In May 2014, we reported that the Office of Inspector General (OIG) issued a supplemental Special Advisory Bulletin regarding independent charitable organizations that assist financially needy individuals, including federal healthcare program beneficiaries, with cost-sharing obligations for prescription drugs.  In that guidance, OIG indicated that it will contact independent foundations that have received favorable Advisory Opinions to request certain clarifications and modifications to those opinions.1 As expected, over the last several months, OIG has issued a series of modifications to Advisory Opinions as well as a handful of new Advisory Opinions on independent foundations offering patient assistance programs.2 These opinions generally demonstrate OIG’s requirement for greater independence between the foundations and their donors.    

The newest Advisory Opinions provide insights into OIG’s expectations related to the way foundations: (1) define disease funds; (2) structure funds for diseases with limited approved products; (3) identify the drugs the funds will support; (4) verify patient financial eligibility; and (5) share data with donors. 

Disease Funds

OIG guidance has required foundations to certify that they define the disease for which a fund will be available in accordance with broadly-defined disease states, based upon widely-recognized clinical standards independent of any request from the donor. In the recent series of Advisory Opinions, OIG has strengthened this by more specifically requiring foundations to certify that they will not define the disease funds by reference to:

  • specific symptoms;
  • severity of symptoms;
  • method of administration of drugs;
  • stages of a particular disease;
  • type of drug treatment; or
  • any other way of narrowing the definition of a widely-recognized disease state. 3

OIG has shown some flexibility, however, in limited circumstances. For example, OIG has accepted funds for patients with metastatic cancers so long as the foundation certifies it will cover all FDA-approved drugs for the type of cancer, without limiting products to those expressly approved for the metastatic stage. OIG also approved a fund based on a symptom of cancer because the foundation certified that: 1) there are currently 62 different drugs from 26 different manufacturers available to treat the referenced symptom and 2) the foundation would not limit the assistance provided to drugs that treat the symptom but will also assist with other medications prescribed for the management or treatment of the underlying cancer.4 In a newly issued Advisory Opinion, OIG gave a positive opinion to a foundation proposing to maintain only one disease fund that would be limited to patients diagnosed with Stage 3 or Stage 4 of a Specified Disease.5 Although the fund would be defined by the stage of the disease, OIG relied on the foundation’s certification that an unspecified number of manufacturers make and market multiple drugs for treatment of both stages of the Specified Disease. The foundation also certified that the fund would provide assistance to all drugs approved by FDA to treat the Specified Disease, not just those approved for the advanced stages of the Specified Disease. Further, OIG relied on the foundation’s guarantee that donors would not be able to earmark their donation to support any particular drug or type of cost-sharing obligation.

These opinions suggest there may be some leeway for foundations in defining the disease funds so long as there are sufficient safeguards, such as ensuring the availability and coverage of multiple drugs by multiple manufacturers and that donors will not be able to earmark their donations in a way that would favor their products.

Funds for Diseases with Limited Approved Products

Another important safeguard for ensuring independence between foundations and donors is OIG’s requirement that foundations certify that they will not maintain a disease fund that provides copayment assistance for only one drug, or for the drugs made or marketed by only one manufacturer (or its affiliates). Where there is only one approved drug for a particular disease, or if only one manufacturer markets the available drugs for the disease, the foundation must certify that the fund will provide support for other medical needs of such patients. At a minimum, the foundation would need to provide copay support for all drugs used by a patient for an FDA-approved indication related to managing the disease.OIG noted that this includes, but is not limited to, drugs to treat symptoms of the disease, such as pain medications, and drugs to treat side effects of treatments, such as anti-nausea medications.

Limiting Assistance to High-Cost or Specialty Drugs

OIG guidance also made it clear that foundations must certify that they will make assistance available for all prescription medications, including generic or bioequivalent drugs that are FDA-approved or indicated in compendia, evidence-based guidelines, or clinical guidelines for a diagnosis that makes the patient eligible for assistance from a particular fund. OIG recognized that some foundations institute a minimum claim amount to minimize administrative burdens, but cautioned foundations against using a minimum claim amount to limit assistance to high-cost or specialty drugs. If a foundation imposes a minimum claim amount to minimize administrative burden, OIG indicated that a patient should be able to meet the claim threshold by accumulating multiple claim receipts and submitting them together. OIG also suggested that foundations can require patients to pay a certain amount of the cost-sharing on all claims. However, foundations should not deny reimbursement for lower copayments while paying higher copayments in full.

This new guidance reflects OIG’s position that any fund that would result in patients paying more for an inexpensive drug than they would for a high-cost drug is inconsistent with the policy that foundations not limit their assistance to high-cost drugs.

Financial Eligibility

OIG consistently has asked foundations to certify that they determine eligibility “according to a reasonable, verifiable and uniform measure of financial need that is applied in a consistent manner.”8 In the recently modified opinions, OIG noted that each foundation has a process for screening patients against its financial criteria either prior to enrolling in the fund or within a reasonable time thereafter. The screening process involves verifying the patient’s financial resources through a third-party service, collecting documentation from the patient, or some combination thereof.  

These opinions show that OIG continues to give foundations latitude in deciding what the particular financial eligibility requirements should be. In one opinion, OIG did not object to an increase in the financial eligibility to 400% or less of Federal poverty guidelines adjusted for family size and cost of living.9 OIG noted that it has not mandated any particular income level that would constitute “financial need,” but only requires charities to determine eligibility according to a uniform measure of financial need. In a modification of another opinion, OIG approved a proposal to allow the charity’s executive committee to change the financial needs eligibility criteria or to discontinue the requirement that patients pay a set percentage of their gross monthly income toward cost-sharing expenses prior to becoming eligible for assistance.10  OIG also approved the charity’s proposal to allow its executive committee to modify the maximum caps on premium assistance, copayment assistance, and emergency assistance. OIG determined that such modifications would not increase risk to federal healthcare programs so long as they are applied uniformly within the fund.

Limited Data Sharing

Finally, the two newest OIG opinions continue to underscore the importance of minimal data flow from the foundation to the donors.11 OIG emphasized that donors would not receive from the foundation any data “related to the identity, amount, or nature of drugs or services” for which the foundation provides assistance. As with previous opinions, OIG indicated that a foundation may share aggregate data, but that such data would be limited to “aggregate numbers of qualifying patients for each Disease Fund or the aggregate amount disbursed from each Disease Fund.”  OIG asked the foundations to certify that patients would not receive any information regarding donors, and donors would not receive information about other donors, except through public disclosures that may be required by law.


These recent opinions provide insights into the level of safeguards OIG expects in relationships between independent charitable foundation and donors. OIG appears to be willing to give foundations the freedom to run their programs as long as foundations: (1) establish funds in a way that does not limit assistance to a single manufacturer’s product(s) and (2) define eligibility criteria without favoring a donor. To avoid OIG scrutiny, donors should be prudent in ensuring that these safeguards are in place when deciding whether to donate to a charitable foundation.