OIG Greenlights Rare Disease Patient Support Program But Cautions About Emerging IRA Implications

Key Takeaways

• In Advisory Opinion 26-17, OIG approved a proposed arrangement in which a nonprofit, tax-exempt charitable organization would provide health insurance premium assistance and copayment assistance to patients with rare and chronic diseases, funded in part by pharmaceutical manufacturers.
• OIG’s analysis rested on traditional safeguards: the requestor’s independence from manufacturer donors; broad disease fund definitions based on widely recognized clinical standards; uniform financial need criteria; first-come, first-served allocation; and the absence of data sharing that could allow donors to correlate donations to product use.
• In a somewhat unusual move, OIG referenced the Inflation Reduction Act’s (IRA’s) Part D redesign provisions, including the $2,000 annual out-of-pocket cap and manufacturer inflation rebates, and reserved the right to reassess the arrangement in approximately two years.
• By connecting the IRA’s Part D cost-sharing reforms to its fraud and abuse analysis, OIG signaled that it views the IRA’s structural changes as potentially transforming the patient assistance program landscape, thus introducing a new variable into the compliance calculus for manufacturers and PAP operators.

On August 21, the U.S. Department of Health and Human Services Office of Inspector General (OIG) published Advisory Opinion 26-17, approving a nonprofit, tax-exempt charitable organization’s (Requestor’s) proposal to provide health insurance premium assistance and copayment assistance to patients with certain rare and chronic diseases (the Proposed Arrangement). Under the Proposed Arrangement, Requestor’s disease funds would be funded in part by the manufacturers of drugs used to treat the covered diseases.

The advisory opinion is notable not because of its ultimate conclusion – OIG has approved similar independent charity patient assistance program (PAP) arrangements before – but rather because of a footnote in which OIG referenced the IRA’s Part D redesign provisions and reserved the right to seek additional data in approximately two years to determine whether rescission, modification, or termination of the favorable opinion may be warranted. By expressly reserving this right, OIG introduces a new and significant variable into the compliance landscape for manufacturer-funded PAPs.

What Is the PAP Arrangement in Advisory Opinion 26-17?

Requestor is a nonprofit, tax-exempt charitable organization that provides financial assistance to patients with certain rare and chronic diseases (the Diseases). Requestor proposes to establish or expand funds for each Disease (Disease Funds) that would provide: (1) health insurance premium assistance, and (2) copayment and coinsurance assistance for prescription medications.

Requestor provided data demonstrating that the Diseases impose extraordinary financial burdens on patients, generating per-patient, per-year costs of up to $600,000 per year. Most products used to treat the Diseases are reimbursable under Medicare Part B, not Part D.

Key structural features of the Proposed Arrangement include:

• Disease Funds would be divided into premium assistance funds and copayment funds, each available to federal healthcare program beneficiaries on a first-come, first-served basis pursuant to a uniform financial need policy.
• Copayment assistance would not be limited to high-cost or specialty drugs. Eligible patients could receive assistance covering all Food & Drug Administration (FDA)-approved prescription medications for the Diseases, including generics.
• Disease Funds would be defined by widely recognized clinical standards (such as ICD codes) and would cover a broad spectrum of products.
• Disease Funds would be funded by donations from pharmaceutical manufacturers as well as financially disinterested persons.
• Patients would choose their healthcare providers and products before applying for assistance and would remain free to change providers or products at any time.

How Did OIG Analyze the Proposed Arrangement Under the Anti-Kickback Statute?

Before beginning its analysis, OIG referenced its existing guidance on independent charity PAPs, noting that, while PAPs can provide important safety net assistance to patients, independent charity PAPs that rely heavily on donations from pharmaceutical manufacturers present significant fraud and abuse risks. OIG then noted that the Proposed Arrangement would implicate the federal Anti-Kickback Statute because the pharmaceutical manufacturers would provide remuneration, in the form of copayment and premium subsidies, through Requestor to patients diagnosed with a Disease that can be treated by one of the manufacturers’ products.

OIG nonetheless concluded that the Proposed Arrangement presents sufficiently low risk of fraud and abuse based on a combination of factors:

• No data sharing: Requestor would not provide donors with data that would allow them to correlate their donations with the use of their products.
• First-come, first-served with uniform financial need criteria: Assistance would be awarded on a first-come, first-served basis, without regard to a patient’s provider, drug manufacturer, or pharmacy.
• Patient choice: Patients choose their healthcare providers and products before applying for assistance and remain free to change providers and products at any time.
• Independence from manufacturers: No manufacturer exercises control over Requestor or the allocation of Disease Fund resources.
• Broad disease fund definitions: Disease Funds are defined by widely recognized clinical standards and cover a broad spectrum of products, reducing the risk that any fund functions as a proxy for a single manufacturer’s product.
• Assistance not limited to specialty drugs: Copayment assistance covers all FDA-approved prescription medications, including generics, reducing steering risk.
• High patient impact: The financial assistance is highly impactful for patients with Diseases, who face extraordinary out-of-pocket costs.

OIG also concluded that the Proposed Arrangement would not violate the Beneficiary Inducements CMP because Requestor is not a provider, practitioner, or supplier, and the assistance is available without regard to a beneficiary’s choice of provider, practitioner, or supplier.

The IRA’s Part D Redesign: Why OIG’s Reference Matters

Perhaps the most significant aspect of Advisory Opinion 26-17 is not its conclusion but rather the fact that OIG explicitly connected the IRA’s Part D cost-sharing reforms to its fraud and abuse analysis and flagged the Proposed Arrangement for future review. OIG’s reference to the IRA’s elimination of Medicare Part D enrollees’ five percent cost sharing in the catastrophic phase and $2,000 cap on annual out-of-pocket costs, in particular, suggests that it views the IRA’s Part D redesign as a potentially transformative development that could reduce the justification for manufacturer-funded copayment subsidies in the future.

OIG’s position is significant for several reasons. First, it signals that OIG is actively monitoring how the IRA’s Part D redesign affects the PAP landscape. Second, it introduces a temporal element into the analysis, suggesting that factors supporting a favorable advisory opinion today may change if associated market conditions change. And finally, it suggests that OIG views the IRA’s structural changes to Part D cost-sharing as a variable that could fundamentally alter the justification for manufacturer-funded cost-sharing subsidies.

What Does This Mean for PAP Operators and Pharmaceutical Manufacturers?

Advisory Opinion 26-17 reinforces the continued importance of traditional PAP safeguards while introducing new considerations tied to the IRA’s Part D redesign. Organizations contributing to or evaluating PAPs should assess whether the PAP includes the safeguards highlighted in Advisory Opinion 26-17, as well as how the IRA’s Part D reforms may affect demand for and the structure of the PAP’s assistance.

As with all advisory opinions, Advisory Opinion 26-17 is limited to the Requestor and the specific facts and circumstances presented. However, it provides important insight regarding OIG’s evolving perspective on the interplay between the IRA’s Part D redesign and manufacturer-funded patient assistance programs.

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