Assessing HHS' Stance On Rare Disease Patient Assistance

May 13, 2024 | By Mary Kohler in Law360

It's a rainy rush hour. You're trying to navigate trucks on the freeway when your teenager asks, "Can I get Instagram when I'm 15?" It's a fair question. But it's complicated. And her timing stinks.

The latest advisory opinion from the U.S. Department of Health and Human Services Office of Inspector General evokes a similar feeling.[1] In 2022, a charity asked the OIG to bless its manufacturer-supported copay funds for rare disease patients. Last month, the OIG finally gave it a cautious yes.

The OIG was busy when the request arrived. First, it was defending two lawsuits challenging its stance that Medicare copay support violates the Anti-Kickback Statute, Pfizer v. HHS in the U.S. Court of Appeals for the Second Circuit and Pharmaceutical Coalition for Patient Access v. U.S. in the U.S. District Court for the Eastern District of Virginia.[2]

Separately, it was analyzing whistleblower allegations against Ultragenyx Pharmaceutical Inc. over manufacturer-sponsored genetic testing[3] — another service in the charity's ask.

These matters have resolved. But now the Inflation Reduction Act is poised to bring sweeping reform. The future is fuzzy. And in an unprecedented move, the OIG gave the opinion a two-year sunset.

Now the question is whether this opinion will help charities and their donors navigate these programs for rare disease patients. Or does it raise new questions?

Copay Tensions

Copay assistance is common. Like grocery store coupons, manufacturer copay cards and vouchers are valid, effective and legal promotional tactics.

But the OIG sees them differently. Copay cards are financial incentives, and they influence purchases. So, the OIG says manufacturers can't give them to federal program patients.

According to the OIG, cost-sharing obligations sensitize patients to cost. Covering them contributes to escalating prices by sidestepping this thoughtful federal benefit design. The agency also says they can affect medical decisions and harm competition as doctors and patients favor options with the lowest out-of-pocket spend.

The OIG allows manufacturers to fund charities that cover Medicare copays for needy patients. But their donations can't be funneled toward their own products. At the dawn of Medicare's Part D drug benefit, the OIG issued guidance and several advisory opinions defining the lines.

Over time, however, prosecutors alleged some single-product funds lacked independence and merely served as conduits for manufacturer payments to patients. This prompted the OIG to modify its earlier positions.[4] Today, single-product, single donor funds are discouraged.

This history presents an issue for rare disease. Often there is only one therapy, and no opportunity to create a pooled fund.

Wait and See

Next year, the IRA will cap patient payments at $2,000. The opinion notes this will alter the dynamics of patient needs and company motivations in yet-unknown ways. To the OIG, uncertainty in the face of another sweeping Medicare reform must strike a familiar chord.

Consistent with its temporary nature, the opinion is remarkably high level. Ordinarily, the OIG would drill down on the charity's 12 funds. Instead, it discusses them as a whole and says AKS risk increases as funds focus more on awarding aid related to their donors' products.

The OIG invited the charity to request an updated opinion when IRA impacts come into focus and the charity has data reflecting the new reality.

Insights for Rare Disease

A temporary answer is unsatisfying, but it's better than the OIG speculating about a post-IRA world and dialing things back later. Also, the opinion is welcome after recent litigation cast doubt on manufacturer-funded copay support.

First, the OIG opined favorably on 12 single-donor funds. Its comfort rests on the charity's non-copay support, as reflected in the chart. But the OIG emphasizes no more than 35% of donor funding goes toward spending on its own products, and it warns a different mix of support might alter its analysis.

This seems like a stark departure from prior settlements, where donor contributions were earmarked almost entirely for product-related spend.[5] And it seems to raise the bar for these charities — even though the OIG has long acknowledged their heavy reliance on manufacturer funding.[6] Now the OIG sees the independent charity model as susceptible to abuse.

The OIG's idea may also prove difficult in operation. Following earlier guidance, many funds now allow patients to use copay grants for side effect treatments as well as the donor's product. And here, the charity does not ask applicants about the drugs they are taking. So it would only know whether its assistance has been used for the donor's product after patients file claims. Ironically, the fund's own compliance systems may impair its ability to manage the OIG's expectation.

Separately, the OIG seems to applaud the charity's ad hoc emergency aid, observing one fund supplied a portable refrigerator to a patient displaced by a hurricane who needed to keep medications cold.

Rare disease patients can have random, unforeseeable needs. And while these requests must be assessed carefully, the OIG's regard for the charity's patient-first thinking is helpful.

The OIG says the charity's programs have many features it has endorsed before. These

include defining funds by disease rather than product, awarding support in a treatment-agnostic manner, limiting data sharing with donors and using a financial eligibility process.

Notably, the OIG suggests the charity's focus on rare disease may mitigate some risk. It cites patients' many financial burdens, and the funds' support for needs beyond drug costs. And it acknowledges the charity's help "could be highly impactful for those patients."

More Questions About Manufacturer-Sponsored Genetic Testing

The opinion excludes genetic testing support. For targeted therapies, testing can be essential to identifying patients who will benefit from a treatment and ruling out those who won't. This pinpointing may ease another government concern — inappropriate use.[7] But payors worry about these therapies' prices, and markets that could grow beyond current projections.

The charity stopped funding genetic testing during the two-year wait. It's hard to know what prompted the decision or why the OIG called out something that's no longer relevant. But the mention may be significant.

Manufacturer-sponsored genetic testing has come under scrutiny. The OIG opined favorably on one company's request in 2022.[8] But last December, Ultragenyx settled a qui tam over its program, and a recent news report suggests other investigations are pending.[9] So, this space remains in flux.

Looking Ahead

The OIG's opinion carves a narrow path for single-donor funds. Whether this path offers enough help to patients — now or next year — remains to be seen. Charities and manufacturers will need to stare into the 35% limit that the OIG has emphasized here.

As always, study the OIG's opinions when structuring — and managing — programs, especially in this period of uncertainty. The OIG wants assurance charities are authentic. And for manufacturers, the golden rule is patients, not profits. These aren't company-owned copay programs.

It's encouraging that the OIG recognizes rare diseases as different. To date, patient assistance guidance has been shaped by big drugs in competitive markets. But rare disease isn't weight loss. Patients don't choose grueling treatments absent a compelling need. And in the absence of competition, the OIG may be open to novel, thoughtful ideas for easing their journey.

Still, the six- to seven-digit price tags these products can boast will always attract attention and skepticism. Given the current scrutiny of genetic testing programs, and one prosecutor's recent statements, new concerns will likely emerge.[10] So, monitor programs in execution, and adapt them as weaknesses unfold or the OIG's thinking evolves.

Finally, keep it simple. This isn't an AKS consideration; it's a human one. A decade of enforcement has brought a steady increase in patient data collection, complex forms and legalistic disclaimers. Yes, compliance requires diligence. But systems that grow incrementally can also get bloated.

Rare disease patients are sick and overwhelmed. The best programs will find ways to offer them meaningful help without taxing their stamina in the process.

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Mary Kohler is the founder and principal at Kohler Health Law, PC.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] OIG Advisory Opinion No. 24-02, Dept. of Health and Human Services, Office of Inspector General (Apr. 8, 2024).

[2] In 2019, OIG issued an unfavorable opinion for Pfizer's request to fund patient copays directly. OIG Advisory Opinion No. 20-05, HHS OIG (Apr. 8, 2020). Pfizer challenged OIG's interpretation of AKS in federal court. And lost. Pfizer, Inc. v. HHS, No. 21-2764-cv (2d Cir. 2022). Shortly afterward, OIG ruled unfavorably on a proposal by the Pharmaceutical Coalition for Patient Access (PCPA), to pool funding and offer copay support through a "coalition model." OIG Advisory Opinion No. 22-19, HHS OIG (Sep. 30, 2022). PCPA similarly challenged OIG's AKS interpretation, and recently lost on summary judgment. Pharmaceutical Coalition for Patient Access v. United States of America et al., No. 3:2022cv00714 (E.D. Va. 2024).

[3] Department of Justice Press Release, Pharmaceutical Company Ultragenyx Agrees to Pay $6 Million for Allegedly Paying Kickbacks to Induce Claims for Its Drug Crysvita, Dec. 21, 2023.

[4] In 2005, OIG issued a Special Advisory Bulletin (2005 SAB) establishing high-level guidance for independent charity foundations. See Special Advisory Bulletin on Patient Assistance Programs for Medicare Part D Enrollees, 70 F. Reg. 706223 (Nov. 22, 2005). In 2014, it updated its 2005 SAB to address issues it identified through experience; most notably single-donor funds where the majority of spend went toward that donor's products. See Supplemental Special Advisory Bulletin: Independent Charity Patient Assistance Programs, 79 F. Reg. 31120 (May 30, 2014). It also modified several of its earlier opinions to require broadly defined diseases, coverage of all FDA approved treatments and no single-donor, single-drug funds unless the charity provides other non-drug services. See e.g., OIG Advisory Opinion No. 07-06, HHS OIG (issued Jul. 23, 2007; modified Dec. 21, 2015) (AO 07-06); and OIG Advisory Opinion No. 07-18, HHS OIG (issued Dec. 19, 2007; modified May 5, 2016) (AO 07-18).

[5] For example, DOJ announced three settlements highlighting the single-donor relationship between the manufacturers and charitable funds. Department of Justice Press Release, Three Pharmaceutical Companies Agree to Pay a Total of Over $122 Million to Resolve Allegations That They Paid Kickbacks Through Co-Pay Assistance Foundations, Apr. 4, 2019.

[6] See, e.g., AO 07-06 and AO 07-18 ("[m]ost of the Foundation's funding for the Arrangement is provided by manufacturers of drugs that are used to treat diseases covered by the Foundation's programs").

[7] M. Kohler, DOJ's Biopharma Settlement Raises Anti-Kickback Questions, Law360, Jan. 23, 2024.

[8] OIG Advisory Opinion No. 22-06, HHS OIG (Apr. 6, 2022).

[9] Reuters, BioMarin Pharma Gets DOJ Subpoena on Sponsored Testing Programs for Two Therapies, Feb. 26, 2024.

[10] B. Penn, Once-Renowned US Health Fraud Unit in Boston Gets an Inside Edge, Bloomberg Law, Feb. 27, 2024.

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