drug assistance programs

WASHINGTON — Pharmaceutical drug makers have been asked to meet withmembers of the Senate Finance Committee about the future of drug companysponsoredprograms that help individuals with high prescription drug costs.

The meeting scheduled for May 11 is part of an effort by Sens. Chuck Grassley,Max Baucus, Orrin Hatch, and John D. (Jay) Rockefeller IV to see these assistanceprograms continue alongside the new Medicare prescription drug benefit. Grassley ischairman and Baucus is ranking member of the Finance Committee, which isresponsible for health care policy. Hatch is chairman and Rockefeller is rankingmember of the Subcommittee on Health Care.

The following companies have been invited to attend the meeting:

The meeting – which will be held in SD-215 at 11:30 a.m., and be closed-door -- will follow other recent initiatives by Grassley, Baucus, Hatch and Rockefeller tosecure the patient assistance programs for Medicare beneficiaries. Those efforts aredescribed in the news releases below.

For Immediate Request
Friday, April 21, 2006

Senators keep focus on keeping drug assistance for Medicare beneficiaries

WASHINGTON — Leading senators are urging pharmaceutical drug makers tocontinue offering prescription drugs to Medicare beneficiaries through programsdesigned to help individuals with high prescription drug costs.

Sens. Chuck Grassley, Max Baucus, Orrin Hatch, and John D. (Jay) RockefellerIV also have pressed for the Inspector General for the Department of Health andHuman Services to issue clear guidance addressing the legal concerns ofpharmaceutical manufacturers about offering drug assistance programs after May 15,when the first sign-up period ends for Medicare’s new prescription drug benefit.

“We’ve got a situation where it looks like the May 15 date has become anexcuse for dropping the assistance that many Medicare beneficiaries rely on, and that’snot right,” Grassley said. "The Inspector General issued more guidance earlier thisweek, and some companies have announced that they’ll continue their programs, solegal avenues do exist.”

“Pharmacy assistance programs provide invaluable assistance to peopleworking hard to get by,” said Baucus. “The Medicare prescription drug benefit does notprevent drug companies from continuing to provide this help to those in need, and theInspector General has made that clear. I hope that drug companies resolve their concerns and continue to provide this much needed help.”

“Drug companies now have the green light to complement the new Medicareprogram with their assistance programs, and I encourage them to continue givinggenerously to help our seniors,” Hatch said.

“Now that the Inspector General has provided some concrete guidance, it’s timefor pharmaceutical companies to fulfill their obligation,” said Rockefeller. “Simply put, these companies should not halt this vital assistance to Americans who cannot afford the prohibitively expensive prescription drugs they need in order to survive. The lives of many Americans depend on these companies being good citizens.”

The text of the Senators’ letter to PhRMA, the association representing thenation’s leading pharmaceutical research and biotechnology companies, follows here,along with statements made earlier this week about an advisory from the InspectorGeneral, and the text of a letter sent on Monday from Grassley, Baucus, Hatch andRockefeller to the Inspector General.

April 21, 2006

The Honorable Wilbert J. Tauzin, Jr.
President and CEO
PhRMA
950 F Street, NW
Washington, DC 20004

Dear Mr. Tauzin:

We are writing to express our concern about the recent announcements made bysome pharmaceutical manufacturers that they plan to curtail their patient assistanceprograms (PAPs) because of the perceived lack of clear federal guidance on operating aPAP now that Medicare’s prescription drug benefit has become available. Millions ofAmericans, including Medicare beneficiaries, receive invaluable assistance in gettingtheir prescription drugs through patient assistance programs offered by several PhRMAmember companies. Many of these medications are extremely costly and withoutassistance from a PAP, some Medicare beneficiaries are not otherwise able to affordthem, even if they are enrolled in the new Medicare prescription drug benefit.

Last November, the Department of Health and Human Services Office of theInspector General (OIG) issued guidance regarding potential approaches for operating aPAP in the new Medicare prescription drug benefit environment. We understand that,for some pharmaceutical manufacturers, the OIG’s November guidance did not provideenough clarity regarding the legality of PAPs in relation to the new Medicareprescription drug benefit. However, we believe the PAP model approved by the OIGearlier this week provides substantial clarification regarding the ways pharmaceuticalmanufacturers can structure their PAPs around the Medicare prescription drug benefit.Moreover, the OIG issued a statement in the November guidance indicating the OIGwould exercise discretion in taking enforcement actions against pharmaceuticalmanufacturers operating PAPs this year -- the initial year of the Part D benefit. Thesefacts make a company’s decision to end its PAP as of May 15 seem rather arbitrary.

We are happy that some companies have already announced that they willcontinue their PAPs. Merck, Schering-Plough, and AstraZeneca have all announcedthey will continue their patient assistance programs, which indicates that legal andfeasible avenues for operating a PAP alongside the Medicare prescription drug benefitdo exist. While Schering-Plough is the only company that has received an OIGadvisory opinion to date, we are aware that other pharmaceutical companies have madesuch requests. The Schering-Plough model provides a workable roadmap for how aPAP can be operated going forward. It is, however, a floor and not a ceiling ofpossible options. A company that wants to pursue an alternative structure for its PAPcould request an individual Advisory Opinion from the OIG.

We applaud Merck, Schering-Plough, and AstraZeneca for their commitment totheir patient assistance recipients, who rely on their products to maintain their health.We wholeheartedly agree with PhRMA’s statement that the OIG opinion onSchering-Plough’s PAP, “can provide useful guidance to other companies.” In yourcapacity as President and CEO of PhRMA, we implore you to call on other membercompanies to expeditiously develop approaches – as Merck, Schering-Plough, andAstraZeneca did – to continue their PAPs. It is simply unacceptable for anypharmaceutical company to use the launch of the new Medicare prescription drugbenefit as an excuse to limit their PAPs as of May 15, particularly since there is nowclear legal guidance from the OIG on ways to operate these programs.

If there are outstanding legal concerns about the ability of pharmaceuticalcompanies to continue to operate PAPs, then we would like to know about them.Otherwise, we strongly encourage your member companies to find legal avenues forcontinuing these vital patient assistance programs, and we would appreciate yourinforming us about the actions PhRMA is taking to educate it members about suchavenues.

Sincerely,

Charles E. Grassley
Chairman

Max Baucus
Ranking Minority Member

Orrin G. Hatch
Chairman
Health Care Subcommittee

John D. Rockefeller IV
Ranking Minority Member
Health Care Subcommittee

M E M O R A N D U M

TO: Reporters and Editors
RE: IG Advisory Opinion On Pharmaceutical Manufacturer Patient Assistance Programs
DA: April 18, 2006

Yesterday, Sens. Chuck Grassley, Max Baucus, Orrin Hatch, and John D. (JayRockefeller) asked the Inspector General for the Department of Health and HumanServices for guidance to address the legal concerns of drug makers who participate inpatient assistance programs. The Inspector General issued an opinion today.Comments from individual senators follow here.

“It's good to finally have this advisory opinion from the Inspector General. Thecompany who made the request now knows that its program to help Medicarebeneficiaries meets federal rules and requirements. I urge the Inspector General toprovide similar assurance to other companies quickly as the May 15 deadline is fastapproaching. Those companies also need to provide any additional information requested by the Inspector General in a timely way.” -- Senator Chuck Grassley

“I'm glad the HHS Inspector General was able to advise one drug manufactureron how to continue its patient assistance program properly in conjunction with theMedicare drug benefit. I trust that other companies seeking advice and assistance willget timely help from the IG, so they can keep their programs going. It's good that thepharmaceutical manufacturer involved has found a way to continue providing thismuch-needed assistance, and I hope that others in the industry can do the same so thatfinancially needy Medicare beneficiaries can get the drugs they need.” -- Senator MaxBaucus

“The Inspector General's office made a good start today by clarifying for onecompany the legal parameters for operating a PAP. But more needs to be done. In thecoming days, the Inspector General must give clear guidance to other drugmanufacturers and to the free clinics also awaiting a decision. Hundreds of thousandsof Medicare recipients are scared that they will not be able to afford the prescriptiondrugs they need. We must make sure that these programs are still there to help our seniors.” -- Senator John D. (Jay) Rockefeller IV

For Immediate Release
Monday, 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 askedfor prompt and definitive guidance from the government to help ensure that Medicarebeneficiaries with extraordinary needs can continue to access additional assistancefrom pharmaceutical drug makers even after signing up for the new Medicareprescription drug benefit.

At issue is the continued availability of pharmaceutical manufacturer patientassistance programs, known as PAPs. Sens. Chuck Grassley, Max Baucus, Orrin Hatchand John D. (Jay) Rockefeller IV have urged the Inspector General for the Departmentof Health and Human Services to make a clear statement as soon as possible addressingthe legal concerns of drug manufacturers so that the additional drug assistance thathelps so many individuals through these PAPs is not discontinued after May 15, thedeadline for Medicare beneficiaries to sign up for the new Medicare drug benefit.

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

“Many seniors simply wouldn't get the drugs they need without patientassistance programs, so it's important that the government quickly provide appropriateadvice 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 drugmanufacturers from providing these vital programs, and I know the Inspector Generalwill seek to strike a balance that works.”

“We have been pushing for a resolution on this issue since November,” saidRockefeller. “We are less than a month away from having some drug companiesterminate these vital programs, and yet our seniors still have no assurance that they willbe able to get the prescription drugs they need from these programs. Nothing short ofan 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 ofpharmaceutical 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 theirprescription drugs. Many seniors and individuals with disabilities who participate inmanufacturer PAPs have chronic conditions. These beneficiaries must take veryexpensive prescription drugs - which often do not have generic drug equivalents - tomanage those conditions and to maintain their quality of life. Without assistance from aPAP, some Medicare beneficiaries may not otherwise be able to afford theirprescription drugs, even if they are enrolled in the new Medicare prescription drugbenefit.

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

Your office has achieved significant accomplishments in reducing waste, fraudand abuse in the Medicare Part A and Part B programs. We applaud the OIG's efforts inassisting, developing and implementing a comprehensive strategy to identify andprevent fraud, waste and abuse under Medicare Part D. Working with the Centers forMedicare and Medicaid Services (CMS), the Federal Bureau of Investigation (FBI) andprosecuting attorneys at the Department of Justice (DOJ), the OIG has recognized theimportance of protecting Medicare beneficiaries and taxpayers' dollars. That said, weare troubled that the OIG's Guidance may limit-albeit unintentionally-beneficiaryaccess to necessary medications. We are particularly concerned about the ongoingavailability of manufacturer PAPs for three groups of Medicare beneficiaries: 1)low-income beneficiaries of limited means who do not qualify for the low-incomesubsidy; 2) low-income beneficiaries between 135 percent and 150 percent of povertywho qualify for the low-income subsidy, but pay 15 percent coinsurance for theirprescriptions; and 3) higher-income beneficiaries with catastrophic prescription drugneeds who currently derive a significant benefit from participation in pharmaceuticalmanufacturer PAPs.

It is our understanding that some companies have requested advisory opinionsfrom the OIG regarding the legality of the specific design of their PAPs. Weunderstand that this process is iterative and that the OIG often must ask the requesterfor additional information. We hope, though, that the OIG will continue to work asexpeditiously as possible in responding to these requests, which may help mitigate thissituation. Again, we urge you to work to further clarify the legal guidance on themanufacturer PAPs as expeditiously as possible. We believe a resolution can beachieved that allows pharmaceutical manufacturers to continue providing much neededassistance to certain groups of Medicare beneficiaries in a manner that does not violatethe 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 youroffice Monday to discuss this issue further.

Sincerely,

Charles E. Grassley
Chairman

Max Baucus
Ranking Minority Member

Orrin G. Hatch
Chairman
Health Care Subcommittee

John D. Rockefeller IV
Ranking Minority Member
Health Care Subcommittee

cc: Michael Leavitt, Secretary, Health & Human Services

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