Patient advocates ask U.S. court to halt AFP’s prescribing practices

A coalition of patient advocacy groups is asking a federal court to block third-party companies from purchasing drugs from countries outside the FDA-regulated U.S. supply chain, arguing that the practice endangers the health of American patients.

The court filing comes in the wake of a CNBC investigation documenting how these third-party agencies, commonly referred to as alternative funding programs (AFPs), have spread to employer-sponsored health plans across the country. Under its growing business model, AFP sources expensive specialty medicines from overseas at lower prices and charges employers a fee or a cut of the savings. AFP then provides the drug at little or no cost to the patient.

AFP is especially attractive to small employers, such as local school districts and county governments, who pay out-of-pocket for their employees’ medical costs. But there are also trade-offs. Federal officials from the Department of Homeland Security and the Food and Drug Administration told CNBC that the drugs are being imported illegally and are putting patients’ lives at risk. Homeland Security Investigations officials told CNBC last year that a criminal investigation into AFP was ongoing.

The Dec. 26 filing with the U.S. Court of Appeals in Maryland was led by the HIV+ Hepatitis Policy Institute, a nonprofit organization that advocates for safe and affordable treatment for people living with HIV and viral hepatitis.

“Forcing people with employer-sponsored health insurance to contract with unknown third-party vendors to receive life-saving medicines supplied from abroad is not only illegal, it puts patients’ health and safety at risk,” Karl Schmidt, executive director of the HIV+ Hepatitis Policy Institute, said in a press release. “Federal regulators should shut down these practices, but in the meantime, the courts must step in to protect patients.”

Patient groups said in a court filing that the arrangement could delay treatment, confuse patients and expose them to drugs different from those distributed through the highly regulated U.S. system. They warned that patients with chronic or life-threatening illnesses should not be forced to sacrifice the safety and reliability of approved U.S. supply chains to save costs for their employers.

The amicus brief filing was filed in a lawsuit brought by: Gilead Sciences After the company learned that HIV patients received Gilead drugs with labels written in Turkish, Gilead claims the drugs were delivered through an unsafe supply chain that did not comply with U.S. law. U.S. officials say Turkey is a known hotbed for counterfeit medicines.

Gilead sued several companies involved in administering employer health insurance, including the alternative funding program Rx Valet.

Georgia-based AFP News Agency CEO Greg Santulli told CNBC last year that the company is confident in the safety of the medicines it sources, adding that Turkey is a “modern, sophisticated country” that can trace medicines through the supply chain.

The lawsuit also names Mertain Health, which manages patient employee health plans and is owned by CVS Health.

A CVS Health spokesperson told CNBC last year that the company “has long maintained a policy of not supporting programs for non-FDA-approved drugs sourced from outside the United States and not contracting with companies that facilitate the importation of non-FDA-approved drugs from overseas.”

A federal judge has issued a preliminary injunction preventing all parties to the lawsuit from importing Gilead drugs from overseas. The defendants are appealing the ruling, with Meritain arguing that the injunction is unnecessary and would harm its business. Rx Vallet said in a court filing that the injunction undermines access to safe medicines, adding that Gilead’s HIV drugs shipped from Turkey are the same as those sold in the United States at much higher prices.