OIG Supplemental Special Advisory Bulletin Raises New Concerns About Independent Charity Patient Assistance Programs

by Baker Ober Health Law
Contact

In an effort to address new concerns about the independence of charity patient assistance programs (PAPs), the Office of Inspector General (OIG) released its Supplemental Special Advisory Bulletin: Independent Charity Patient Assistance Programs [PDF] (Supplemental SAB) on May 21, 2014. The Supplemental SAB expands upon previous guidance issued in the OIG’s November 2005 Special Advisory Bulletin on Patient Assistance Programs for Medicare Part D Enrollees [PDF] (2005 SAB). In light of this new guidance, industry stakeholders will have to reexamine their PAP arrangements.

PAPs were established by pharmaceutical companies and independent organizations to help patients meet their out-of-pocket drug treatment expenses. They have grown in size and prominence in recent decades due to increases in prescription drug costs. While PAPs have been praised for providing important patient benefits, critics counter that they can also promote overutilization and drug price inflation. Regulators have also raised concerns about conflicts of interest, as pharmaceutical manufacturers increasingly seek to fund narrowly defined PAPs—which may be limited to a small number of drugs—to promote sales of their own drugs.

In the 2005 SAB, which was released before the implementation of the Medicare Part D prescription drug program, the OIG analyzed various types of PAPs under the federal antikickback statute (AKS) and concluded that “lawful avenues” exist for pharmaceutical manufacturers to facilitate patients’ access to medically necessary drugs. Among other things, the 2005 SAB addressed PAPs operated by independent charities and set forth a list of factors that may be used to assess their propriety. Informed by several years of experience with the Medicare Part D program, the OIG’s Supplemental SAB provides additional guidance on fraud and abuse concerns related to independent charity PAPs. Specifically, the new guidance addresses: (1) disease funds, (2) eligible recipients, and (3) conduct of donors.

Disease Funds

The OIG recognized in the 2005 SAB that bona fide independent charities may reasonably focus upon particular diseases, and confirmed that pharmaceutical manufacturers may donate to such disease funds when they have a broad focus. Donations to narrowly defined disease funds raise concerns, however. The OIG stated in the Supplemental SAB that PAPs “must not function as a conduit for payments or other benefits from the pharmaceutical manufacturer to patients and must not impermissibly influence beneficiaries’ drug choices.” The OIG identified several areas of concern with disease funds in the 2005 SAB:

  • Pharmaceutical manufacturers and their affiliates exert direct or indirect influence or control over the fund.
  • Donors influence the identification of the diseases covered by the fund.
  • The fund is defined by reference to specific symptoms, severity of symptoms, or the method of administration of drugs.

The OIG said at the time that these were examples, not an exclusive list. Through its experience over the past several years, including consideration of advisory opinion requests, the OIG has identified additional areas of concern with disease funds. The Supplemental SAB expresses growing concerns in the following scenarios:

  • The fund is defined by the stages of a particular disease, the type of drug treatment, or in any other way that serves to narrow the treatment of widely recognized disease states.
  • The fund is so narrowly defined that it funds exclusively or primarily the products of donors.
  • Facts and circumstances suggest the fund is operated to induce the purchase of donors’ products.
  • The fund is limited to a subset of available products—by covering copayments only for expensive or specialty drugs—rather than all products approved by the FDA for treatment of the disease states covered by the fund or all products covered by the relevant federal health care program when prescribed for the treatment of the disease state(s).

The OIG warned that funds focused on expensive products are subject to greater scrutiny out of concern that they may steer patients away from more beneficial products, increase drug prices, and generate added costs for federal health care programs. In the end, the OIG advised that “disease funds should be defined in accordance with widely recognized clinical standards and in a manner that covers a broad spectrum of products….”

Eligible Recipients

The OIG reaffirmed its view that the risk is not necessarily increased if a PAP fund serves only federal health care program beneficiaries. Far more critical, according to the OIG, is that the PAP “must determine [patient] eligibility according to a reasonable, verifiable, and uniform measure of financial need that is applied in a consistent manner.” The OIG acknowledged that PAPs may consider relevant variables beyond income, but warned that the cost of a particular requested drug should not be the sole factor in determining individual financial need. Finally, the OIG noted that generous financial need criteria, especially in the case of narrowly defined funds, could be evidence that the fund is intended to impermissibly induce the use of one or more drugs.

Conduct of Donors

According to the Supplemental SAB, PAPs should be configured to ensure that they operate independently from their donors. The OIG recognizes that donors should not be given “any information that would enable a donor to correlate the amount or frequency of its donations with the number of aid recipients who use its products or services or the volume of those products supported by the PAP.” The OIG noted that in prior advisory opinions it had cited various steps taken by the PAP to control the conduct of donors. While acknowledging that these safeguards were critical to the advisory opinions, the OIG recognized that the actions of the donors would be considered in determining whether the donor’s intent is to channel its financial support to copayments of its own products, thereby implicating the AKS.

Looking Ahead: PAP Compliance in a Stricter Regulatory Environment

While recognizing the benefits of properly structured PAPs, the Supplemental SAB warns that PAP arrangements, such as narrowly focused disease funds, raise serious fraud, waste, and abuse risks. The OIG also indicated that it would be contacting organizations that have received favorable advisory opinions to ensure the approved arrangements are consistent with this new guidance. Where necessary, the OIG would seek to modify existing PAPs. Not wanting to disrupt the important work being done by existing PAPs, the OIG has stated that favorable advisory opinions “will continue to protect the arrangements described in the opinions until we issue any final notice of modification or termination to the requestors of those opinions.”

It remains to be seen how industry stakeholders will react to the new concerns expressed by the OIG in the Supplemental SAB. Drug companies, charities, and donors will have to carefully reassess their involvement in PAP arrangements in light of the new OIG guidance. The key will be to implement sufficient safeguards into PAPs to satisfy the concerns expressed by the OIG, without having a chilling effect on PAPs’ important contributions to our social safety net.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Baker Ober Health Law | Attorney Advertising

Written by:

Baker Ober Health Law
Contact
more
less

Baker Ober Health Law on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!