OIG further restricts charitable copay assistance programs

Independent charity patient assistance programs (PAPs) can help patients pay for prescription drugs. Recently, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued a Supplemental Special Advisory Bulletin on the subject of PAPs. The Supplement updates the OIG “Special Advisory Bulletin on Patient Assistance Programs for Medicare Part D Enrollees” published in the Federal Register on November 22, 2005 (http://bit.ly/partDpap), and expands upon the guidance issued in the 2005 Special Advisory.

It is well established that PAPs have assisted patients who are unable to afford their cost-sharing obligations for their prescription drugs. The OIG recognizes that independent charities can help financially needy beneficiaries with their healthcare expenses and notes that pharmaceutical manufacturers can donate to these charities.

Charities that are not sufficiently independent from drug-manufacturer donors, however, could be found to be operating PAPs that harm patients and federal healthcare programs alike. In those instances, depending on the facts, it could be alleged that such activities violate fraud, waste, and abuse laws.

The Supplemental Bulletin expands upon the previous guidance, focusing particularly on disease funds and legitimate copay waivers for prescribed medications from such funds.

Narrow and limited

The 2005 Special Advisory took the position that bona fide independent charities might reasonably focus their efforts on patients with particular diseases, and that, in general, a pharmaceutical manufacturer’s donations to an independent charity that “are earmarked for one or more broad disease funds should not significantly raise the risk of abuse.”

Since publication of the 2005 Advisory, however, the OIG has become aware that some PAPs are, in fact, establishing narrowly defined disease funds and covering a limited number of drugs within those funds.

To address this concern, the OIG avers that a charity with narrowly defined disease funds may be subject to enhanced scrutiny if the disease funds direct their contributions “exclusively or primarily” to “the products of donors, or if other facts and circumstances suggest that the disease fund is operated to induce the purchase of donors’ products.”

The OIG Supplemental Bulletin goes further, noting that a fund will also be subject to more scrutiny if it is “limited to a subset of available products, rather than all products approved by the Food and Drug Administration (FDA) for treatment of a disease state(s) covered by the fund or all products covered by the relevant federal healthcare program when prescribed for the treatment of the disease states.”

Wide and broad

The Supplemental Bulletin concludes by stating that, in short, disease funds should be defined in accordance with widely recognized clinical standards and in such a manner that it covers a broad range of drug products. Those that are narrowly defined or limited in coverage raise serious questions of fraud, waste, and abuse if they are not sufficiently independent from donors.

For their part, pharmacy benefit managers (PBMa) have generally frowned upon copay assistance, whatever their form. In this regard, PBMs have been scrutinizing pharmacies that have been alleged to engage in any form of reducing or waiving copays for patients. 

PBMs have amended their pharmacy provider manuals to reflect strict co-pay contracting requirements and have even excluded manufacturer drugs from their preferred formularies, thereby requiring patients to choose alternative drugs that are cheaper. PBMs argue that they should not have to pay for new and expensive treatments when they are not clinical breakthroughs.