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Speaker 1: Well, now is time for our daily Bloomberg Law Brief,

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Speaker 1: exploring legal issues in the news, and today Bloomberg Lajo

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Speaker 1: stuon Grosso and Greg Store discuss an i r S

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Speaker 1: probe into the tax exempt status of a charity funded

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Speaker 1: by pharmaceutical companies. Critics say it allows pharmaceutical companies to

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Speaker 1: help patients pay for expensive drugs. They speak with Bloomberg

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Speaker 1: News reporter Robert Landgrath explain how these patient assistance charities work. So,

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Speaker 1: it turns out, if you're on Medicare, as a patient

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Speaker 1: on Medicare and other government programs, drug makers are not

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Speaker 1: allowed to directly pay for that patient's co payment if

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Speaker 1: they can't afford it. That's viewed at a potentially in

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Speaker 1: legal kickback. So it's happened as these a group of

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Speaker 1: charities that have sprung up to help patients can't afford it,

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Speaker 1: pay for their their portion their co payment of very

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Speaker 1: expensive drugs hundred thousand dollar drugs for cancer and multiple grosses.

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Speaker 1: And the controversy is over whether some of these charities

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Speaker 1: maybe too close in some way to their donors as

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Speaker 1: and it turns out they've created very narrow disease funds

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Speaker 1: where most of the money ends up going back UH

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Speaker 1: and these disease funds may be funded by just one

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Speaker 1: or two drug companies and most of the money ends

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Speaker 1: up going back to patients taking those drug companies drugs.

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Speaker 1: And now it turns out the I R S is

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Speaker 1: looking into one of these charities, the Chronic Disease Fund,

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Speaker 1: and looking to see whether, you know, does it deserve

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Speaker 1: tax except status? And the I R S has done

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Speaker 1: an analysis and as we found it in court papers

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Speaker 1: showing that of a nine point three million the charities

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Speaker 1: spent on co payment support in two thousand eleven went

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Speaker 1: back to patients taking drugs made by its donors. So

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Speaker 1: what is it that would be potentially illegal here? What

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Speaker 1: is the I r S looking for? Are those numbers

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Speaker 1: you're talking about enough to make a case or do

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Speaker 1: they have to find something more? Well, it's not clear

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Speaker 1: exactly what the I r S is going to, but

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Speaker 1: they do sometimes, you know, declare have findings that you know,

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Speaker 1: charity is no longer entitled to tax exempt status. We

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Speaker 1: talked to some tax experts who said, you know, what

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Speaker 1: the I R S appears to be looking at is

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Speaker 1: whether this charity was effectively really operating as a marketing

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Speaker 1: arm essentially of drug companies and therefore doesn't deserve its

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Speaker 1: charitable status and as Bloomberg News reporter Robert de Langreth

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Speaker 1: speaking with the Bloomberg lah Hoo stuon Grasso and Greg Sture.

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Speaker 1: You can listen to Bloomberg Law weekdays at one pm

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Speaker 1: morning's Bloomberg Law Brief. You can find more legal news

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Speaker 1: b and A dot com for more information.