Life Science Compliance Update

May 27, 2014

HHS-OIG Releases Updated Advisory on Independent Charity Patient Assistance Programs

Back in 2005, OIG concluded that pharmaceutical manufacturer patient assistance programs (PAPs) that subsidize Part D cost-sharing amounts present heightened risks under the anti-kickback statute. However, because the Part D program benefit had not begun in 2005, OIG admitted that their assessment of fraud and abuse was "necessarily speculative." On May 21, 2014, OIG released a Supplemental Special Advisory Bulletin focused on Independent Charity PAPs. While OIG continues to believe that Independent Charity PAPs can provide a valuable resource to financially needy patients when properly structured, they "also believe that Independent Charity PAPs raise serious risks of fraud, waste, and abuse if they are not sufficiently independent from donors."

OIG focuses on two specific violations when it comes to what they deem "sham" independent charities to operate PAPs: the Anti-Kickback Statute and Beneficiary Inducement civil monetary penalties (CMPs).

Anti-Kickback Statutes

If a pharmaceutical company donates to a PAP to induce the PAP to recommend or arrange for the purchase of the donor's federally reimbursable items, the anti-kickback statute could be violated. Similarly, if a PAP's grant of financial assistance to a patient is made to influence the patient to purchase (or to induce the patient's physician to prescribe) certain drugs, the statute also could be violated. OIG notes that whether a particular arrangement violates the anti-kickback statute requires an "individualized evaluation of all of the relevant facts and circumstances, including the parties' intent," including the nature, structure, sponsorship, and funding of the particular PAP.

Beneficiary Inducement Civil Monetary Penalties

A subsidy for copayments provided by a pharmaceutical manufacturer through a PAP may implicate the Beneficiary Inducements CMP if the subsidy is likely to influence a Medicare beneficiary's selection of a particular provider, practitioner, or supplier. An example would be where companies make eligibility dependent on the patient's use of certain prescribing physicians or certain pharmacies to dispense the drugs. The penalty is meant to discourage companies who induce beneficiaries to use their product through any sort of transfer of value.

2014 Guidance

OIG states that pharmaceutical manufacturers and their affiliates should not exert any direct or indirect influence or control over the charity or its assistance program. They split their guidance up into three categories of particular concern: (1) Disease Funds; (2) Eligible Recipients; and (3) Conduct of Donors. We have made a chart highlighting the takeaways from each section.

Improperly Narrow Approaches to Defining Disease Funds

OIG is chiefly concerned that narrowly defining disease funds or limiting disease funds to provide assistance only for expensive drugs can result insteering patients to the drugs for which assistance is available. This type of steering increases the likelihood that the donors could use the PAPs as improper conduits to provide a subsidy to patients who use the donors' own products. This potentially increases costs to the Federal health care programs in cases where a lower cost, equally effective drug is available.

Thus, OIG requires disease funds not be defined for the purpose of limiting the drugs for which the Independent Charity PAP provides assistance. OIG recommends disease funds be defined in accordance with widely recognized clinical standards and in a manner that covers a broad spectrum of products.



A charity with narrowly defined disease funds may be subject to scrutiny if the disease funds result in funding exclusively or primarily the products of donors, or if other facts and circumstances suggest that the disease fund is operated to induce the purchase of donors' products.



Funds are too narrow if they reference:

-Specific symptoms

-Severity of symptoms

-Method of administration of drugs

-Stages of a particular disease

-A disease fund including only one drug made by one manufacturer wouldn't not alone be enough to violate the AKS, but it would be subject to scrutiny



A fund will be subject to more scrutiny if it is limited to a subset of available products, rather than all products approved by the FDA for treatment of the disease states covered by the fund or all products covered by the relevant Federal health care program when prescribed for the treatment of the disease states.



Funds are improperly limited to a subset of available products where they cover:

-only expensive drugs

-only specialty drugs


Improperly Narrow Approaches to Defining Eligible Recipients


OIG recommends that Independent Charity PAPs determine eligibility according to a reasonable, verifiable, and uniform measure of financial need that is applied in a consistent manner.



Independent Charity PAPs may base their eligibility criteria on:

-Poverty guidelines, which take into account family size

-Cost of living

-Scope and extent of a patient's total medical bills

-Cost of particular drug for which the patient is applying is NOT an appropriate standalone factor in determining financial need

-OIG notes that "generous" financial need criteria, particularly when a fund is limited to a subset of available drugs or the drugs of a major donor, could be evidence of intent to fund a substantial part of the copayments for a particular drug for the purpose of inducing the use of that drug, rather than for the purpose of supporting financially needy patients diagnosed with a particular disease.



Conduct of Donors


OIG notes that their opinions have focused on the conduct of Independent Charity PAPs, not donors. In requesting an opinion, a charity certifies to actions it will take to ensure the independence of the PAP from the donors—for example, charities certify they will not give a donor information that would enable the donor to "correlate the amount or frequency of its donations with the number of aid recipients who use its products or services or the volume of those products supported by the PAP."

OIG states that The procedures described in charity certifications are a critical safeguard and a material fact upon which OIG has relied in issuing favorable advisory opinions regarding Independent Charity PAPs. They note: "These opinions do not address actions by donors to correlate their funding of PAPs with support for their own products. Such actions may be indicative of a donor's intent to channel its financial support to copayments of its own products, which would implicate the anti-kickback statute."

"Independent, Bona Fide Charities"

Pharmaceutical companies can provide donations to a truly "independent, bona fide charity" that provides cost-sharing subsidies for Part D drugs. In the 2005 guidance, OIG provided an outline for structuring independent charities that avoid anti-kickback violations.

OIG Recommendations for Independent Bona Fide Charities


Neither the pharmaceutical manufacturer nor any affiliate of the manufacturer (employee, agent, officer, shareholder, or contractor—wholesaler, distributor, or pharmacy benefits manager—can exert direct or indirect influence or control over the charity or the subsidy program.


The charity must award assistance in a truly independent manner that severs any link between the pharmaceutical manufacturer's funding and the beneficiary (i.e., the assistance provided to the beneficiary cannot be attributed to the donating pharmaceutical manufacturer);


The charity must award assistance without regard to the pharmaceutical manufacturer's interests and without regard to the beneficiary's choice of product, provider, practitioner, supplier, or Part D drug plan;


The charity must provide assistance based upon a reasonable, verifiable, and uniform measure of financial need that is applied in a consistent manner;


The pharmaceutical manufacturer must not solicit or receive data from the charity that would facilitate the manufacturer in correlating the amount or frequency of its donations with the number of subsidized prescriptions for its products.

The increased scrutiny to patient assistance programs will probably mean fewer patients will receive cutting edge medicine and be forced to receive older medications. This may be alright for some chronic diseases, but for cancer patients and those who do not tolerate certain medications this could prove to be disastrous.

September 12, 2013

AHRQ Patient Engagement Guide

The Agency for Healthcare Research and Quality (AHRQ) released a new guide that gives hospitals patient engagement strategies, a topic we have covered over the years. The four evidence-based strategies will help hospitals eliminate communication gaps among patients, their family members and healthcare providers, the U.S. Department of Health & Human Services agency announced.

The guide was tested and evaluated at 200-bed Advocate Trinity Hospital in Chicago, 324-bed Anne Arundel Medical Center in Annapolis, Md., and 76-bed Patewood Memorial Hospital in Greenville, S.C.. The guide's sections include:

  • Information to Help Hospitals Get Started addressing:

    How to select, implement, and evaluate the Guide's strategies.

    How patient and family engagement can benefit your hospital.

    How senior hospital leadership can promote patient and family engagement.

  • Strategy 1: Working With Patients and Families as Advisors shows how hospitals can work with patients and family members as advisors at the organizational level.
  • Strategy 2: Communicating to Improve Quality helps improve communication among patients, family members, clinicians, and hospital staff from the point of admission.
  • Strategy 3: Nurse Bedside Shift Report supports the safe handoff of care between nurses by involving the patient and family in the change of shift report for nurses.
  • Strategy 4: IDEAL Discharge Planning helps reduce preventable readmissions by engaging patients and family members in the transition from hospital to home.

As reported by FierceHealthcare: With the first strategy, hospitals incorporate the patient's perspective into the planning, delivery and evaluation of healthcare services, the AHRQ noted. For example, hospitals can work with patient and family advisors to revise patient and family handbooks, informational videos or care instructions.

To implement the patient and family advisor strategy, the AHRQ guide recommends identifying a staff liaison to oversee and coordinate with advisory council members. Hospital staff also can hand out postcards to people they think would make good patient and family advisors.

Following the second strategy, hospitals can foster better communication before admission. Patients and families should receive three tools at or prior to admission that include the hospital name, logo and tailored information. Moreover, the guide recommends having the bedside nurse review the tools with patients and families on the day of admission.

To ensure safer handoffs, strategy three calls on hospital staff to briefly explain the process at each shirt change and invites the patient and family to take part in the bedside shift report. The guide recommends having the patient define who can be present during the bedside shift report, as well as use a door hanger that says either "please wake me for my for shift report" or "please do not disturb."

The fourth strategy aims to engage the patient and family in discharge planning using the IDEAL framework. IDEAL encourages hospital staff to include the patient and family as full partners in the discharge process, discuss ways to prevent problems at home, educate in plain language, assess how well doctors and nurses explain matters, and listen to and honor the patient and family's preferences and concerns.

The new AHRQ guide adds to federal efforts to engage patients in their own healthcare, which U.S. Chief Technology Officer Todd Park highlighted at the Health Privacy Summit in Washington, D.C. last month.

September 09, 2013

FDA Primer on Drug Development for Patient Organizations

The Food and Drug Administration (FDA) recently announced a meeting for patients, caregivers, patient advocates, as well as patient advocate and health professional groups, to provide a primer on drug product development and explore patient involvement in drug development.

The meeting will serve as a forum for FDA's patient stakeholders and the general public, including health professionals, academia, and industry to learn about FDA's role in, and various regulatory issues related to drug development, analyze where in the process patient input may be most practical and most valuable, and explore practicable approaches to incorporating meaningful patient input that will represent broad patient perspectives in drug development and regulatory decision making. Specifically, this meeting will provide information and facilitate a discussion about: FDA's role in drug development and where and how patients can take an active role.

The meeting will be held on September 10, 2013, from 8:30 a.m. to 4:30 p.m. Register to attend the conference at on or before August 27, 2013. There is no registration fee for this conference. Early registration is suggested because space is limited. The conference will be available for viewing via Webcast please register at for the Webcast at

The meeting will be held at the Washington Marriott at Metro Center 775 12th St. NW., Washington DC 20001.

This is the second FDA Patient Network Annual Meeting hosted by the FDA Office of Health and Constituent Affairs, formerly the Office of Special Health Issues, the Agency's primary liaison with patient and health professional communities. This annual meeting is being hosted as part of the larger FDA Patient Network program.

The FDA Patient Network is a new resource for patients, caregivers, independent patient advocates, and patient advocate groups that seeks to:

  • Educate and inform patient stakeholders about FDA, its regulatory authorities and processes, its initiatives and programs, and
  • Provide a venue for advocacy for patient stakeholder involvement within FDA, enhancing transparency of Agency actions for patients. In addition to an annual meeting, the FDA Patient Network consists of:
  • The FDA Patient Network Web site—A new, patient-centered Web site that contains educational modules, centralized Agency information, and multi-directional communication tools (;
  • The biweekly FDA Patient Network News email newsletter containing FDA-related information on a variety of topics, including new product approvals, significant labeling changes, safety warnings, notices of upcoming public meetings, proposed regulatory guidance's and opportunity to comment, and other information of interest to patients and patient advocates; and
  • Hosting of periodic meetings, briefings, and listening sessions between patient advocates and FDA staff.

Patient Involvement in the Drug Development Life Cycle

FDA believes that enhancing patients' understanding of the drug development process will provide a better foundation for their participation in regulatory decision making, and clarify where patient input can be most meaningful in the drug development life cycle. Patients who live with a disease have a direct stake in the development of new therapies to treat and minimize symptoms they are experiencing. They are in a unique position to contribute to the various product-specific regulatory decisions that occur throughout the drug development process, as well as the policy decisions that impact the drug development and review paradigm.

Though several programs exist that facilitate patient representation on Advisory Committees or participation in selected review meetings, there are currently few venues in which the patient perspective is discussed outside of a specific product's marketing application review. F DA believes the medical product review process could benefit from a more scientific, systematic, and expansive approach to obtaining input from patients who are experiencing a particular disease condition.

As part of the Food and Drug Administration Safety and Innovation Act (FDASIA), specifically section 1137, FDA is tasked with developing and implementing strategies to solicit the views of patients during the medical product development process and consider their perspectives during regulatory discussions. This includes:

  • Fostering participation of FDA Patient Representatives as Special Government Employees in appropriate Agency meetings with medical product sponsors and investigators; and
  • Exploring means to provide for identification of potential FDA Patient Representatives who do not have any, or have minimal, financial interest in the medical products industry.

FDA is conducting this meeting with patients, caregivers, patient advocates, and patient advocate groups to provide a forum to demystify the drug development process and FDA's role in drug regulation, and facilitate a discussion between these stakeholders and the Agency to foster a collaborative relationship. This meeting, intended to build upon the objectives of the inaugural Patient Network Annual Meeting, held on May 18, 2012, will provide an open forum for patients and patient advocates to engage with FDA on both ongoing and emerging medical product regulatory issues.


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