Irene Adkins doesn’t know how she’s going to afford the drugsthat keep her alive in 2018. The 59-year-old former buildingsupervisor from Falls Church, Va., suffers from pulmonaryhypertension, a rare lung disorder that can lead to fatal heartfailure if left untreated. To keep the disease at bay she takes afew pills each day that, together, cost about $150,000 per year. While Adkins’sgovernment-funded Medicare plan covers most of the cost, herout-of-pocket portion is about $10,000—a sum she can’t afford onher $1,600-a-month disability check.

Like hundreds of thousands of Medicare patients who can’t affordthe copays on astronomically priced drugs, Adkins has turnedto help from a fast-growing corner of the convoluted U.S. healthsystem: patient assistance charities, which are funded almostentirely by drugmaker contributions and help Medicarepatients with out-of-pocket expenses.

Now that help is in peril. For the past two yearsfederal regulators have issued subpoenas and scrutinizedrelationships between drug companies and the charities, which aresupposed to operate independently from industry donors. In Novemberthe U.S. Department of Health and Human Services yanked itsapproval from one charity, Caring Voice Coalition Inc., which gave$129 million in aid to tens of thousands of patients in 2016.Caring Voice now says it may not be able to help patients nextyear. It plans to announce its decision about its future inJanuary.

“It’s terrifying,” says Adkins, one of Caring Voice’sbeneficiaries, who has only enough medicine to last until lateJanuary and already needs supplemental oxygen. “I am going to diewithout this.”

Patient assistance charities have existed for more than 25years, but they grew exponentially after Congress expanded Medicarein 2003 to cover prescription drugs. While drugmakers are allowedto help patients who have private insurance directly, such as bygiving them coupons to cover their copays, they can’t do this formore than 40 million patients on government-funded Medicare drugplans. The government considers this a kickback, one that couldsteer patients toward higher-priced medications. But it allowsdrugmakers to donate money to independent patient assistancecharities, which can help Medicare recipients with out-of-pocketexpenses, as long as the pharmaceutical companies don’t exert anyinfluence over how the charities are run or whom they help. Thedrug industry has warmly embraced this arrangement, withcontributions to the seven biggest patient assistance charitiesjumping from a combined $450 million in 2010 to $1.4 billion in2016.

Drugmakers’ gifts to these charities often enhance their ownbottom lines by keeping patients on high-priced drugs, while thecompanies recoup most of the medicines’ cost from Medicare. In somecases, every million-dollar donation from a pharma company to acopay charity can generate up to $21 million in sales, according toa recent report from Citi Research. While this helps patients anddrug companies, it has a nasty side effect: By ensuring patientscan afford medicines even at staggering prices, it removes one ofthe few deterrents to fast-rising drug prices.

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“They became a way for pharmaceutical and biotech companies tocharge exorbitant prices without losing customers,” says HartajSingh, a senior analyst at Oppenheimer & Co. “It shifts theburden of drug prices onto the taxpayer.”

Despite government rules, the lines separating drug companiesand charities have sometimes become blurred. A Bloomberg Businessweek investigationin 2016 found that Caring Voice in some cases appeared to givepreferential treatment to patients of donor companies. Forinstance, patients who needed donor Jazz Pharmaceuticals Plc’sexpensive narcolepsy drug Xyrem got help quickly, while patientsusing other narcolepsy drugs from nondonors were sometimes steeredaway or wait-listed. Jazz says it’s stopped donating to CaringVoice in favor of another charity and has a program to ensurecompliance with federal rules on donations. In a statement, CaringVoice said “we continue to concentrate on ensuring that each of ourpractices at CVC follow both the letter and spirit of allapplicable laws and regulations.”

Increased scrutiny by regulators has triggered a wave ofsubpoenas, fines, and sanctions. Since December 2015, at least 15drug companies, including Gilead Sciences, Pfizer, and Johnson& Johnson, have received subpoenas from the U.S. Department ofJustice regarding their relationships with these charities. Gilead,Pfizer, and J&J say they’re cooperating with the probe.

On Dec. 20, the DOJ announced a $210 million settlement withUnited Therapeutics Corp., a maker of pulmonary hypertension drugs,for using Caring Voice to funnel money to its own patients. Thecompany tracked its donations to ensure that sales from Medicarepatients being helped “far exceeded” its donations, the governmentalleged. Separately, Celgene Corp., which denied wrongdoing, and Aegerion Pharmaceuticalsreached settlements with federal and state officials in 2017.

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In November, HHS jolted the industry by revoking the favorableadvisory opinion it had given Caring Voice. The charity, it said,violated rules by sharing data with drugmakers and letting theminfluence how it set up its disease funds—potentially steeringdrugmakers’ donations largely to their own patients.

The crackdown has particularly affected companies with Medicarepatients on pricey medicine. Makers of costly drugs that treatprostate and ovarian cancer, for instance, said that more poorcustomers in 2017 were pushed into free-drug programs, wheredrugmakers or related foundations supply medicines for free,cutting into their profits. Johnson & Johnson said in July that15 percent of prescriptions for a prostate cancer drug, Zytiga,were via a free-drug program, vs. 4 percent a year earlier. “Fundsthat in the past [have] been available from foundations are nolonger available,” said Patrick Mahaffy, chief executive officer ofClovis Oncology Inc., on a November earnings call. “We expect thistrend to continue into the foreseeable future.”

For some patients, this sets up a scramble to get funds beforethey dry up. Patients suffering from multiple myeloma, a bloodcancer, had only one day in 2017 to sign up for support from thePatient Access Network Foundation, thebiggest of the charities. A similar fund at the Leukemia &Lymphoma Society ran out of cash for the first time in October.

For Jennifer Koehler, who manages the medication assistanceprogram at Community Health Network, a health-care provider inIndianapolis, it means she spends more of her time helping patientsget aid from these charitable funds. On a recent Friday night, shereceived an email alert that a breast cancer fund had opened up atone of the charities. She had 15 patients waiting for help, so sheimmediately sat down at her computer and began to register them oneat a time. To her chagrin, she had only signed up five of herpatients before the fund closed again. “This year has been a littlemore difficult than prior years,” she says.

The Justice Department’s investigation “poses an existentialthreat to the entire charitable sector that assists sick andfinancially vulnerable patients,” says Dana Kuhn, president of oneof the charities, Patient Services Inc., which expects tosupport 2,000 fewer patients in 2018 because of a 17 percentdecline in contributions.

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