In an unprecedented action, the U.S. Department of Health and Human Services Office of Inspector General (OIG) has revoked an Advisory Opinion that protected a patient assistance charity from kickback liability, noting that it had failed “to fully, completely, and accurately disclose all relevant and material facts to OIG…” and had also failed to comply with “certain factual certifications” necessary for the retention of its protected status.

The charity, Caring Voice Coalition (CVC), operates one of the biggest patient assistance programs in the United States, and the revocation of the shield provided in the Advisory Opinion has led some to speculate that without the government’s “seal of approval” it may go out of business.

CVC helps patients afford expensive prescription drugs by funding health insurance copayments. The charity is bankrolled almost entirely by donations from drug makers.  The OIG Advisory Opinion (Advisory Opinion No. 06-04) that provided kickback liability protection to CVC was first issued in 2004 and subsequently revised in 2015. OIG has now revoked the protection, citing two breaches:

CVC provided patient-specific data to one or more donors that would enable the donor(s) to correlate the amount and frequency of their donations with the number of subsidized prescriptions or orders for their products, and

CVC allowed donors to directly or indirectly influence the identification or delineation of CVC’s disease categories

By the terms of the Advisory Opinion and its 2015 revision, CVC was to ensure that its arrangements “interposed an independent, bona fide charitable organization” between its donors (i.e. drug companies) and the recipients of its aid. OIG found that the above-noted breaches, “materially increased the risk that [CVC] served as a conduit for financial assistance from a pharmaceutical manufacturer donor to a patient, and thus increased the risk that the patients who sought assistance from [CVC] would be steered to federally reimbursable drugs that the manufacturer donor sold.”  This steering, in turn, potentially enabled manufacturers to raise drug prices while insulating patients from the immediate out-of-pocket effects of price increases while leaving federal health care programs like Medicare and Medicaid to bear the cost.

In additional bad news for CVC and its drug company donors, the rescission is retroactive to the original date of issuance (April 20, 2006). The Department of Health and Human Services, along with a number of other federal agencies involved in the management of the nation’s federally-funded health care programs and the U.S. Justice Department, are now free to look back at CVC’s handling of donations for any improper conduct, kickbacks, or fraud.

While an OIG spokesman declined to indicate whether an investigation of CVC was underway, both the OIG and the U.S. Department of Justice have placed increased scrutiny on patient assistance programs for the last few years and implicated several in False Claims Act cases. In matters possibly related to CVC, the Justice Department has also issued subpoenas and investigative inquires to a number of drug makers in recent months, including Gilead Sciences Inc., Jazz Pharmaceuticals Plc., Celgene Corp., and Novartis AG.

The FisherBroyles Pharmacy and Health Care Law team is pleased to keep you updated on events of interest to those in the healthcare and pharmaceutical industries. Questions regarding the subject matter of this alert may be directed to any of the following attorneys:

Brian Dickerson, FisherBroyles Partner
Brian E. Dickerson

Anthony Calamunci, FisherBroyles Partner
Anthony Calamunci

Nicole Waid, FisherBroyles Partner
Nicole Hughes Waid

Amy Butler, FisherBroyles Partner
Amy Butler

Katy Wane, FisherBroyles Partner
Katy Wane