The Office of Inspector General has revised two Advisory Opinions in light of changes made by two charities in response to new fraud protection guidance from the OIG.

As we previously discussed, in 2014 the OIG issued a Supplemental Bulletin (“the Bulletin”) providing guidance to independent charities that operate patient assistance programs (“PAPs”) to ensure compliance with the Anti-Kickback Statute (42 U.S.C. Section 1320a-7b(b)) and the Civil Monetary Law governing beneficiary inducements (42 U.S.C. Section 1320a-7a(a)(5)).

Charities often maintain disease funds that provide financial assistance for a particular disease. The OIG expressed concern that disease funds that are narrowly defined (e.g., limited by symptoms, severity, drug treatment or stage of disease), may give rise to potential kickback problems when a drug manufacturer donates to a charity that provides access to that manufacturer’s drug. To mitigate that risk, the Bulletin specifically instructed charitable organizations to design their PAPs to provide access to a variety of drugs from a variety of manufacturers. If the FDA has only approved one drug for treatment of a particular disease, charitable organizations must offer assistance for other costs associated with that disease, for example, the cost of pain medications.

Following the publication of the Bulletin, the OIG reached out to charities that had previously received favorable advisory opinions and instructed these charities to make certain changes in order to maintain favorable status.  In May 2014, the OIG sent letters to two charities who had previously received favorable Advisory Opinions (AO No. 06-10 and AO No. 07-18) expressing concern about certain aspects of their PAPs and advising the charities that the PAPs would have to be modified in order to maintain the favorable opinions. The charities both agreed to make the necessary changes and certified to the OIG that the changes had been made. On October 26, 2015, the OIG issued two modifications to those Advisory Opinions (modification to AO 06-10 and modification to AO no. 07-18), noting that the prior approvals would be continued because the charities certified that:

  • They will not narrowly define widely recognized diseases for which they provide disease funds. More specifically, they will not refer to the severity of the disease symptoms, the stage of the disease, or the method of administering treatment for the disease. Both charities have plans to create disease funds for patients with certain metastatic cancers and agreed to cover all drugs approved by the FDA for the type of cancer (not limited to drugs specifically approved for the metastatic stage of the cancer).
  • They will not maintain any disease fund that provides copayment assistance for only one drug, or only drugs made or marketed by one manufacturer. In the case that only one drug has been FDA approved to treat a particular disease, the charities certified that they will offer assistance for other costs associated with that disease.
  • They will not limit their assistance to high-cost or specialty drugs. The charities certified that they would not use minimum claim requirements to deny assistance for lower copayment amounts under the minimum while providing access for higher copayment amounts above the minimum.
  • They would determine eligibility according to reasonable, verifiable, and uniform measures of financial need and apply these measures consistently.

Charities that have PAPs should note the requirements in the 2014 Supplemental Bulletin and take steps to evaluate their structure and operation to ensure compliance with the Anti-Kickback Statute and Civil Monetary Law. Charities that received favorable advisory opinions prior to the release of the Bulletin should be aware that they may also receive letters – if they haven’t already – advising them to make certain changes in order to be in compliance with the requirements of the Bulletin.