For the first time, the OIG has rescinded an advisory opinion issued to a charity.

According to the OIG, the advisory opinion – issued in 2006 and modified in 2015 –  was revoked because the charity “failed to comply with certain factual certifications” about independence from donors, potentially steering Medicare beneficiaries toward certain prescription drugs.

The revocation shows that patient-assistance charities and their ties to drug manufacturers are under continued scrutiny, especially after specific guidance from the OIG – discussed below – about how they should be structured.  Thus, charities should ensure that they comply with this guidance and representations made to secure any favorable advisory opinions.

Further, the OIG’s action illustrates that even an advisory opinion is not a sure thing – especially if a requestor deviates from material factual certifications made to the agency.  Any company requesting an advisory opinion should ensure that all relevant and material facts have been “fully, completely, and accurately disclosed to OIG,” and that those relevant and material facts do not change.

The revocation stated that the charity:

  • Gave patient-specific data that allowed at least one donor to “correlate the amount and frequency of their donations with the number of subsidized prescriptions or orders for their products,” and
  • Permitted “donors to directly or indirectly influence the identification or delineation of [the charity’s] disease categories.”

As a result, the donors – drug manufacturers – could potentially affect the drugs provided to patients and paid for by Medicare.

  • The OIG explained that the breaches “increased the risk that [the charity] served as a conduit for financial assistance from a pharmaceutical manufacturer donor to a patient, and thus increased the risk that the patients who sought assistance from [the charity] would be steered to federally reimbursable drugs that the manufacturer donor sold.”
  • As an example of potential harm, the OIG said that “patients may be urged to seek, and physicians may be more likely to prescribe, a more expensive drug if copayment assistance is available,” enabling manufacturers to raise their prices charged to federal programs.

As we previously discussed, in 2014 the OIG issued a Supplemental Bulletin providing guidance to independent charities that operate patient-assistance programs (PAPs) to ensure compliance with the Anti-Kickback Statute and the Civil Monetary Law governing beneficiary inducements.

  • 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 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, such as the cost of pain medications.
  • After the publication of the Bulletin, the OIG reached out to charities that had previously received favorable advisory opinions – including the one at issue here – and instructed these charities to make certain changes to maintain favorable status.  This charity’s opinion was revised in December 2015.

When the OIG contacted this charity about the breaches, it did not dispute the relevant findings.  Although the charity warned that it would likely need to shut down if the OIG rescinded its opinion, the agency said that its revocation of this advisory opinion was in “the public interest,” and that, as needed, the charity should “wind down in a manner that protects patients[.]”

The revocation states that it has retroactive effect: that is, it is as if the charity never received the advisory opinion.  The retroactive revocation of the advisory opinion could signal that the OIG intends to pursue additional action against the charity for violation of the Anti-Kickback Statute, back to the date that it first began operating.