OIG Notifies Pharmaceutical Companies They Can Provide Free Medication to Those Losing Charitable Assistance

In late November, the U.S. Department of Health and Human Services Office of the Inspector General revoked an Advisory Opinion that previously protected a patient-assistance charity from becoming the target of kickback charges.

In a follow-up to that ruling this month, the OIG has sent a letter to Pharmaceutical Research and Manufacturers of America (PhRMA) advising that, under certain conditions, its members can provide free medication to certain patients who can’t afford their prescriptions.

OIG noted that because of its November Advisory Opinion, Caring Voice Coalition, (CVC), no longer would provide patient financial assistance going forward. Consequently, some patients impacted by CVC’s decision could face “significant financial barriers†to obtaining critical drugs. To prevent this from taking place, OIG told PhRMA it would not pursue sanctions against any drug company for providing free drugs in 2018.

“Given these circumstances, we have considered our enforcement approach to entities that manufacture, sell, or distribute outpatient prescription drugs (collectively Drug Companies) that provide free drugs to federal health care program beneficiaries impacted by CVC’s decision,†wrote OIG in its letter.

However, OIG went on to note that the drug companies must abide by the following conditions:

• The free drugs are provided in a uniform and consistent manner to federal health care program beneficiaries who were receiving cost sharing assistance from CVC for the same drugs as of Nov. 28, 2017, and who have been impacted by CVC’s decision not to provide assistance.
• The free drugs are awarded without regard to the beneficiary’s choice of provider, practitioner, supplier or health plan.
• The free drugs are not billed to any federal health care program, counted toward the beneficiary’s Medicare Part D true out-of-pocket costs, resold, or otherwise billed to a third-party payor.
• The provision of free drugs is not contingent on any future purchases or orders of the drugs or any other item or service.
• The drug company maintains accurate, contemporaneous, and complete records of the free drugs it furnishes to federal health care program beneficiaries.

OIG said it was not providing guidance on how drug companies should structure their programs, only that its decision applies to those drugs provided this year to federal healthcare program beneficiaries who were receiving cost-sharing support from CVC as of Nov. 28, 2017.

As we previously wrote about, OIG’s decision to rescind its advisory opinion was based on CVC’s failure to “fully, completely, and accurately disclose all relevant and material facts to OIG. That failure to comply increased the risk that CVC might serve as a conduit for improper financial assistance from a drug company donor to a patient. Although the ruling did not prevent CVC from continuing to operate, CVC decided not to provide further financial assistance. It’s important to note that although CVC was not named in the OIG’s revocation, OIG pointed out that it was departing from its policy of redacting names because it received inquiries from patients impacted by the ruling and because CVC itself had publicized it was the one affected by the ruling.

CVC’s troubles are not limited to the rescission of the advisory opinion. Last month, United Therapeutics Corp. agreed to pay the federal government $210 million to settle allegations it engaged in a kickback scheme with Caring Voice Coalition. According to a news release, United Therapeutics used the charity as a conduit to pay the copays of Medicare patients taking UT’s pulmonary arterial hypertension drugs.

“UT’s payments to the foundation were not charity for PAH patients generally, but rather were a way to funnel money to patients taking UT drugs. The Anti-Kickback Statute exists to protect Medicare, and the taxpayers who fund it, from schemes like these that leave Medicare holding the bag for the costs of expensive drugs,†said Acting United States Attorney William D. Weinreb, in a news release.

Under the Anti-Kickback Statute, a pharmaceutical company is prohibited from offering or paying, directly or indirectly, any remuneration — including money or any other thing of value — to induce Medicare patients to purchase the company’s product.

The Health Law Offices of Anthony C. Vitale can review your patient assistant program to confirm compliance with the major fraud and abuse laws which govern this area. Contact us for additional information at 305-358-4500 or send us an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.