The opinion "illustrates that lawful avenues exist for pharmaceutical manufacturers to give assistance to financially needy patients, including Medicare beneficiaries enrolled in Part D." Levinson said.

This opinion also addresses concerns that rx makers have about the types of rx assistance offerred being construed as kickbacks.

Drug companies said federal authorities could construe the giveaways as an illegal inducement to beneficiaries to continue seeking brand-name drugs when their prescriptions are no longer subject to coverage gaps in the Medicare drug benefit and Medicare begins picking up the tab.

Federal authorities acknowledged that to be the case, saying giveaways can be designed in a way that steers beneficiaries to certain brand-name products. That kind of steering would cost Medicare money when cheaper alternatives such as generic drugs are available, they note. But they added that giveaway programs do not inherently constitute an illegal inducement to beneficiaries.

The opinion notes that the value of the drugs given to qualifying beneficiaries will not count toward the "catastrophic costs trigger" -- the point at which out-of-pocket costs reach such a high total that Medicare picks up 95 percent of prescription costs.

PhRMA Senior Vice President Ken Johnson:

"While the advisory opinion is effective only for the company that requested it, such opinions can provide useful guidance to other companies.  We have sent a copy of the opinion to our members and undoubtedly they are reviewing it and comparing it to their own programs."

According to Schering-Plough, patients can apply for assistance through two programs: Commitment to Care, which covers the company's cancer and hepatitis drugs, and SP-Cares, which includes most of its other prescription medications.

"In 2005, these programs provided more than 120,000 patients with more than $125 million worth of Schering-Plough products."

To be eligible, a person's income must not exceed certain levels out-of-pocket drug costs must exceeding 3 percent of their household incomes.

Johnson said he did not know whether the opinion means all giveaway programs will continue to be available to Medicare beneficiaries. Johnson further stated,

"All of the companies and all of the programs operate independently.  Certainly we believe it will provide an impetus for many of our companies to continue."

The opinion only applies to the Schering-Plough program as it is designed in a way that would not lead to wasteful Medicare outlays.

Consumer groups and key lawmakers stated that all programs should continue as Medicare D(isaster) has coverage gaps and prescriptions unaffordable for needy beneficiaries.