The Inspector General took an unprecedented step Tuesday, rescinding a favorable Advisory Opinion first issued in 2006 that had provided assurances to the patient assistance charity, Caring Voice Coalition, that its drug subsidy program would not expose the organization to liability under the Anti-Kickback Statute.

The now-void Advisory Opinion 06-04[1] concluded that the charity’s practice of subsidizing out-of-pocket treatment costs for patients with certain chronic conditions, while not falling squarely within the protection of any applicable Anti-Kickback Safe Harbors, would not subject the organization to sanctions. Caring Voice Coalition, one of the largest U.S. patient assistance charities, maintains its drug subsidy program funding, at least in part, through donations from the pharmaceutical companies whose drugs are being subsidized. In reaching its initial decision, OIG relied on the charity’s certification that “no donor or affiliate of any donor . . . has exerted or will exert any direct or indirect influence or control over the [charity] or any of the [charity’s] programs” and that “[n]o individual patient information will be conveyed to donors.”[2]

OIG now points to the charity’s “failure to fully, completely, and accurately disclose all relevant and material facts” and contends in its November 28, 2017 Final Notice of Rescission that Caring Voice Coalition “(i) provided patient-specific data to one or more donors that would enable the donor(s) to correlate the amount and frequency of their donations with the number of subsidized prescriptions or orders for their products, and (ii) allowed donors to directly or indirectly influence the identification or delineation of [the charity’s] disease categories.”[3]

The letter describes the potential harm to patients and federal health care programs as a form of patient-steering, alleging that the charity here “served as a conduit for financial assistance from a pharmaceutical manufacturer donor to a patient.”[4] In essence, OIG has charged Caring Voice Coalition with allowing its subsidy program to operate as a collusive mechanism, permitting drug manufacturers to increase drug prices dramatically while the charity shields the patient from personal financial impact and federal payors pick up the tab. OIG expressed concern that “patients may be urged to seek, and physicians may be more likely to prescribe, a more expensive drug if copayment assistance is available for that drug but not for less expensive but therapeutically equivalent alternatives.”[5]

OIG’s extraordinary letter closes with an ominous warning and an unequivocal reservation of the right to revoke the Opinion’s protective designation retroactively:

The rescission of 06-04 means that the advisory opinion and its modification are revoked retroactively to the original date of issuance (April 20, 2006) and will be deemed to have been without force and effect at any time. [citation omitted]

Although the Requestor has represented it may cease operations, we note that OIG’s rescission of 06-04 does not require Requestor to do so. Should Requestor continue operations, all relevant laws and regulations continue to apply, and any violations could trigger enforcement action. To the extent that Requestor ceases operations, we would expect it to act in accordance with its nonprofit, charitable, tax-exempt purposes and either operate or wind down in a manner that protects patients and their access to outpatient prescription drugs. In addition, should Requestor cease operations, pharmaceutical manufacturers that wish to provide free drugs to impacted patients for the remaining period during which the patients otherwise would have received copayment assistance from Requestor may contact OIG if they have fraud and abuse concerns.”[6]