The Department of Health and Human Services Office of Inspector General (the OIG), on November 28, 2017, issued a Rescission Letter terminating Advisory Opinion Number 06-04 (Advisory Opinion 06-04).1 In Advisory Opinion 06-04, the OIG found that a non-profit, tax-exempt charitable organization’s (the “Charity”) practice of providing financially needy Medicare beneficiaries with subsidies to defray their out-of-pocket drug costs posed a low risk of abuse given the safeguards the Charity employed. The Rescission Letter explains that the Charity directly contravened the specific safeguards it certified it maintained by: (i) providing patient-specific data to one or more of the pharmaceutical manufacturer donors that would enable the manufacturers to correlate the amount and frequency of their donations with the number of subsidized prescriptions or orders for their products, and (ii) allowing the manufacturer donors to directly or indirectly influence the identification or delineation of the Charity’s disease categories.

This is the first time that the OIG has issued a rescission letter terminating one of its advisory opinions to a charitable patient assistance organization. The OIG’s justification for this highly unusual action is, by itself, unsurprising: the Charity’s practices disregarded the OIG’s longstanding guidance on independent charity patient assistance programs (PAPs). However, the fact that the OIG issued this letter demonstrates the OIG’s interest in this area and reinforces the importance of properly structuring PAPs to insulate them from donor influence.

Furthermore, the letter is significant because the PAP informed the OIG that the rescission of the advisory opinion could potentially require the PAP to close its doors and stop providing patient assistance for the drugs at issue. In rejecting this apparent plea for leniency, the OIG made the seemingly unsolicited suggestion that should the Charity cease operations as a result of the rescission, “pharmaceutical manufacturers that wish to provide free drugs to impacted patients for the remaining period during which the patients otherwise would have received copayment assistance from [the Charity] may contact OIG if they have fraud and abuse concerns.” Manufacturer free drug programs are somewhat different in nature than donations to charitable organizations that provide out-of-pocket patient support. However, as it is unlikely that the OIG included this statement inadvertently, this recommendation may telegraph a policy preference for free drug programs as opposed to copay assistance programs. It will be worth monitoring future publications to see if the OIG more explicitly endorses this viewpoint.