Injurious Tactics Associated with Alternative Funding Programs are Growing

By: Ranier Simons, ADAP Blog Guest Contributor

Barriers to accessing prescription medications, especially specialty drugs, is a constant challenge for many patients in the healthcare expenditure ecosystem. It is made more complicated by the constant tug-a-war between public payors, insurance companies, pharmacy benefits managers (PBMs) and drug manufacturers over cost. Unfortunately, patient harm is often the collateral damage of the insurers attempting to cut costs while maximizing profits. To save money, alternative funding program (AFP) utilization by insurers and PBMs is a gimmick increasing in popularity. The injurious tactics associated with AFPs are growing, and more data is being collected regarding the problems they are causing patients.

Photo Source: MMIT

A recent study indicated that 75% of employers utilizing AFPs plan to continue their use, with one in three large employers considering using them in the future (Doxey & Balicki, 2024). AFPs operate by partnering with employers to fraudulently, for their profit, utilize programs offered by drug manufacturers and private charitable entities that are in place to help needy patients. It also targets certain public safety net programs, such as State AIDS Drug Assistance Programs (ADAPs).

They do this by manipulating employer plans to take advantage of copay assistance programs, patient assistance programs (PAP), and even international mail orders. In return for employers saving money, patients are suffering. A patient experience study involving a survey of 227 patients utilizing AFPs showed that 88% reported stress and anxiety due to medication uncertainty due to coverage denial, the average wait time to receive medication was 68.2 days, and 24% explained the delay caused them adverse side effects including worsening of their condition (Wong et al., 2024).

One of the most dangerous AFP practices is drug importation. In this case, AFPs force patients to take non-FDA-approved drugs from overseas. They, in essence, broker personal drug importation between patients and unlicensed illegal foreign pharmacies (Partnership for Safe Medicines, 2024). First and foremost, in most circumstances, personal importation of drugs and devices into the U.S. is illegal (FDA, 2024). In the narrow instances where the FDA allows some permissible discretion with importation, the expectation was for specific individual needs. It was not for large-scale utilization by employers and AFPs. As explained by Shabbir Imber Safdar, Executive Director of the Partnership for Safe Medicines (PSM), “Employers participating in these plans are opening themselves up to enormous legal liability when they encourage their employees to take a risk with their medical care in order to save the employer a few dollars.”

Photo Source: Partnership for Safe Medicines

Under the drug importation scheme, AFPs convince employers to carve out expensive and specialty medications from coverage to source them from outside of the United States for lower prices (Partnership for Safe Medicines, 2024). Patients using these self-funded employer plans are told they must agree to foreign-sourced medication to receive their needed therapies. To avoid violating essential health benefit (EHB) coverage laws, some employers simply encourage patients to use foreign-based medications instead of carving out medications from coverage. Employers explain to patients that they will pay less money if they buy the foreign drugs in comparison to what they’d be charged by the plan otherwise. 

The foreign sources used to obtain these medications are outside of the U.S. Drug Supply Chain Security Act tracking system known as “track and trace” (Partnership for Safe Medicines, 2024). As such, patients are in danger of receiving dangerous counterfeit drugs or drugs that have not been appropriately handled. Safdar says, "These medicines are not inspected or approved by the U.S. Food and Drug Administration. Their packaging and safety instructions are not the same as the U.S. product, if they're even real at all, and they're dispensed by unlicensed foreign businesses." Patients have no protection or recourse if they are harmed by counterfeit or poorly handled foreign-sourced medication. Additionally, the medications most commonly targeted for AFP drug importation schemes are used to treat asthma, cancer, epilepsy, hepatitis, HIV, pulmonary hypertension, and organ rejection (Partnership for Safe Medicines, 2024). These vulnerable populations could suffer fatal harm from counterfeit or ineffective medications.

Using the Freedom of Information Act (FOIA), PSM analyzed 16 towns and school districts, identifying over $4 million of imported medication invoices. Employers are enticed by the cost savings presented by AFPs. In one city, PSM found that the base cost of one Trulicity prescription was $1,100.00 without foreign drug importation and only $438.00 with the drug being imported. Several widely used HIV antiretrovirals were also found on these invoices: Biktarvy, Dovato, Genvoya, and Descovy. Employers that utilize the AFP drug importation programs pay fees to the AFPs. Safdar further explains that employers usually pay a percentage of the perceived “savings” difference between the regular market costs of the drugs compared to the foreign import costs. Thus, employers are spending money for the program in addition to what they are paying to purchase the imported drugs. AFPs are purely profit-driven and are not in service of helping patients.

All AFP schemes are predatory, whether they are exploiting PAPs, utilizing copay accumulators, or foreign drug importation schemes. However, AFPs are also discriminatory. Specifically, they are discriminatory against low-income patients. The PAPs that AFPs exploit, whether they be a manufacturer or charitable organization, usually have income threshold requirements. Thus, the patients likely to be approved for the programs are those with lower incomes (Prescription, 2023). Employees with higher incomes will not qualify, and subsequently, the employer plan will end up covering their medication under standard cost-sharing. However, the lower-income employees are forced to remain on the AFP-obtained PAP.

Photo Source: Optum for Business

In this manner, lower-income employees face higher barriers to medication access. However, they are paying the same premiums as other employees whose income disqualifies them from utilizing fraudulent PAP enrollment (Prescription, 2023). Low-income employees are subject to delays due to mail-order pharmacy requirements and the stress of navigating the bureaucracy of application and approval of the PAP access via the AFP. Employees on standard covered medications can start their treatment immediately upon receiving a prescription from their doctor. Patients prescribed “carved-out” medications are subject to suboptimal care.

Patients expect the insurance plans they pay for to provide the coverage they need. By utilizing deceptive AFPs, employers with self-insured health plans, both large and small, do not fulfill their fiduciary duties nor the promise of patient care. For the sake of profit, AFPs endanger patients' health and well-being, impede patient assistance entities' ability to provide help to those genuinely in need and violate the law. Outlawing them will protect the vulnerable workers they exploit and add some stability to the presently fragile healthcare ecosystem.

[1] Doxey, P., Balicki, C. (2024). The Present and Future of Alternative Funding Programs for Specialty Drugs. Retrieved from https://leavittpartners.com/the-present-and-future-of-alternative-funding-programs-for-specialty-drugs/

[2] The Partnership for Safe Medicines. (2024). Alternative Funding Programs: Offshoring patients, importing risks. Retrieved from https://www.safemedicines.org/2024/04/afps-offshoring-patients-importing-risks.html

[3] Prescription for Better Access. (2023, November 17). 12: How Alternative Funding Programs Exploit Patient Assistance Programs (Podcast). Retrieved from https://prescriptionforbetteraccess.com/12-how-alternative-funding-programs-exploit-patient-assistance-programs/

[4] United States Food and Drug Administration. (2024, October 8). Personal Importation. Retrieved from https://www.fda.gov/industry/import-basics/personal-importation

[5] Wong, W. B., Yermilov, I., Dalglish, H., Bienvenu, L., James, J., & Gibbs, S. N. (2024). A descriptive survey of patient experiences and access to specialty medicines with alternative funding programs. Journal of managed care & specialty pharmacy, 30(11), 1308–1316. https://doi.org/10.18553/jmcp.2024.30.11.1308

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.