In Advisory Opinion No. 07-04 (April 6, 2007), the OIG permitted the distribution of free outpatient pharmaceuticals to financially needy patients enrolled in Medicare Part D. A subsidiary of a pharmaceutical manufacturer had operated patient assistance programs (PAPs) providing drugs to certain qualifying patients who lacked insurance coverage. The company desired to extend its PAP programs to patients enrolled in Medicare Part D. The targeted patients would be limited to those who are eligible for the Part D low-income subsidy. In addition, patients would have to meet certain financial need tests. For self-administered drugs, the patients must have annual incomes of 200% or less of the federal poverty level. For physician administered drugs, patients must have annual incomes of 275% or less of the federal poverty level. Assistance would not be conditioned on the type of provider, practitioner or supplier of drugs, or the type of Part D plan used by the patient. The company would pay the pharmacy fair market value for providing the drugs. In addition, the free drugs would not count as true out-of-pocket spending under the Part D program. The company will not charge the patient, the Part D plan, or Medicare for the provision of the drug. The OIG was convinced that the PAP program had sufficient safeguards to avoid an Anti-Kickback violation. Specifically, the OIG noted that the PAPs will notify the patient’s Part D plans that the drugs are outside of the Part D benefit. Second, eligibility for PAP assistance is limited to those having a demonstrated financial need using a methodology that does not consider the patient’s type of Part D plan. The OIG believed the form of the program avoided the risk that the PAP covered drugs would be used to tie patients to particular drugs payable by Part D or that the drugs would be used to increase costs to the Part D program.