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In the face of rising drug prices, health plan sponsors have quietly used a clever, but questionable tactic over the past few years to deflect costs. And now, some pharmaceutical companies are pushing back.

The maneuver goes by different names — it’s sometimes called a specialty carve out, or alternative funding – but relies on exploiting charitable programs. It works like this: a health plan sponsor excludes certain expensive specialty medicines from coverage and taps an outside vendor to help patients obtain the drugs for free from patient assistance programs run by drugmakers or foundations.


By doing so, plan sponsors — usually employers that fund their own health coverage — no longer have to pay for the medicines. Instead, the pharmaceutical company bears the cost. Typically, drug companies provide free medicines directly through their own assistance programs or work with charitable foundations, many of which receive some funding from drug companies and are devoted to assisting patients with specific diseases.

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