Kusserow on Compliance: OIG modifies patient assistance program Advisory Opinion

In a recent modified Advisory Opinion, the Office of Inspector General (OIG) found that certain Independent Charity Patient Assistance Programs (PAPs), as modified based on a Supplemental Bulletin issued in 2014 would not constitute grounds for the imposition of civil monetary penalties. Although the PAP could potentially generate prohibited remuneration under the Anti-Kickback Statute (AKS), the OIG would not impose administrative sanctions on the charity.

Supplemental Bulletin

In 2014, the Office of Inspector General (OIG) issued a Supplemental Special Advisory Bulletin regarding Independent Charity Patient Assistance Programs (the Supplemental Bulletin). It provided additional guidance on PAPs operated by independent charities to address certain risks about these programs that have come to the agency’s attention in recent years. The OIG sent targeted letters to all independent charities that have received favorable advisory opinions from them to request certain clarifications and modifications to those opinions.

Original Advisory Opinion

In 2006, the OIG issued Advisory Opinion No. 06-10, which was a favorable opinion regarding the charity operation of a PAP that provided cost-sharing assistance for specialty medications to patients who had been diagnosed with one of the disease states for which the requesting charity maintained a disease fund and who meet certain financial need criteria. The OIG approved certain features that have since been determined are problematic.


Based on the Supplemental Bulletin, the OIG Advisory Opinion No. 06-10 of the PAP would have to be modified for the charity to retain its favorable advisory opinion. The charity responded to the OIG and addressed concerns as described in the Supplemental Bulletin through the following three certifications:

  • The charity will not define its disease funds by reference to specific symptoms, severity of symptoms, method of administration of drugs, stages of a particular disease, type of drug treatment, or any other way of narrowing the definition of widely recognized disease states. The charity stated they will develop and maintain disease funds that would be limited to patients with certain metastatic cancers that will cover, at a minimum, all drugs that are approved by the FDA for the type of cancer (not limited to drugs expressly approved for the metastatic stage of the cancer).
  • The charity will not maintain any disease fund that provides copayment assistance for only one drug, or only the drugs made or marketed by one manufacturer or its affiliates. If they establish a fund for a disease for which the FDA has approved only one drug, or only the drugs made or marketed by one manufacturer or its affiliates; they will provide support for other medical needs of patients with the disease, in addition to copayment support for the FDA-approved treatment of the disease. At a minimum, they will provide copayment support for all prescription drugs used by a patient for an FDA-approved indication related to managing the disease that is the subject of the fund, including, but not limited to, drugs to treat symptoms of the disease, such as pain medications, and prescription drugs to treat side effects of treatments, such as anti-nausea medications.
  • The charity will not limit its assistance to high-cost or specialty drugs, will make assistance available for all prescription medications, including generic or bioequivalent drugs, approved by the FDA for treatment of the disease state(s) covered by the fund. The OIG also asked the charity to certify, and it did certify, that it determines eligibility according to a reasonable, verifiable, and uniform measure of financial need that is applied in a consistent manner. They employ a process for screening all applicants for compliance with a fund’s designated financial eligibility criteria prior to enrolling applicants in a fund or within a reasonable time thereafter. Such screening process is applied uniformly across funds, and involves: verifying each applicant’s financial resources through information provided by a third party service; collecting documentation of financial need from the applicant; or some combination thereof. They further certified that, except as expressly provided above, all other material facts to their original submission in connection with OIG Advisory Opinion No. 06-10 remain accurate.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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