OIG Promises Scrutiny of Narrowly Focused Patient Assistance Programs Run By Independent Charities – Some Practices Previously Endorsed Are Now Suspect

By James C. Shehan –

According to St Francis of Assisi, “where there is charity and wisdom, there is neither fear nor ignorance.”  As we contemplate the policy changes announced in the just-issued OIG Supplemental Special Advisory Bulletin on Independent Charity Patient Assistance Programs (PAPs), we wonder whether the charities and pharmaceutical companies affected by them will find comfort in the OIG’s enunciated wisdom, or rather ignorance and fear stemming from the suggestions therein that activities previously condoned by the OIG are now potentially subject to government enforcement actions under the anti-kickback statute.  To be more precise, the new Special Advisory Bulletin notifies us that PAPs with a narrow focus on specific diseases and specific products will be subject to “more scrutiny,” explicitly states that existing advisory opinions that endorsed the practices of some independent charities “will need to be modified,” but also provides little specific guidance and instead leaves many current practices in a gray area.    

The Special Advisory Bulletin (SAB) begins by acknowledging that PAPS can achieve the important goal of helping patients obtain needed medicines and that an SAB on PAPs issued in 2005 found that “lawful avenues” exist for pharmaceutical manufacturers to ensure that patients can afford medically necessary drugs.  The new SAB also reiterates that donor contributions to PAPS and PAPs’ grants to patients implicate the anti-kickback statute if either influences the recommending, arranging or purchasing of federally reimbursable products.  Noting that the previous SAB preceded the existence of the Medicare Part D prescription drug benefit, OIG explains that it has since become aware of “specific risks” with these programs relating to three areas: disease funds, eligible recipients and the conduct of donors.

In addressing its concern with “disease funds,” OIG cautions that funds may be so narrowly defined that a donor is effectively subsidizing its own products. Put another way, the independent charity PAP must not be a “conduit for payments … from the pharmaceutical manufacturer to patients” and therefore as an “impermissibl[e] influence” of beneficiaries’ drug choices.  It is in the specifics following these statements that the SAB becomes vaguer.  A number of suspect eligibility-limiting criteria are mentioned – e.g., specific symptoms, severity of symptoms, specific methods of administration, stages of a disease.  None of these limitations are specifically prohibited, however; rather, the guidance cites them as areas of OIG “concern” and subject to “scrutiny.”  The OIG also is “concerned” about disease funds limited to a subset of available products — particularly expensive and specialty drugs — rather than all products approved by FDA for the disease covered by the fund, or all products covered by a Federal health care program for the disease (including generics). 

The SAB specifically addresses situations where there is only one reimbursed drug for a disease or one manufacturer who makes all of the drugs for a disease.  The new SAB does not retract the statement of the 2005 SAB that these circumstances alone do not create anti-kickback violations. It does rather inscrutably state, however, that such situations are “subject to scrutiny” and that, among other factors, OIG will consider whether the disease fund “appears to be narrowly defined in a manner that favors any of the fund’s donors.”   How a manufacturer who makes the only approved drug for a particular disease could avoid favoring itself in donations to a PAP that covers that disease is not addressed.

The summary of the disease fund section muddles the guidance even further by proclaiming that “disease funds should be defined in accordance with widely recognized clinical standards and in a manner that covers a broad spectrum of products.”  These “widely recognized clinical standards” are not further defined nor are they mentioned anywhere else in the guidance.   Similarly, the summary proclaims that “disease funds should not be defined for the purpose of limiting the drugs for which the Independent Charity PAP provides assistance.” This very broad statement seems to contradict other sections of the SAB.  For example, it might be interpreted to prohibit a PAP that distributed all available antiviral drugs to needy patients with HIV.

As for eligible recipients, the SAB does stand by an earlier advisory opinion that allows PAPs to provide assistance only to Medicare patients.  PAPS are instructed to base eligibility on reasonable, verifiable and uniform measures of financial need that are consistently applied.  OIG does caution, however, that the cost of a particular drug is not an appropriate stand-alone factor in determining financial need and that overly-generous financial need criteria may be suspect. 

The SAB section on donors is more cryptic than the eligible recipients section.  Referencing the certifications that PAPs make when applying for OIG advisory opinions, it states a material fact relied upon by OIG in issuing favorable opinions is that a PAP does not give donors information that allows the donor to correlate the amount or frequency of its donations with the number of patients  or the volume of product dispersed.  Noting that these advisory opinions do not address donor actions, the SAB nevertheless states that “actions by donors to correlate their funding of PAPs with support for their own products… may be indicative of a donor’s intent to channel its financial support to copayments of its own products, which would implicate the anti-kickback statute.”

It is in the concluding section that OIG changes course on some existing advisory opinions.  Repeating that independent charity PAPS are a valuable resource for a needy patients but raise serious issues of fraud, waste and abuse, OIG states that some independent charity PAPS “have received favorable advisory opinions that may include features that are discouraged in this [SAB.]”  OIG volunteers that it is writing to these PAPS to explain how it will work with them and notes that some advisory opinions will need to be modified.  In the interim, the suspect features will be “protected.”   Finally, OIG voices its intent that there should be “no disruption of patient care during this process.” 

While the new SAB might have done a somewhat better job of reducing fear and ignorance, we believe that St. Francis would join us in heartily endorsing this last sentiment regarding the well-being of patients.