On May 21, 2014, the Office of the Inspector General ("OIG") of the Department of Health and Human Services ("DHHS") issued a supplemental special advisory bulletin ("Bulletin") on independent charity patient assistance programs.  The Bulletin provides guidance regarding patient assistance programs operated by independent charities ("Programs") that provide cost-sharing assistance for prescription drugs to patients who cannot afford their cost-sharing obligations under the Medicare Part D program.  In this Bulletin, the OIG discusses certain risks of these patient assistance programs under the federal anti-kickback statute ("Anti-Kickback Statute"), and the provision of the civil monetary penalties law prohibiting inducements to Medicare and Medicaid beneficiaries ("Inducement Prohibition").  Also, the OIG expands on prior guidance regarding donations by pharmaceutical manufacturers to these Programs.

Anti-Kickback Statute

The OIG believes two aspects of these Programs require scrutiny under the Anti-Kickback Statute: donor contributions to Programs (which can also be analyzed as indirect remuneration to patients) and Program grants to patients. If a donation is made to a Program to induce it to recommend or arrange for the purchase of the donor's federally reimbursable items, the Anti-Kickback Statute could be violated. Similarly, if a Program's grant of financial assistance to a patient is made to influence the patient to purchase (or to induce the patient's physician to prescribe) the donor's federally reimbursable items, the Anti-Kickback Statute could be violated.  Whether a particular arrangement violates the Anti-Kickback Statute requires an individualized evaluation of all of the relevant facts and circumstances, including the parties' intent.

Inducement Prohibition

The OIG also has specific concerns regarding subsidies provided to a Program by pharmaceutical manufacturers.  Such subsidies may implicate the Inducement Prohibition if the subsidy is likely to influence a Medicare or Medicaid beneficiary's selection of a particular provider, practitioner, or supplier, such as by making eligibility dependent on the patient's use of certain prescribing physicians or certain pharmacies to dispense the drugs.

Donations by Pharmaceutical Manufacturers

In its earlier guidance, the OIG raised concerns about pharmaceutical manufacturer patient assistance programs that subsidize Part D cost-sharing amounts, stating they pose a heightened risk under the Anti-Kickback Statute.  However, the OIG also stated that pharmaceutical manufacturers can donate to bona fide independent charity Programs that provide such subsidies, provided appropriate safeguards exist.  The Bulletin focuses on three specific areas with regard to such Programs: disease funds, recipient eligibility, and donor conduct.

A disease fund is a fund earmarked for patients with particular diseases, e.g. cancer or diabetes.  This alone should not significantly raise the risk of abuse.  However, the OIG expressed concerns over defining the disease categories so narrowly that the earmarking effectively results in the donor subsidizing its own products.  A Program with narrowly defined disease funds may be subject to scrutiny if the disease funds result in funding exclusively or primarily the products of donors or if other facts and circumstances suggest that the disease fund is operated to induce the purchase of donors' products. The Bulletin expresses additional concerns regarding limitation of assistance to a subset of available products, such as specialty drugs or expensive drugs.  Also, a disease fund that covers only a single product, or the products made or marketed by only a single manufacturer that is a major donor to the fund, will be subject to scrutiny.

Recipient eligibility is another area of concern for the OIG.  The Bulletin states that Programs must determine eligibility according to a reasonable, verifiable, and uniform measure of financial need that is applied in a consistent manner.  The cost of the particular drug for which the patient is applying for assistance is not an appropriate stand-alone factor in determining individual financial need, as this may result in steering patients to a particular donor's drug.  Also, generous financial need criteria, particularly when 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 a particular drug or drugs for the purpose of inducing the use of those drugs, rather than for the purpose of supporting financially needy patients diagnosed with a particular disease.

In the Bulletin, the OIG notes that its overall focus has been on the conduct of Programs, especially with regard to Advisory Opinions requested by Programs.  In requesting an Advisory Opinion, a Program can only certify its own actions, not the actions of donors.  In requesting these Advisory Opinions, Programs typically certify the actions they will take to ensure independence from donors.  For example, they will typically certify that they will provide donors only with aggregate data, and not provide information that would enable a donor to correlate the amount or frequency of donations with the number of subsidy recipients who use its products or services or the volume of those products supported by the Program.  Actions by donors to correlate their funding of Programs with support for the donors' products may indicate the intent to channel financial support to their own products, thereby implicating the Anti-Kickback Statute.