Patient Assistance Programs (“PAPs”), some independent and some operated by pharmaceutical manufacturers, play an important role in providing patients that have no or limited health insurance with financial assistance to access needed medications. Pharmaceutical manufacturers and PAPs have a shared commitment to patients and focus on fighting diseases. PAPs provide financial assistance to patients with limited means in a variety of forms, including free or discounted products, product coupons and copayment assistance. The US Department of Health and Human Services ("HHS") Office of the Inspector General ("OIG") has continually acknowledged that properly structured PAPs can provide important "safety net assistance" to patients who cannot afford necessary drugs.
However, as many pharmaceutical manufacturers have found, PAPs can also present significant risks of violations of the False Claims Act (“FCA”) and the Federal Anti-Kickback Statute (“AKS”). The OIG has repeatedly stated that the AKS may be violated "if a donation is made to a PAP to induce the PAP to recommend or arrange for the purchase of the donor's federally reimbursable items," as well as if a PAP's grant of financial assistance to a patient is made "to influence the patient to purchase (or induce the patient's physician to prescribe) certain items."
In the last several years, both the US Department of Justice (“DOJ”) and the OIG have taken enforcement actions against pharmaceutical manufacturers for AKS violations related to their activities with PAPs, many of which have resulted in settlements and subsequent corporate integrity agreements (CIAs).
Given this increase in government enforcement actions, pharmaceutical manufacturers engaged with independent PAPs should be reviewing and evaluating their compliance controls and should also consider implementing ongoing monitoring of selected PAPs’ activities in order to avoid FCA and AKS violations. The CIAs resulting from government enforcement actions in the area provide useful insight into the OIG’s expectations regarding controls that help ensure legal and regulatory compliance.
To ensure compliance when working with independent PAPs, a pharmaceutical manufacturer should decide the objectives of its engagement with the PAP to then determine the level of due diligence required. For example, whether the pharmaceutical manufacturer wants to partner with a PAP or simply donate funds will drive the next steps of the assessment process, including gathering basic information about the PAP and following up with a more structured due diligence.
In conducting due diligence, the pharmaceutical manufacturer must verify that it understands the PAP’s mission and goals to assess alignment with its own objectives. It should review the PAP’s governance structure, including board members, leadership and organizational policies. Further, the pharmaceutical manufacturer needs to examine the PAP’s financial statements to evaluate its financial stability and transparency. It is also imperative that the pharmaceutical manufacturer understand the range of services and support offered to patients, such as medication assistance, financial counseling or educational resources, and that it ascertains the criteria patients must meet to access the PAP’s services. In addition, it is crucial to evaluate the program’s track record in terms of patient outcomes and its impact on the community it serves to ensure that the PAP complies with all relevant laws and regulations such as the AKS, the Health Insurance Portability and Accountability Act (“HIPAA”) and other healthcare compliance regulations and standards.
As the next step, the PAP’s representatives, including board members as well as its top management, should be interviewed. The interviews should be focused on understanding the program’s operations, including its application process and patient support, as well as follow-up procedures. The pharmaceutical manufacturer should also inquire about the PAP’s funding sources, including donations, grants and pharmaceutical partnerships. Requesting case studies or examples of successful patient outcomes resulting from a PAP’s support can be useful to assessing the PAP’s impact. Thereafter, the pharmaceutical manufacturer can compare the PAP with other similar programs or organizations offering patient assistance to determine which one aligns best with its objectives and values. The pharmaceutical manufacturer may also consider conducting site visits to get a better understanding of the PAP’s culture and operations. Lastly, it is crucial to conduct discreet reference checks with other organizations and individuals with experience with the PAP.
Once the pharmaceutical manufacturer has decided to fund the PAP, it must develop an ongoing monitoring mechanism of key internal compliance indicators to ensure compliance with laws and regulations. The pharmaceutical manufacturer should establish an independent monitoring function for managing the PAP’s funding. This should be separate from the company’s commercial organization, which should not have any involvement in, or influence over, the review, approval or implementation of any budget or other decisions or activities relating to independent charity PAPs.
The independent monitoring function (with input from the legal and compliance departments) should establish standardized, objective and written criteria that will govern donations to PAPs, designed to ensure that the PAP does not function as a conduit for payments or other benefits from the company to patients and does not impermissibly influence patients’ drug choices.
Further, it is important that the company develop and implement a centralized annual risk assessment and internal review process to identify and address risks associated with each of the company’s Government Reimbursed Products (“GRP”) and with applicable federal healthcare program requirements. The risk assessment and internal review process should identify and prioritize risks associated with each GRP, including those associated with the sales, marketing and promotion of such products, with the operation of any of the PAPs and the company’s arrangements.
As part of the risk assessment, the pharmaceutical manufacturer should review and evaluate key internal indicators of its compliance program from the perspective of design and implementation:
- Program design: Is the compliance program for the management of PAPs well designed? Are the policies, procedures and systems designed and documented to mitigate compliance risks? This may include, for example, evaluating the SOPs developed by pharmaceutical manufacturers or conducting a walkthrough of the processes and key internal indicators implemented for each key area of the management and interaction with the PAP.
- Program implementation: Does the compliance program work in practice? Is it being implemented effectively? The company should assess the strength of implementation and effectiveness of key internal indicators that have been put in place to mitigate and monitor compliance risk. This may include, for example, evaluating whether requirements stated in SOPs are being followed by the business in practice and transactional testing of payments and donations to the PAP.
Presenting the results and rating of each key internal indicator reviewed and assessed graphically in a heat map is often beneficial. The heat map can also provide a visual comparison of key internal indicators in terms of design and implementation and show the areas that need remediation.
Lastly, the company should develop corrective action plans in response to the results of any internal audits performed and track their implementation to assess their effectiveness.
PAPs play an important role in assisting pharmaceutical manufacturers to reach patients with limited resources and provide them with much needed medications. However, interactions with PAPs have historically increased pharmaceutical manufacturers’ risk of potentially violating the FCA and the AKS. It is imperative for pharmaceutical manufacturers to develop and implement compliance programs governing interactions with PAPs and to review and monitor their activities.