Many manufacturers and providers donate to independent charitable foundation patient assistance programs (PAPs) that help financially needy patients, including federal healthcare program beneficiaries, obtain services, drugs, and devices vital to treating their chronic diseases. On June 4, 2015, the Office of Inspector General (OIG) issued Advisory Opinion 15-06, the latest Advisory Opinion reviewing the structure of an independent charitable foundation’s PAP vis-a-vis the beneficiary inducement civil monetary penalty and the federal Anti-Kickback Statute (AKS). The Advisory Opinion builds on previous OIG guidance, including the principles OIG announced in the 2005 Special Advisory Bulletin on patient assistance programsand last May’s supplemental Special Advisory Bulletin (2014 SAB), which provided additional guidance related to the creation of disease funds, eligible recipients, and the conduct of donors. In keeping with these past pronouncements, Advisory Opinion 15-06 perhaps is most notable for its strict implementation of OIG’s guidance and may provide an illustration of the level of independence OIG would expect independent charitable foundations to have from their donors and vendors. Specifically, the Advisory Opinion provides potential insights into OIG’s expectations related to: 1) the definition of disease funds; 2) the data that may be shared with donors; and 3) the charitable foundation’s independence from influence or control by donors or the foundation’s vendors. 

Disease Funds 

Although OIG has acknowledged that independent charitable organizations may focus their efforts on patients with particular diseases, and donors may earmark donations for one or more broad disease funds, the 2014 SAB underscored OIG’s substantial concern with the practice of independent charitable PAPs operating disease funds that limit assistance to a subset of available products. The requesting charitable foundation in Advisory Opinion 15-06 appears to have successfully addressed OIG’s concerns. In addition to certifying that it will, consistent with previous OIG guidance, define its disease funds independent from donors and in accordance with broadly defined disease states based on widely recognized clinical standards1, the charitable foundation further appears to have implemented additional safeguards. First, the charitable foundation certified that it will make copayment assistance available for all drugs, including generic or bioequivalent drugs, and devices covered by Medicare or a patient’s non-governmental insurer for the treatment of the disease that is the subject of the PAP fund. Second, the charitable foundation certified that its disease funds will not provide copay assistance for only one drug or device, or for drugs or devices manufactured by only one manufacturer or its affiliate(s). As is often the case with orphan drugs and rare diseases, where there is only one drug or device approved by the FDA to treat a disease, or if all FDA-approved drugs or devices are manufactured by a single manufacturer (or its affiliate(s)), the fund will also provide assistance with other medical needs of patients with that disease, in addition to copayment support for the FDA-approved treatment of the disease. At a minimum, the foundation would provide copayment support for all drugs that treat symptoms of the disease or side effects of treatments. These additional safeguards appear to be in response to OIG’s statement in the 2014 SAB that funds that “cover" 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.2

Restrictions on Data Provided to Donors

In the 2005 and 2014 SAB, OIG underscored the importance of limiting the data flow between independent charitable foundations and donors. Generally, independent charitable foundations should not provide their donors with information that may help the donor to correlate its donations with reimbursements for its products. In particular, OIG has cautioned that PAPs should not provide donors with individual patient information and instead should only provide limited aggregate data on the number of applicants for assistance, the number qualifying for assistance, and overall amount of assistance disbursed by the foundation. The requesting foundation in the Advisory Opinion demonstrated its implementation of OIG’s guidance by certifying, with OIG’s approval, that it will not provide its donors with any “data related to the identity, amount, or nature of drugs, devices, or services subsidized by the patient assistance program.3” 

Restrictions and Requirements for Vendors

The Advisory Opinion also illuminates the level of independence OIG may expect independent charitable foundations to have from its vendors that administer the PAP. OIG gave a positive opinion to the charitable foundation partly based on the following safeguards the charitable foundation certified that it would implement. Specifically, the foundation certified that vendor employees or agents would not influence the structure or eligibility criteria of any disease fund, would be prohibited from proposing new disease funds or eligibility criteria, and would be prohibited from soliciting donations for or on behalf of the charitable foundation. The charitable foundation further certified that while provider vendors, like specialty pharmacies, will be able to assist patients enrolled in the charitable foundation’s PAP, the foundation would not refer patients to those vendors. Furthermore, vendors would be contractually obligated to follow all applicable laws, including the Health Insurance Portability and Accountability Act (HIPAA). Finally, the charitable foundation would prohibit any foundation board member or senior manager to be a director, officer, or employee of, or the immediate family member of, a director, officer or employee of a foundation vendor or donor. 


Although, by its terms, Advisory Opinion 15-06 addresses only the circumstances of the foundation that requested the opinion, the opinion may provide insights into the level of safeguards OIG would expect in arrangements between independent charitable foundation PAPs and their donors and vendors. 

We note that HHS previously announced its determination that qualified health plans offered on Health Insurance Exchanges do not constitute a federal healthcare program subject to the AKS. At the same time, HHS has discouraged qualified health plan issuers from accepting third party assistance with cost-sharing or premiums from commercial entities. This advisory opinion does not implicate these pronouncements.