The Department of Health & Human Services Office of Inspector General ("OIG") recently released a Supplemental Special Advisory Bulletin ("Supplemental Bulletin") on the potential fraud and abuse implications of prescription drug patient assistance programs ("PAPs"). The Bulletin updates OIG's 2005 Special Advisory Bulletin ("2005 Bulletin") on PAPs for Medicare Part D enrollees and addresses concerns with PAPs that have surfaced since the 2005 Bulletin was issued. Consistent with its existing guidance, OIG takes the position that properly structured, bona fide charity PAPs can provide prescription assistance to federal health care program beneficiaries without violating federal fraud and abuse laws as long as PAPs maintain independence from pharmaceutical manufacturer donors. The Supplemental Bulletin outlines factors that place a PAP at risk for violating federal fraud and abuse laws and describes key safeguards to ensuring a PAP's independence from donors.
PAPs are an important resource for patients who are unable to afford the cost-sharing obligations associated with prescription drugs. However, PAPs can raise fraud and abuse concerns when used by federal health care program beneficiaries. OIG has expressed concern that pharmaceutical manufacturer donations to PAPs have the potential to induce PAPs to arrange for or recommend a manufacturer's drug or to influence a patient's selection of a particular drug. Depending on the facts, such arrangements could violate the Anti-Kickback Statute, which makes it a criminal offense to knowingly and willfully offer, pay, solicit or receive remuneration to induce or reward referrals of items or services reimbursable by a federal health care program. Additionally, improperly structured PAPs could implicate the Civil Monetary Penalties Law, which prohibits inducements to federal health care program beneficiaries.
In the 2005 Bulletin, which was released before the implementation of the Medicare Part D program, OIG clarified that donations from a pharmaceutical manufacturer to a PAP operated by an independent charity ("Independent Charity PAP") may be permissible under the Anti-Kickback Statute provided that certain factors are met. In the Supplemental Bulletin, OIG reiterates that the following factors are fundamental to a properly structured Independent Charity PAP:
- The pharmaceutical manufacturer does not exert any control or influence over the PAP;
- The PAP awards assistance in an independent manner and severs any connection between the pharmaceutical manufacturer's funding and the beneficiary;
- The PAP awards assistance without regard to the pharmaceutical manufacturer's interests and without regard to the beneficiary's choice of product;
- The PAP provides assistance based on a reasonable, verifiable and uniform measure of financial need that is consistently applied; and
- The pharmaceutical manufacturer does not solicit or receive data from the PAP correlating the amount or frequency of its donations with the number of subsidized prescriptions for its products.
The Supplemental Bulletin provides additional guidance on Independent Charity PAPs in response to concerns that have arisen since the implementation of Medicare Part D. Specifically, the Supplemental Bulletin addresses the following risk areas related to Independent Charity PAPs: (1) disease funds; (2) eligible recipients; and (3) the conduct of donors.
Disease Funds. The 2005 Bulletin clarified that a pharmaceutical manufacturer could earmark donations to an Independent Charity PAP to support a specific disease. However, OIG expressed concern that Independent Charity PAPs may define their disease funds too narrowly, resulting in direct subsidization of a manufacturer's own drug in those cases when there was only one treatment on the market for a given disease. In the Supplemental Bulletin, OIG further cautions that disease funds that are classified by stages of disease, types of treatment or anything other than a widely recognized disease state may be subject to scrutiny if circumstances suggest that the disease fund is operated to induce the purchase of a donor manufacturer's drugs. Additionally, Independent Charity PAPs that provide assistance only for expensive drugs may result in steering patients to such drugs and lead to higher costs for federal health care programs. In the Supplemental Bulletin, OIG states that it will subject Independent Charity PAPs that limit funding to a subset of products to greater scrutiny compared to PAPs that provide assistance for all approved products for the treatment of a disease. Further, OIG expects disease funds to be defined in accordance with widely recognized clinical standards and in a manner that covers a broad spectrum of products.
Eligible Recipients. Regardless of whether an Independent Charity PAP assists all patients or solely federal health care program beneficiaries, OIG expects the PAP to determine eligibility "according to a reasonable, verifiable and uniform measure of financial need that is applied in a consistent manner." Independent Charity PAPs may base their eligibility criteria on relevant variables other than income, such as local cost of living and the scope and extent of the patient's total medical bills. However, OIG stresses in the Supplemental Bulletin that the cost of a drug for which a patient seeks financial assistance is not an appropriate stand-alone factor in determining a patient's financial need. Additionally, OIG cautions that generous financial need criteria, especially when a PAP limits a disease fund to a narrow subset of available drugs or the drugs of a major donor, could be evidence of a PAP's intent to induce the use of a particular drug in violation of the Anti-Kickback Statute.
Conduct of Donors. To date, OIG's Advisory Opinions on Independent Charity PAPs have focused on the conduct of PAPs as opposed to donor conduct. In these Advisory Opinions, the PAP typically certifies that it will not give a donor any information that would enable a donor to correlate the amount or frequency of its donations with the number of aid recipients using the donor's products or the volume of those products supported by the PAP. In the Supplemental Bulletin, OIG reiterates that such certifications have been material to OIG's decision to issue favorable Advisory Opinions to Independent Charity PAPs. OIG also notes that actions by donors to link their funding of PAPs with support for their own products may be indicative of a donor's intent induce referrals or the generation of business reimbursable by federal health care programs, thereby implicating the Anti-Kickback Statute.
While PAPs have the ability to provide valuable assistance to patients in need, Independent Charity PAPs and pharmaceutical manufacturer donors should take steps to ensure that PAPs are structured in accordance with OIG guidance to avoid implicating federal fraud and abuse laws. In light of the recent guidance, OIG recognizes that some PAPs who have received favorable OIG Advisory Opinions in the past may now contain features that are discouraged in the Supplemental Bulletin. Moving forward, OIG will write to all Independent Charity PAPs that have received favorable opinions and will work with them to ensure continued compliance with the Supplemental Bulletin. Additionally, OIG anticipates the need to modify some of its previous PAP Advisory Opinions based on the Supplemental Bulletin. PAPs and pharmaceutical manufacturers should closely monitor OIG's website for additional guidance related to Independent Charity PAPs. Additionally, physicians and other providers should be aware of the types of PAPs available to patients so that patients of limited means can be directed to compliant PAPs for assistance in obtaining prescription drugs.