Independent Charity Patient Assistance Programs (PAPs) can serve as a valuable resource for financially needy patients by providing cost-sharing assistance for prescription drugs. However, PAPs that subsidize Medicare Part D amounts have increased risks of fraud, waste and abuse. In May of this year, the Office of the Inspector General (OIG) issued a Supplemental Bulletin to the 2005 OIG Special Advisory Bulletin on Patient Assistance Programs, focusing on the problematic features of PAPs with respect to the anti-kickback statute, the Civil Monetary Penalties Law that prohibits inducements to Medicare and Medicaid beneficiaries, and potentially the False Claims Act. The Supplemental Bulletin focuses on three areas:
• disease funds;
• eligible recipients; and
• the conduct of donors.
Pharmaceutical manufacturers are permitted to contribute cash donations to these “independent, bona fide charitable assistance programs.” PAPs can reasonably focus their efforts on patients with particular types of diseases, such as cancer or diabetes. With respect to these disease funds, pharmaceutical manufacturers can earmark their cash contributions for one or more broad disease funds. A problem arises when these charities define their disease funds so narrowly that this earmarking results in the manufacturer subsidizing its own products.
Another problem arises when, although the disease fund may be adequately defined, the fund covers only a single product or products made by a single manufacturer donor to the fund. The OIG makes clear that a PAP cannot function as a conduit for payments or other benefits from the pharmaceutical manufacturer to patients and cannot impermissibly influence beneficiaries’ drug choices. Thus, in order to avoid statutory violations, disease funds should be appropriately defined and cover a broad range of products.
The OIG also addressed the criteria used to determine beneficiary eligibility in PAPs. Some PAPs choose to operate funds that provide financial assistance solely to federal health care program beneficiaries. While the OIG approves of funds that are limited to federal health care program beneficiaries, it reiterated the need to consistently use a reasonable, verifiable and uniform measure of financial need. It emphasized that the cost of the drug for which the patient needs assistance is not an appropriate stand-alone factor for determining financial need. Generous financial need criteria could be evidence of intent to fund a substantial part of the copayments for a particular drug for the purpose inducing the use of that drug, especially in funds that are limited to a subset of available drugs or limited to drugs of a major manufacturer donor.
Lastly, the OIG focused on the conduct of donors as opposed to the PAPs. Actions by donors to correlate their contributions to PAPs with support for their own products may be indicative of the donor’s intent to steer its financial support to copayments of its own products in violation of the anti-kickback statute. While the OIG continues to support PAPs as valuable resources when properly structured, it also recognizes the serious potential for fraud, waste and abuse in these programs. It is imperative that these PAPs stay truly independent, and that pharmaceutical manufacturers do not exert direct or indirect influence over these programs. If you need more information on this subject, contact Leslie Pescia at 800-898-2034 or by email at Leslie.Pescia@beasleyallen.com.
Source: Federal Register /Vol. 79, No. 104 / Friday, May 30, 2014 /Notices available at: http://oig.hhs.gov/fraud/docs/alertsandbulletins/2014/independent-charity-bulletin.pdf]
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