New OIG guidance issued on independent charity patient assistance programs

by Thompson Coburn LLP

Medical Bill On May 21, 2014, the Office of Inspector General (“OIG”) issued a Supplemental Special Advisory Bulletin (“Bulletin”) on independent charity patient assistance programs (“PAPs”). The Bulletin, which supplements the 2005 guidance issued by the OIG, made clear that while PAPs serve an important function of providing cost-sharing assistance for prescription drugs to patients in financial need, they also present a risk of fraud and abuse to Federal health care programs.

The OIG explained that if donor contributions to PAPs are made to induce the PAP to recommend the donor’s Federally reimbursable items or if a PAP’s grant of financial assistance to the patient is made to influence the patient to purchase certain items, the Antikickback Law is implicated. Although pharmaceutical manufacturers can make cash contributions to PAPs, several factors are fundamental to a properly structured PAP for compliance with the Antikickback Law. The OIG focused on the following three factors in the Bulletin: structure of disease funds, selection of recipients and conduct of donors.

Disease funds

The Bulletin explained that while donations to PAPs may be earmarked for one or more broad disease funds, if PAPs define their disease funds too narrowly, earmarking may result in the donor subsidizing its own products. Of particular concern to the OIG are disease funds defined by reference to stages of a particular disease, the type of drug treatment or any other way of narrowing the definition of widely recognized disease states. Also noted as problematic are disease funds that cover only a single product or the products of a single manufacturer who is a major donor to the fund or disease funds that limit assistance to a subset of available products (e.g., cover copayments only for expensive or specialty drugs instead of all FDA approved products for disease treatment).

The OIG observed that narrowly defining disease funds or limiting disease funds to provide assistance only for expensive drugs leads to steering the patients toward the drugs for which assistance is available and increases the likelihood that donors can use PAPs as improper conduits to subsidize patients who use the donors’ products. To minimize such concerns, 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 Bulletin emphasized that PAPs must determine eligibility based on a reasonable, verifiable and uniform measure of financial need that is consistently applied. While PAPs may consider factors such as local cost of living and the scope and extent of a patient’s total medical bills in determining eligibility, the cost of a particular drug is not an appropriate stand-alone factor for determining individual financial need for PAP eligibility. Generous financial need criteria, especially where a fund is limited to a subset of available drugs or the drugs of a major donor, may indicate intent to fund copayments for particular drugs in order to induce the use of those drugs.

Conduct of donors

The Bulletin noted that actions by donors to correlate their funding of PAPs with support for their own products may be evidence of a donor’s intent to channel its financial support to copayments for its own products, thereby implicating the Antikickback Law.

The Bulletin also noted that some charitable PAPs that received favorable OIG advisory opinions may include the above described suspect features. The OIG indicated that the OIG will contact such PAPs and explain how the OIG will work with them to ensure that the approved arrangements are consistent with the new guidance.

A copy of the Bulletin can be found here.

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.

© Thompson Coburn LLP | Attorney Advertising

Written by:

Thompson Coburn LLP

Thompson Coburn LLP 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.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

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.


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 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:

- 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.