HHS-OIG Issues Favorable Advisory Opinion Regarding Independent Charity Patient Assistance Program

Highlights

• The U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG) issued a favorable opinion regarding a proposed independent charity patient assistance program intended to fund insurance premium and copayment assistance for drug-based treatment of certain diseases, which would rely on donations from pharmaceutical manufacturers. 
• HHS-OIG noted that patient assistance programs relying on donations from pharmaceutical manufacturers create potential for inflated drug costs and improper steering.
• However, the proposed patient assistance program carried a sufficiently low risk of fraud and abuse under the federal Anti-Kickback Statute (AKS) because assistance would be awarded on a first-come, first-served basis under a reasonable, verifiable, and uniformly applied financial need policy. 
• HHS-OIG reserved a right to revisit the opinion in two years and to seek certain additional information to ensure that the proposed patient assistance program is operating as intended. 
• Given increasing prescription drug costs, HHS-OIG will take into consideration that a proposed patient assistance program may reduce those costs for patients, thereby increasing access to critical care. 

Overview of Proposed Independent Charity Patient Assistance Program 

HHS-OIG recently issued Advisory Opinion 26-17, a favorable opinion regarding a proposed independent charity patient assistance program, whereby a nonprofit, tax-exempt organization (requestor) would provide health insurance premium assistance and copayment assistance to federal healthcare program beneficiaries diagnosed with certain rare and chronic diseases (diseases). The program would be largely funded by donations from pharmaceutical manufacturers of drugs that treat the diseases (funding manufacturers).

Under the proposal, the requestor would establish funds for the diseases that would be made available to eligible beneficiaries on a first-come, first-served basis under a financial need policy uniformly administered by the requestor. Assistance would be available for all U.S. Food and Drug Administration (FDA)-approved prescription medications for the diseases, including generic and bioequivalent drugs. The requestor would not promote the assistance program through any direct-to-consumer advertisement of any funding manufacturer’s drug. And funding manufacturers would have no direct influence or input on how any donated funds are to be used or applied. 

HHS-OIG’s Skepticism of Pharmaceutical Manufacturer-Supported Patient Assistance Programs 

In its Advisory Opinion, HHS-OIG noted it has long recognized that independent charity patient assistance programs provide important safety net assistance to beneficiaries who may not otherwise be able to afford cost-sharing obligations for prescription drugs. However, HHS-OIG reminded that independent charity patient assistance programs relying on donations from pharmaceutical manufacturers can present significant fraud and abuse risks, including the potential for improperly inflated drug prices and the possible inappropriate steering of federal healthcare program beneficiaries to certain drugs. 

Why HHS-OIG Found the Proposed Patient Assistance Program Sufficiently Low-Risk Under the AKS 

HHS-OIG observed that the proposed assistance program implicates the AKS because the funding manufacturers, through the requestor, would provide remuneration to federal healthcare program beneficiaries that could influence the beneficiaries’ choice of drug. While there is no available AKS safe harbor, HHS-OIG determined that the proposed assistance program presents a sufficiently low risk of fraud and abuse because: 

• The requestor would not provide any funding manufacturer with data that could facilitate the correlation of donations to the amount or frequency of use of the funding manufacturer’s drug(s).
• Donors have no influence or input on how funds are used or applied.
• Assistance would be awarded on a first-come, first-served basis under uniform, reasonable, and verifiable financial need criteria, without regard to funding manufacturers’ interests or contribution amounts. Patients seeking assistance would have a treatment regimen in place before applying and would not be referred to or for any provider, practitioner, supplier, or drug.
• The program would apply to a broad spectrum of products — i.e., all FDA-approved prescription medications, including generic and bioequivalent drugs that treat the diseases — not only high-cost or specialty drugs.
• The program may increase access to care that patients may not otherwise be able to afford, particularly in light of increasing costs of prescription drugs and the extra financial burden borne by patients with rare and chronic diseases. 

HHS-OIG separately concluded that the program would not be likely to influence a beneficiary’s selection of a provider, practitioner, or supplier and does not implicate the Beneficiary Inducements Civil Monetary Penalty law. 

HHS-OIG May Revisit the Proposed Patient Assistance Program in Two Years 

One noteworthy aspect of the Advisory Opinion was HHS-OIG’s reservation of a right to revisit the proposed patient assistance program and seek additional information in two years. HHS-OIG indicated this decision was based on certain aspects of the Inflation Reduction Act (IRA), including the Medicare Prescription Drug Inflation Rebate Program, that have only recently taken effect. In HHS-OIG’s view, potential aspects of the IRA may sufficiently reduce cost-sharing obligations such that the cost-sharing subsidies in the proposed patient assistance program become superfluous. Thus, two years from the date of the Advisory Opinion, HHS-OIG may seek certain non-patient-identifiable data regarding donors, allocation of donations, and distribution of assistance to assess whether the proposed program is operating as intended or instead requires rescission, modification, or termination. 

Key Takeaways for Organizations Offering Independent Charity Patient Assistance Programs that Rely on Donations from Pharmaceutical Manufacturers 

Organizations contemplating similar independent charity patient assistance programs should bear in mind HHS-OIG’s statements regarding the significant fraud and abuse risks posed by a patient assistance program backed by pharmaceutical manufacturers. Proper safeguards to consider include: 

• Maintaining independence. Control program decisions and donor funds under the program and sever potential links between donated funds and manufacturer interests.
• Using neutral eligibility rules. Consistently apply objective financial need criteria with awards made on a first-come, first-served basis. Ensure beneficiaries would not be referred for any particular drug.
• Defining funds broadly. Make funds available for a broad spectrum of FDA-approved drugs, including generic and bioequivalent drugs; do not limit assistance to high-cost or specialty products.