- April 18, 2024
- Alerts
OIG Allows Patient Assistance Programs Funded by Drug Manufacturers
The U.S. Department of Health and Human Services, Office of Inspector General (OIG) posted a favorable Advisory Opinion (24-02) permitting a non-profit organization (Non-Profit) to provide financial support to eligible patients with specific rare diseases through assistance programs (Programs) it operates.[1] In an unusual step, OIG put an expiration date on this opinion because of Medicare Part D caps on out-of-pocket drug costs that will take effect on January 1, 2025, which could affect OIG’s analysis in this opinion.[2]
The Non-Profit receives tax-deductible charitable contributions under section 501(c)(3) of the Internal Revenue Code. It operates Programs, funded by drug manufacturers, to assist patients, including Federal health care program beneficiaries, with out-of-pocket costs associated with rare diseases, their symptoms, treatments, and treatment-related side effects. Each Program addresses a specific rare disease and has a single donor, a drug manufacturer, which manufactures or markets a drug used to treat the specific disease addressed by the individual Program(s).
Each Program provides at least two types of support to eligible patients – cost-sharing subsidies for prescription drugs and other items or services; financial support for medical expenses not covered by insurance; insurance premium subsidies; and/or short-term limited financial assistance for essential non-medical expenses in emergencies. The Non-Profit has written agreements with these drug manufacturer donors to prevent them from exerting influence or control (either directly or indirectly) over the Programs.
Despite longstanding concerns that patient assistance programs funded by drug manufacturers trigger potential liability under the Federal Anti-Kickback Statute (AKS) and merely serve as a “conduit” for payments by a manufacturer to a patient, OIG determined that it would not impose AKS sanctions here because the Programs had key safeguards in place to reduce the risk of fraud and abuse. Among others, (1) the Programs vary substantially in the proportion of funds spent to support the purchase of the donors’ drugs; and (2) Program participation is based on satisfying financial and medical eligibility criteria. OIG also highlighted many other “secondary” Program safeguards in its favorable opinion. Lastly, OIG concluded that the Programs did not implicate the Beneficiary Inducements Civil Monetary Penalties Law because patient eligibility is not contingent upon selection of a particular physician or pharmacy.
This favorable advisory opinion allows the use of subsidies given these limited factual circumstances. Importantly, every arrangement is different and should be evaluated on its own merits. Therefore, providers and organizations must proceed with caution when proposing arrangements that involve subsidies or any kind of remuneration.
A complete copy of Advisory Opinion 24-02 is available at: https://oig.hhs.gov/documents/advisory-opinions/9864/AO-24-02.pdf
Should you have any questions regarding the above, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at info@garfunkelwild.com.
The Non-Profit receives tax-deductible charitable contributions under section 501(c)(3) of the Internal Revenue Code. It operates Programs, funded by drug manufacturers, to assist patients, including Federal health care program beneficiaries, with out-of-pocket costs associated with rare diseases, their symptoms, treatments, and treatment-related side effects. Each Program addresses a specific rare disease and has a single donor, a drug manufacturer, which manufactures or markets a drug used to treat the specific disease addressed by the individual Program(s).
Each Program provides at least two types of support to eligible patients – cost-sharing subsidies for prescription drugs and other items or services; financial support for medical expenses not covered by insurance; insurance premium subsidies; and/or short-term limited financial assistance for essential non-medical expenses in emergencies. The Non-Profit has written agreements with these drug manufacturer donors to prevent them from exerting influence or control (either directly or indirectly) over the Programs.
Despite longstanding concerns that patient assistance programs funded by drug manufacturers trigger potential liability under the Federal Anti-Kickback Statute (AKS) and merely serve as a “conduit” for payments by a manufacturer to a patient, OIG determined that it would not impose AKS sanctions here because the Programs had key safeguards in place to reduce the risk of fraud and abuse. Among others, (1) the Programs vary substantially in the proportion of funds spent to support the purchase of the donors’ drugs; and (2) Program participation is based on satisfying financial and medical eligibility criteria. OIG also highlighted many other “secondary” Program safeguards in its favorable opinion. Lastly, OIG concluded that the Programs did not implicate the Beneficiary Inducements Civil Monetary Penalties Law because patient eligibility is not contingent upon selection of a particular physician or pharmacy.
This favorable advisory opinion allows the use of subsidies given these limited factual circumstances. Importantly, every arrangement is different and should be evaluated on its own merits. Therefore, providers and organizations must proceed with caution when proposing arrangements that involve subsidies or any kind of remuneration.
A complete copy of Advisory Opinion 24-02 is available at: https://oig.hhs.gov/documents/advisory-opinions/9864/AO-24-02.pdf
Should you have any questions regarding the above, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at info@garfunkelwild.com.
[1] The Non-Profit operates other patient assistance programs (PAPs), but the focus of this advisory opinion is limited to the PAPs the Non-Profit has for 12 specific rare diseases.
[2] The new law eliminates Medicare Part D enrollees’ five percent cost sharing in the catastrophic phase beginning in 2024 and caps enrollees’ out-of-pocket costs for Part D drugs at $2,000 beginning in 2025 (with caps updated annually). Given the uncertain impact of this law on OIG’s analysis in this opinion, the opinion and the protections it provides terminates on January 1, 2027.