Alerts and Updates
OIG Warns Industry About Fraud and Abuse Implications of Pharma Manufacturers' Patient Assistance Programs for Part D Beneficiaries
November 29, 2005
With the inception of the Medicare Part D prescription drug program looming, the United States Department of Health and Human Services, Office of Inspector General (OIG), on November 7, 2005, published a Special Advisory Bulletin setting forth its concerns regarding the potential link between certain Patient Assistance Programs (PAPs) and Medicare Part D beneficiaries. Historically, PAPs have offered cash subsidies, free or reduced-price drugs or both to eligible patients who are not covered by insurance programs. Some PAPs are affiliated directly or indirectly with pharmaceutical manufacturers (Pharma Affiliated PAPs); others are operated by independent charitable organizations.
As millions of formerly uninsured PAP participants will look to Medicare for prescription drug coverage beginning on January 1, 2006, the OIG expressed concern that the continued participation of such participants in Pharma Affiliated PAPs could implicate the federal anti-kickback statute. The statute prohibits the payment or receipt of anything of value in return for a referral for, or the arrangement of, services that are otherwise payable by Medicare or Medicaid. In the Special Advisory Bulletin, only the fourth in the last five years, the OIG speculated that Pharma Affiliated PAPs could subsidize Medicare patients' costs under the Part D program (such as co-payments and deductibles). According to the OIG, these subsidies would likely increase the number of beneficiaries using the manufacturer's products and shield the beneficiaries from the economic effects of drug pricing, thereby driving up Medicare Program costs. In addition, the OIG voiced concern that subsidies would lock beneficiaries into the particular manufacturer's product and unlawfully steer them away from other less costly alternatives.
The OIG explicitly stated that not all PAPs covering Part D beneficiaries will implicate the anti-kickback statute. Independent charity PAPs and coalition model PAPs and certain bulk replacement programs may cover Part D beneficiaries while steering clear of any anti-kickback problems, if certain safeguards are implemented by such PAPs or programs. Furthermore, the OIG indicated that it would, during 2006, "take into consideration in exercising its enforcement discretion ... whether the [Pharma Affiliated] PAP is taking prompt, reasonable, verifiable and meaningful steps to transition Part D beneficiaries to alternative assistance models."
As it is an offense to receive as well as give any remuneration in violation of the anti-kickback statute, health care providers that have relied in the past on PAPs to assist their patients with drug purchases should be cognizant of the funding source for the PAPs with which they are dealing (especially any PAPs from which the providers receive direct subsidies) and the structure of such PAP programs in order to avoid unwitting violation of the anti-kickback statute.
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