OIG Approves Arrangement Regarding Patient Assistance Funds for Patients With Certain Rare Diseases, Pending Medicare Part D Changes

The Department of Health and Human Services, Office of Inspector General (“OIG”) recently released a favorable advisory opinion, OIG Advisory Opinion No. 24-02 (the “Opinion”) to a nonprofit organization that provides financial support to patients with certain rare disorders and demonstrated financial need (the “Requestor”). Requestor proposes to maintain a “Disease Fund” around each of 12 rare disorders that would generally assist patients with out-of-pocket costs associated with their disease, including costs of expensive medications and other care necessary for treatment of the patient’s disease. Each Disease Fund has a single donor — a manufacturer that makes or markets a drug to treat the disease state addressed by the Disease Fund. The Requestor inquired whether the contemplated funding arrangement (the “Proposed Arrangement”) would constitute grounds for sanctions under the civil monetary penalty provisions at section 1128A(a)(5) and (7) of the Social Security Act (the “Act”), as those sections relate to the commission of acts described in section 1128B(b) of the Act (the “federal anti-kickback statute” or “AKS”) or prohibition of inducements to beneficiaries (the “Beneficiary Inducements CMP”). The Requestor also sought confirmation that the Proposed Arrangement would not expose them to sanctions under the exclusion authority at section 1128(b)(7) of the Act. OIG concluded that though the Proposed Arrangement would generate prohibited remuneration if the requisite intent were present, OIG would not impose sanctions under the Act in connection with the Proposed Arrangement.

The Advisory Opinion

Under the Proposed Arrangement, the Requestor advertises the Disease Funds to relevant interest groups and the general public. The Disease Funds are open to all patients regardless of insurance status or whether they are enrolled in a federal healthcare program. An applicant’s financial eligibility is determined based on a number of factors, including their fiscal condition and their prescription drug cost-sharing burden. Medical eligibility requires certification from the patient’s physician that the applicant has the disorder for which the particular Disease Fund has been established. Neither the Requestor nor anyone with whom the Requestor contracts arranges for only certain patients (e.g., those taking the donor’s drug) to receive assistance, and patients’ eligibility is not contingent on the selection of a particular physician or pharmacy, or whether the patient has been prescribed any particular drug. Disease Fund assistance is not limited to any particular drug or to expensive specialty drugs, and fund expenditures for assistance with medically necessary items or services have several safeguards, including restrictions on per-patient spending. Further, Disease Fund donors are not identified to patients, and donors are not allowed to specify that their funds may be used only for prescription drug cost-sharing subsidies or influence the type of drugs or services their contributions will support. Historically, prescription drug cost-sharing subsidies represented approximately 31% of the overall spending of the disease funds. The remainder was spread across medical assistance (e.g., office visits, durable medical equipment, infusion services and supplies, etc.), insurance premium assistance, and short-term limited financial assistance in emergency situations.

OIG acknowledged that patient assistance programs (“PAPs”) can provide important safety net assistance to patients, especially those who cannot afford their prescription drug cost-sharing obligations. But it also asserted that independent charity PAPs that rely heavily on donations from pharmaceutical manufacturers present significant fraud and abuse risks, including: (1) the potential for improperly increased drug prices, which could result in improperly increased costs to federal healthcare programs and certain patients; (2) the possible steering of Part D enrollees to certain drugs, which could result in enrollees taking drugs that are not as safe and efficacious for them as other drugs; and (3) the prospect of anti-competitive effects.

OIG concluded that the Proposed Arrangement did not implicate the Beneficiary Inducements CMP because it did not influence an enrollee’s selection of a particular provider, practitioner, or supplier of any item or service for which a federal or state healthcare program might pay. Conversely, the Proposed Arrangement implicates the AKS because the drug manufacturers provide (via the Requestor) remuneration to federal healthcare program beneficiaries who can be treated by a drug produced by the manufacturer. Nonetheless, OIG would not sanction the Requestor because, as a whole, the Proposed Arrangement includes many of the features OIG has highlighted in the past as reducing fraud and abuse risk in independent charity PAPs, including: (1) defining Disease Funds based on established disease states; (2) awarding assistance without regard to the treatment regimen prescribed for a particular patient; (3) limitations on the sharing of information with donors; and (4) application of a financial eligibility process. OIG also declined sanctions because less than one-third of funds spent under the Proposed Arrangement were for cost-sharing subsidies for drugs manufactured by donors, while the remainder was spent on other categories of assistance, including other medical items and services, premium support, or emergency relief. Because of recently enacted legislation restructuring cost-sharing by Medicare Part D enrollees, OIG limited the validity of the Opinion — and the prospective immunity it confers — to January 1, 2027.


This Opinion reinforces that PAPs providing drug cost-sharing subsidies and other medical expenses can be sponsored predominantly by drug manufacturers, so long as critical safeguards are maintained. To limit the risk of fraud and abuse in PAPs, OIG has long emphasized the importance of disease funds not limiting their assistance to certain drugs or to patients in particular stages of a disease. See, e.g., OIG, Supplemental Special Advisory Bulletin: Independent Charity Patient Assistance Programs, 79 Fed. Reg. 31,120 (May 30, 2014), https://oig.hhs.gov/fraud/docs/alertsandbulletins/2014/independent-charity-bulletin.pdf (hereinafter the “2014 Bulletin”). OIG has also stressed the value of determining patients’ eligibility according to consistent and verifiable measures, and preventing donors from accessing information that would allow it to correlate the amount of its donations with the number of aid recipients using its products. Id. Such assurances are material facts on which OIG has relied in issuing favorable advisory opinions, which provide significant protection against AKS risks.

Notably, unlike most advisory opinions, this one comes with an expiration date on the prospective immunity a favorable opinion provides. As part of the Inflation Reduction Act of 2022 (“IRA”), Congress restructured cost-sharing for Medicare Part D beneficiaries, including capping out-of-pocket Part D cost sharing to $2,000 beginning January 1, 2025 (down from $8,000 in 2024). The Opinion’s protections will end on January 1, 2027, two years after full implementation of the out-of-pocket cap. OIG noted that the reduction in cost-sharing obligations could ease demand for the subsidies provided under the Proposed Arrangement, but gave the Requestor an extra two years’ protection to provide it sufficient time to submit a new advisory opinion request. The sunset provision in this Opinion indicates that, in the future, the IRA’s changes to Medicare Part D cost sharing may alter the OIG’s perspective of fraud risks implicated by PAPs.

For more information on OIG Advisory Opinion No. 24-02 or other issues addressed herein, please contact AGG Healthcare attorney Lisa Churvis.