As we discussed last month, the Office of Inspector General (OIG) rescinded Advisory Opinion 06-04 (Opinion 06-04), provided to a nonprofit, tax-exempt, charitable patient assistance program (PAP) because it determined that the PAP failed to fully, completely and accurately disclose all relevant and material facts to the OIG and failed to comply with certain factual certifications it made to the OIG, which were material to the OIG’s conclusion that the arrangement did not implicate section 1128A(a)(5) of the Social Security Act (SSA) or the Federal Anti-Kickback Statute (AKS).

On January 4, 2018, the OIG sent a letter (Letter) to the Pharmaceutical Research and Manufacturers of America (PhRMA) in response to an announcement by Caring Voice Coalition, Inc. (CVC), that it would not provide financial assistance to patients in 2018. The Letter provides a limited method for drug companies to assist patients who formerly received assistance from CVC to obtain prescription medications. Specifically, the OIG stated in the Letter that, “After consideration of all the relevant circumstances,…Drug Companies will not be subject to OIG administrative sanctions if they provide free drugs in 2018 to Federal health care program beneficiaries who were receiving cost-sharing support from CVC as of November 28, 2017,” as long as the following conditions are met:

  • “The free drugs are provided in a uniform and consistent manner to Federal health care program beneficiaries who: (i) were receiving cost sharing assistance from CVC for the same drug(s) as of November 28, 2017; and (ii) have been impacted by CVC’s decision not to provide assistance in 2018.
  • The free drugs are awarded without regard to the beneficiary’s choice of provider, practitioner, supplier, or health plan.
  • The free drugs are not billed to any Federal health care program, counted toward the beneficiary’s Medicare Part D true out-of-pocket costs (TrOOP), resold, or otherwise billed to a third-party payor.
  • The provision of the free drugs is not contingent on any future purchases or orders of the drugs or any other item or service.
  • The Drug Company maintains accurate, contemporaneous, and complete records of the free drugs it furnishes to Federal health care program beneficiaries.”

In a footnote to these conditions, the OIG stated that the free drug programs that utilize a single pharmacy do not implicate the Civil Monetary Penalties Law as no payment was made by a Federal or state health care program. The OIG stated that the Letter should not be interpreted as guidance to manufacturers on how to structure free drug programs for Federal health care program beneficiaries.