Life Science Compliance Update

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December 17, 2015

HHS OIG Modifies Advisory Opinion on Patient Assistance Programs

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently released a modification of OIG Advisory Opinion 07-11, concerning a non-profit, tax-exempt charitable organization's practice of providing financially needy cancer patients with grants to defray their out-of-pocket treatment costs. This modification is in response to guidance issued on May 21, 2014, in the Supplemental Special Advisory Bulletin regarding Independent Charity Patient Assistance Programs (PAPs).

The Supplemental Bulletin was sent along with targeted letters to all independent charities that had received favorable advisory opinions from HHS OIG to request certain clarifications and modifications to those favorable opinions.

On September 28, 2007, the OIG issued OIG Advisory Opinion 07-11 to the "Charity" – Charity and organization names are redacted as they are identifying information and can contain potentially privileged, confidential, or proprietary information – regarding Charity's operation of a PAP to help financially needy cancer patients pay for certain drugs used to treat certain types of cancer and certain conditions incident to cancer therapy. That AO approved certain features of the PAP that have since been determined to be problematic. The OIG asked Charity to modify certain areas of concern in order to retain its favorable AO, which Charity did and made appropriate certifications adhering to those modifications.

The modification of the original Advisory Opinion goes through each of the certifications Charity has made and explains in detail the changes that will be made to keep a favorable advisory opinion of its PAP.

One such change is that 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." Instead, Charity will "develop and maintain disease funds that would be limited to patients with certain metastatic cancers." Through those disease funds, Charity plans to cover all FDA-approved drugs for each particular type of cancer. Charity is not permitted to restrict coverage to FDA-approved products that are "expressly approved for the metastatic stage of the cancer."

Another change requires Charity to "not maintain any disease fund that provides copayment assistance for only one drug, or only the drugs made or marketed by one manufacturer or affiliates." However, if Charity establishes a fund for a disease that only has one FDA-approved drug, Charity "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." This means that Charity may be forced to provide copayment support for all prescription medicines used by a particular patient that are related to managing the disease or cancer.

Further, Charity is not permitted to limit its copayment assistance to only high-cost or specialty drugs. This means that generic or bioequivalent drugs must be given the same opportunities for assistance as expensive or specialty drugs, provided that they are approved by the FDA for treatment of the disease covered by the fund.

The screening process for eligibility determinations was also commented on in the modified advisory opinion: Charity must determine eligibility "according to a reasonable, verifiable, and uniform measure of financial need that is applied in a consistent manner." This screening process is applied uniformly across all funds and involves actions such as: verifying an applicant's financial resources through a third party service, collecting documentation of financial need from the applicant, or some combination of the two.

It is important to note that Charity's established disease funds provide assistance only to qualifying Federal health care program beneficiaries.

These changes in the Advisory Opinion show that when changes are made in the law, even through something as simple as guidance from HHS OIG, companies must pay attention and work to alter their existing programs so they are in full legal compliance. This modified Advisory Opinion can serve as a year-end reminder to ensure company policy is up-to-date and in full compliance with all laws and legal guidances.

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