On December 7, 2015, OIG posted a modification adding additional strictures to a prior favorable Advisory Opinion (No. 07-11) regarding a charity’s operation of a patient assistance program (PAP) to provide financial assistance to low-income patients to help pay for their cancer drugs (Modified Advisory Opinion).  In the initial Advisory Opinion, OIG addressed the potential Anti-Kickback Statute implications of accepting monetary donations from a drug manufacturer who made the drugs that the charity subsidized, and the agency concluded that the PAP would not be subject to monetary sanctions. 

On May 30, 2014, OIG published a Supplemental Special Advisory Bulletin on independent charity PAPs.  There, OIG explained that while PAPs are designed to allow financially-needy patients who are unable to cover their cost-sharing obligations for prescription drugs, PAPs “also present a risk of fraud, waste, and abuse with respect to Medicare and other Federal health care programs.”  Thus, OIG explained that the purpose of the Supplemental Bulletin was to provide additional guidance to independent charity PAPs, since, according to OIG, “properly structured PAPs can help Federal health care program beneficiaries.”

In the Modified Advisory Opinion, OIG explains that in the prior Advisory Opinion, the agency “approved certain features that [the agency] ha[s] since determined are problematic.”  OIG explains in the Modified Advisory Opinion that it informed the charity that certain aspects of its PAP would have to be refined in order to retain the favorable Advisory Opinion.  OIG further explains that the charity provided the following three certifications to address the concerns that OIG described in its Supplemental Bulletin:

1. The charity will not define its 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 widely recognized disease states.  As the only exception to this commitment, the charity intends to develop and maintain disease funds that would be limited to patients with certain metastatic cancers. In those disease funds, the charity will cover, at a minimum, all drugs that are approved by the FDA for the type of cancer (not limited to drugs expressly approved for the metastatic stage of the cancer).
2. The charity will not maintain any disease fund that provides copayment assistance for only one drug, or only the drugs made or marketed by one manufacturer or its affiliates.  If the charity establishes a fund for a disease for which the FDA has approved only one drug, or only the drugs made or marketed by one manufacturer or its affiliates, the charity will provide support for other medical needs of patients with the disease, in addition to copayment support for the FDA-approved treatment of the disease.  At a minimum, the charity will provide copayment support for all prescription medication used by a patient for an FDA-approved indication related to managing the disease, including, but not limited to, prescription medications to treat symptoms of the disease, such as pain medications, and prescription medications to treat side effects of treatments, such as anti-nausea medications.
3. The charity will not limit its assistance to high-cost or specialty drugs.  Instead, the charity will make assistance available for, at a minimum, all products, including generic or bioequivalent drugs, approved by the FDA for treatment of the disease state(s) covered by the fund

At the request of OIG, the charity further certified that it determines PAP eligibility according to a reasonable, verifiable, and uniform measure of financial need that is applied in a consistent manner.

Finally, the charity proposed to establish disease funds that would provide assistance only to qualifying Federal health care program beneficiaries.  Based on the changes outlined in the Modified Advisory Opinion, OIG concluded that the charity’s PAP would not be subject to monetary sanctions.

Reporter, Stephanie F. Johnson, Atlanta, +1 404 572 4629, sfjohnson@kslaw.com.