OIG Issues Advisory Bulletin Impacting Independent Charity Patient Assistance Programs

by Reed Smith


On May 21, 2014, the Office of the Inspector General (OIG) of the Department of Health and Human Services (HHS) issued its “Supplemental Special Advisory Bulletin: Independent Charity Patient Assistance Programs” (SSAB) to address recently observed risks stemming from the conduct of Independent Charity Patient Assistance Programs (PAPs). The SSAB does not replace, but rather expands on, the OIG’s guidance from 2002 and 2005, specifically focusing on PAPs’ definitions of disease funds and the identification of eligible recipients, as well as the conduct of donors with relation to Independent Charity PAPs.

Brief Background

The anti-kickback statute prohibits any transaction in which remuneration is paid purposefully to induce or reward referrals of items or services payable by a federal health care program.1 Both donor contributions to PAPs and PAPs’ grants to patients present certain remunerative functions that could trigger the anti-kickback statute. Donations made to PAPs to induce a recommendation of a donor’s federally reimbursable items, for example, could violate the statute. On the other hand, if a PAP attempts to influence patients to purchase certain items via grant of financial assistance, the statute could also be violated.

Additionally, civil monetary penalties (CMPs) may be levied against any party that attempts to influence a beneficiary’s choice of provider, practitioner, or supplier, through the offer of remuneration.2 The Beneficiary Inducements CMP may be implicated if a pharmaceutical manufacturer provides a subsidy for cost-sharing obligations through PAPs where the patient must receive items from a particular supplier.

Expanded Guidance on Independent Charity PAPs

As laid out in the OIG’s 2005 Special Advisory Bulletin and other previous advisory opinions, pharmaceutical manufacturers may make bona fide charitable contributions to properly structured assistance programs. The key to granting legitimate donations is the independence of the charity itself, and this current SSAB focuses the OIG’s guidance in that regard on (1) disease funds, (2) eligible recipients, and (3) conduct of donors.

(1) Disease States as Defined by PAPs:

In 2005, the OIG allowed manufacturer donations to disease funds that provided assistance for any product used within the disease state. Thus, in theory, a manufacturer’s assistance might subsidize a patient taking a competitor product. However, the OIG also expressed concern that, in certain circumstances, PAPs might define their disease funds too narrowly. This earmarking would effectively result in a manufacturer’s subsidization of its own product through donations. To curb Independent Charity PAPs from funneling donations directly from manufacturers to patients, and to prevent impermissible influence over beneficiaries’ drug choices, the OIG has now expanded on its guidance regarding the relationship between donors and charities.

First, the OIG notes that its 2005 suggestions of what might constitute overly narrow disease fund definitions are by no means exhaustive. Instead, the OIG questions the practice of defining disease funds by referencing certain stages of a particular disease, particular types of treatments, or anything narrower than a widely recognized disease status. These narrow classifications may indicate inducement, and manufacturers should be cautious with Independent Charity PAPs that utilize such categorizations.

Furthermore, the OIG has become concerned with Independent Charity PAPs that limit assistance to a subset of available products within an established disease fund. Limiting funds to expensive or specialty products in this manner is not beneficial to patients or health care programs because it binds them to certain treatments when more beneficial products may be on the market, and may also lead to higher federal program costs. Thus, for example, the exclusion of assistance for generic products would be suspect in the OIG’s view. As a result, in determining whether a particular manufacturer benefited from this structuring in violation of the anti-kickback statute, the OIG will subject funds that are limited to a subset of available products to more scrutiny than those that include all products approved by the Food and Drug Administration (FDA) for treatment of a disease state (including generic or bioequivalent drugs). However, the OIG does not mandate that Independent Charity PAPs provide assistance for drugs prescribed “off-label,” although allowing for such coverage might promote compliance. The OIG, however, expects truly independent charities to treat all its funds equally. Thus, limiting assistance for one fund to only FDA-approved drugs while, in another fund, offering assistance for all drugs covered by Medicaid, could subject a PAP to scrutiny.

(2) Eligible Recipients as Defined by PAPs:

With respect to eligibility criteria, the OIG noted that it has allowed funds dedicated only to federal health care program participants. PAPs should, however – regardless of whether a fund is available to all patients or simply to federal health care participants – “determine eligibility according to a reasonable, verifiable, and uniform measure of financial need that is applied in a consistent manner.”3 In so doing, Independent Charity PAPs may consider relevant factors such as family size, local cost of living, and total medical expenses of patients. Conversely, PAPs should not consider only the cost of a particular drug for which the patient is applying. Further, maintaining unduly generous financial need criteria may be indicative of a PAP’s intent to induce the use of a particular drug by funding its copayments.

(3) Conduct of Donors:

Finally, the OIG notes briefly that its advisory opinions issued to PAPs and charities do not address actions by donors to relate their funds to support for their own products. Such correlation or coordination, however, would implicate the anti-kickback statute. Because of this, donors should exercise care to maintain independence when coordinating referrals.


The OIG noted that it would be working with PAPs that have previously received advisory opinions to identify potential changes. Thus, both PAPs and donors may expect some future follow-up adjustments to their relationships. The SSAB also underscores the importance of manufacturers’ independence from PAPs from both a negotiation process perspective and from a substantive perspective. Manufacturers may want to consider reviewing existing disease funding arrangements with PAPs.

  1. See 42 U.S.C. § 1320a-7b.
  2. See 42 U.S.C. § 1320a-7a.
  3. OIG, “Supplemental Special Advisory Bulletin: Independent Charity Patient Assistance Programs." 

Peter Vogel also contributed to this article.



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.

© Reed Smith | Attorney Advertising

Written by:

Reed Smith

Reed Smith 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):

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 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.