Health Law Daily Charity, drug manufacturer’s arrangement rescinded, may cause prescribing of expensive drugs over cheaper equivalents
Thursday, November 30, 2017

Charity, drug manufacturer’s arrangement rescinded, may cause prescribing of expensive drugs over cheaper equivalents

By Kelly J. Rooney, J.D., M.P.H.

The Office of Inspector General advisory opinion 06-04 issued to an independent charity patient assistance program, and once before modified, was rescinded because the OIG found the charity failed to fully, completely, and accurately disclose all relevant and material facts as required by 42 CFR sec. 1008.45. The charity sought an opinion regarding an arrangement with drug manufacturers to donate drugs to the charity and provide copayment assistance to patients. Because the misrepresentations made by the charity were relevant to the OIG’s conclusion that the arrangement was low risk and would not subject the charity to administrative sanctions or violations of the anti-kickback statute, the OIG believes it must rescind to maintain the integrity of the advisory opinion process. The rescission is effective immediately (OIG Advisory Opinion Rescission, No. 06-04, November 28, 2017).

Arrangement and past modification. The original advisory opinion in this matter was entered on April 20, 2006, and modified on December 23, 2015, in light of a supplemental bulletin from May 2014 which outlined the risks of fraud, abuse, and waste associated with patient assistant programs (PAPs). Specifically, donor contributions and grants to patients (made possible by the PAP) could be used to induce the purchase of particular federally reimbursable items, OIG noted. Providing remuneration to a beneficiary to influence a patient to use a particular provider could subject the entity to civil monetary penalties. The OIG believed the original opinion could cause drug manufacturers to donate to charities and effectively subsidize their own products. In response, the charity certified: (1) it would narrow the definition of disease states; (2) it would maintain disease funds that cover more than one drug or device or those marketed by only one manufacturer; and (3) provide assistance for generic and bioequivalent drugs. The charity also agreed to structure its financial assistance for obtaining prescription drugs in a way that will prevent instances of kickbacks (see Charity’s assistance program changes in line with OIG’s parameters, January 4, 2016).

Notice of rescission. The OIG notified the charity in a letter dated August 10, 2017, with a notice of rescission or termination of the opinion and provided it with a reasonable opportunity to respond. It is within the OIG’s right to reconsider opinions and the OIG decided to rescind opinion 06-04 because of the factual misrepresentations made by the charity. Specifically, in violation of the certifications the charity made (1) the patient-specific data provided to at least one drug manufacturer would allow it to correlate the amount and frequency of its donations with the number of subsidized prescriptions or orders for their products and (2) allowed the manufacturers to directly or indirectly influence the identification or delineation of the charity’s disease categories. In response to the notice, the charity did not dispute the determination or refute findings regarding the misrepresentations, but instead asked for the OIG to further modify opinion 06-04. It noted that if the OIG were to rescind or terminate the opinion, it "likely would cease operations and no longer provide copayment assistance to patients."

OIG’s reasoning. The charity’s failure to comply with certifications to the OIG increased the chances that it served as a conduit for financial assistance from a drug manufacturer to a patient, increasing the risk that patients would be steered to federally reimbursable drugs it sold because of the financial assistance provided by the charity. Patients could be urged to a more expensive drug if copayment assistance is available (as well as to physicians more likely to prescribe them) rather than "less expensive but therapeutically equivalent alternatives." The OIG believes manufacturers would have an increased ability to raise prices for drugs while protecting patients from immediate out-of-pocket cost increases, leaving federal health care programs like Medicare to bear the cost.

When a party requesting an advisory opinion misrepresents material facts, the opinion has "no force or effect." The OIG found it necessary to rescind the opinion to maintain the integrity of the process and for the public interest. The "investigational or prosecutorial authority of OIG, the Department of Justice, or any other agency of the government" is not limited by this rescission. The rescission of 06-04 does not require the charity to cease operations, but should it continue to operate, all relevant laws and regulations still apply.

MainStory: TopStory OIGAdvisoryOpinions AntikickbackNews CharityNews CMPNews CopayNews GCNNews PrescriptionDrugNews ProgramIntegrityNews

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