Supplemental Special Advisory Bulletin Clarifies OIG Positions on Independent Charity Patient Assistance Programs


The OIG has released a Supplemental Special Advisory Bulletin that “reiterates and amplifies” previous OIG Special Advisory Bulletin guidance from 2005. Pharmaceutical manufacturers and Patient Assistance Programs that provide independent, charitable support for patients’ drug expenses (PAPs) should be aware of this supplemental guidance, as the OIG notes that it may modify some previously-issued favorable advisory opinions. Specifically, in this bulletin the OIG expands on its previous guidance regarding disease funds, eligible recipients, and the conduct of donors.


PAPs provide cost-sharing assistance for patients who cannot afford their prescription medications. While PAPs are an important resource for individuals burdened with high drug costs, they also raise concerns about fraud and abuse of Federal healthcare program funds, including Medicare and Medicaid dollars. The government’s primary concern is that pharmaceutical manufacturers will influence the structure of, and direct donations to, PAPs in a way that creates illegal kickbacks implicating the Anti-Kickback Statute, the Civil Monetary Penalties Law, and the False Claims Act.

In 2005, the OIG released a Special Advisory Opinion to provide guidance in connection with these potential kickback issues and in anticipation of the Medicare Part D drug benefit. Now, the OIG has issued a Supplemental Special Advisory Bulletin that provides additional guidance regarding PAPs operated by independent charities.

The government’s objective with this, and the 2005 guidance is to prevent pharmaceutical manufacturers from making donations to PAPs that incentivize or influence the purchase of drugs produced by donor-drug manufacturers, while at the same time allowing drug manufacturers to make contributions to PAPs.

Supplemental Guidance

The Supplemental Special Advisory Bulletin expands on previous OIG guidance regarding disease funds, eligible recipients, and the conduct of donors.

Disease Funds. Disease funds should be defined using widely-recognized clinical standards and cover a variety of pharmaceutical products. Donors and PAPs should expect increased scrutiny when,

• a PAP defines the disease fund so narrowly that it is effectively subsidizing the copayment for its own product;
• a pharmaceutical manufacturer has any direct or indirect influence over the PAP;
• disease funds are defined in reference to the stages of a particular disease, the type of drug treatment, or any other narrowing of the definition of widely-recognized disease states; and
• disease funds limit patient assistance to a subset of products available to treat a particular condition, such as only providing assistance for drugs considered very expensive or drugs marketed by a single manufacturer that is a major donor to the fund.

Eligible Recipients. The supplemental guidance clarifies that disease funds limited to Federal health care program beneficiaries are clearly permitted, and even encouraged. PAPs may not, however, make eligibility determinations based solely upon the price of the drug. Permissible eligibility variables include income, local cost of living, and the scope and extent of a patient’s total medical bills. Alternatively, an eligibility arrangement that may draw scrutiny is one that incudes generous financial eligibility criteria coupled with a disease fund that is limited to a subset of available drugs or drugs of a major donor—this arrangement may evidence intent to fund the copayments of a particular drug, or drugs, to induce certain drug purchases, rather than for charitable financial support for patients with a particular disease.

Conduct of Donors. Donor-pharmaceutical manufacturer actions or activities directed at correlating donations to PAPs with support for their own products may now be subject to scrutiny, whereas in the past, guidance focused on restricting PAP activities that might convey such correlative information. The OIG recognizes these donor actions and activities as potentially indicative of a donor’s intent to impermissibly use its donation to fund copayments of its own products.


The new Supplemental Special Advisory Bulletin provides more detailed guidance and a roadmap for potential OIG enforcement activities related to pharmaceutical manufacturer funding of PAPs. Donors and PAPs alike should review their practices to evaluate whether they may face scrutiny and penalties related to an illegal kickback arrangement.

For more information on the new Special Advisory Bulletin or related issues, please feel free to contact Heather Baird or any member of our health care practice group for a further discussion.

Comments are closed.