On May 21, 2014, OIG released a Supplemental Special Advisory Bulletin (the Bulletin) on independent charity patient assistance programs (PAPs) that provide cost-sharing assistance for prescription drugs. The Bulletin “reiterates and amplifies” guidance previously provided by OIG in its 2005 Special Advisory Bulletin (the 2005 Bulletin) and, according to OIG, is not intended to replace the 2005 Bulletin or other relevant guidance. The Bulletin focuses on three areas of concern: (1) disease funds that too narrowly define eligible disease states, (2) PAP eligibility defined with respect to drug cost and (3) donors correlating their PAP contributions with support for their own products.
In the new Bulletin, OIG states that charity PAPs that earmark funds for particular disease states may be subject to scrutiny if such earmarks result in donors’ contributions exclusively or primarily funding the products of major donors. While guidance from the 2005 Bulletin continues to apply (permitting bona fide independent charity PAPs to reasonably focus their efforts on patients with particular diseases such as cancer or diabetes), in the new Bulletin OIG expresses particular concern with disease funds that are too narrowly defined.
In its 2005 Bulletin, OIG expressed concern with disease funds defined by reference to specific symptoms, severity of symptoms or the method of administration of drugs. OIG expands on this list in the new Bulletin to include disease funds defined by reference to stages of a particular disease, type of drug treatment or anything else that narrows the definition of widely recognized disease states.
Importantly, OIG states that a charity with narrowly defined disease funds may be subject to scrutiny if the disease funds are directed exclusively or primarily to the products of donors, or if other facts and circumstances suggest that the disease fund is operated to induce the purchase of donors’ products, even if the charity previously obtained a favorable advisory opinion. OIG’s rationale is that in such circumstances, the facts do not comport with the certifications made by the charity in submitting the advisory opinion request (e.g., that no donor has exerted any direct or indirect influence or control over the charity or any of its programs), and that such arrangements are not protected by the opinion. OIG projects that certain favorable advisory opinions will need to be modified, and it intends to notify recipients regarding modifications or terminations of opinions.
Also subject to increased scrutiny according to the new guidance are disease funds that limit assistance to a subset of available products by, for example, covering copayments only for expensive or specialty drugs rather than (i) all products approved by the FDA for treatment of the disease state(s) or (ii) all products covered by the relevant federal health care program for the relevant disease state(s), including generic or bioequivalent drugs.
Disease funds that cover only a single product or the products of a single manufacturer that is a major donor to the fund will also be subject to scrutiny, according to the Bulletin. In contrast, guidance in the 2005 Bulletin had suggested that coverage by a disease fund of only one drug or drugs made by one manufacturer would not, standing alone, be determinative of a federal Anti-Kickback Statute violation where Medicare Part D coverage was also so limited.
While OIG states that its previous 2005 Bulletin guidance regarding safeguards to recipient eligibility continues to apply, OIG emphasizes that the cost of a particular drug is not an appropriate stand-alone factor for determining individual financial need for PAP eligibility. Rather, as outlined in the 2005 Bulletin, independent charity PAPs must determine eligibility based on a reasonable, verifiable and uniform measure of financial need. This may include measures such as poverty guidelines, local cost of living and the scope and extent of a patient’s total medical bills.
In the new Bulletin, OIG also emphasizes that generous financial need criteria, particularly where a fund is limited to a subset of available drugs or the drugs of a major donor, could be evidence of intent to fund a substantial part of the copayments for particular drugs for the purpose of inducing the use of those drugs.
Conduct of Donors
Finally, OIG states that actions by donors to correlate their funding of PAPs with support for their own products (by, for example, correlating the amount or frequency of donations with the number of aid recipients who use the donor’s products or services or the volume of those products supported by the PAP) may be indicative of a donor’s intent to channel its financial support to copayments for its own products, which, according to OIG, implicates the federal Anti-Kickback Statute.