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New Special Advisory Bulletin Provides
Additional Guidance on Independent Charity
Patient Assistance Programs for Federal Health Care Program Beneficiaries

May 21, 2014

A Supplemental Special Advisory Bulletin on patient assistance programs (PAPs) run by independent charities was released today by the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services. OIG announced that this document expands 2005 OIG guidance in response to concerns about potential abuses arising from some PAPs' interactions with their donors.

OIG continues to recognize that independent charities can help financially needy beneficiaries with their health care expenses, and pharmaceutical manufacturers can donate to these charities. However, charities that are not sufficiently independent from drug manufacturer donors may operate PAPs that harm patients and Federal health care programs and may, depending on the facts, violate fraud and abuse laws.

"OIG is mindful of the importance of helping financially needy beneficiaries of Federal programs receive needed medical care. Independent charities can play an important role in advancing this goal. If, however, a charity acts as a conduit for a drug manufacturer to induce the prescription of its drugs, Federal health care programs and their beneficiaries are put at risk. OIG will therefore closely scrutinize PAPs that do not appear sufficiently independent from their donors," said Inspector General Daniel R. Levinson.

The Bulletin reflects concerns that OIG has identified since 2005. For example, in the 2005 Bulletin, OIG stated that charities could lawfully establish broad disease funds (such as diabetes funds and cancer funds) to which donors could earmark contributions. In the intervening years, OIG has seen a general tendency away from these broad disease funds toward much narrower funds, such as a fund for a specific stage or complication of a disease. Further, charities have sought advisory opinions to narrow the scope of the drugs that they cover within these funds to specialty or expensive pharmaceuticals.

These restrictions can be harmful to patients, taxpayers and Federal programs. If assistance is available only for the highest-cost drugs, patients may be steered to those pharmaceuticals rather than to equally effective, lower-cost alternatives. If, instead, assistance is available for a broader range of equally effective treatments, patients, and their prescribers, have greater freedom of choice.

The Supplemental Bulletin provides guidance on what OIG considers to be key safeguards to ensuring a charity's independence from its donors. OIG will work with charities that previously received favorable advisory opinions to ensure that their operations are consistent with current guidance. OIG intends that there be no disruption of patient care during this process.

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