CBI PAP LEGAL UPDATE MEDICARE & MEDICAID A REVIEW OF COMPLIANCE WITH GOVERNMENT PROGRAMS. September 26, Sarah difrancesca Partner Cooley LLP

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1 CBI PAP LEGAL UPDATE MEDICARE & MEDICAID A REVIEW OF COMPLIANCE WITH GOVERNMENT PROGRAMS September 26, 2017 Sarah difrancesca Partner Cooley LLP attorney advertisement Copyright Cooley LLP, 3175 Hanover Street, Palo Alto, CA The content of this packet is an introduction to Cooley LLP s capabilities and is not intended, by itself, to provide legal advice or create an attorney-client relationship. Prior results do not guarantee future outcome.

2 AGENDA I. PAP OVERVIEW II. INDEPENDENT CHARITY PAPS III. MANUFACTURER PAPS IV. KEY CONSIDERATIONS 2

3 I. PAP OVERVIEW

4 I. PATIENT ASSISTANCE PROGRAMS (PAP) Internal or external programs that provide financial support for a company s product, including free or reduced price product, copayment assistance, or grants to independent charitable foundations that provide assistance to financially needy patients PAP Types Independent Charity PAPs Manufacturer PAPs 4

5 I. OIG GUIDANCE... LAWFUL AVENUES EXIST FOR PHARMACEUTICAL MANUFACTURERS AND OTHERS TO HELP ENSURE THAT ALL PART D BENEFICIARIES CAN AFFORD MEDICALLY NECESSARY DRUGS. - OIG Supplemental Special Advisory Bulletin: Independent Charity Patient Assistance Programs (2014) 5

6 I. KEY LEGAL CONCERNS Anti-Kickback Statute (AKS) Criminal offense to knowingly and willfully offer, pay, solicit or receive remuneration or induce or reward the referral or generation of business reimbursable by a Federal health care program (e.g., Medicare, Medicaid) False Claims Act (FCA) Liability for knowingly presenting, or causing to be presented, false or fraudulent claims for payment or approval from a Federal health care program AKS violation can form basis for FCA action Civil Monetary Penalty (CMP) Prohibits any person from offering or transferring remuneration to a Medicare or State health care program beneficiary that the person knows or should know is likely to influence the beneficiary s selection of an item or service reimbursable by a Medicare or State health care program (e.g., Medicaid, CHIP) 6

7 I. PAP FRAUD & ABUSE CONCERNS Steering patients to higher priced brand name drugs rather than less costly alternatives, such as generics Increasing costs to Federal health care programs Providing a financial advantage over competing products Decreasing a Medicare beneficiary s incentives to seek out and use less costly alternatives 7

8 II. INDEPENDENT CHARITY PAPS

9 II. INDEPENDENT CHARITY PAPS Long-standing OIG guidance makes clear that industry stakeholders can effectively contribute to the health care safety net for financially needy Medicare and Medicaid patients by contributing to independent, bona fide charitable assistance programs. - OIG Advisory Opinion (2007) 9

10 II. INDEPENDENT CHARITY PAPS OIG guidance states that donations from a manufacturer to an independent, bona fide charity that provides cost-sharing subsidies for Part D drugs would raise little AKS concerns No manufacturer or affiliate influence or control over charity or assistance program (direct or indirect) Assistance awarded by charity in a truly independent manner that severs any link between the manufacturer s funding and the beneficiary Charity awards assistance without regard to manufacturer s interests and without regard to beneficiary s choice of product, provider, practitioner, supplier or Part D drug plan Charity provides assistance based upon reasonable, verifiable, and uniform measure of financial need that is applied in a consistent manner Manufacturer does not solicit or receive data to determine referrals 10

11 II. INDEPENDENT CHARITY PAPS We do not believe that the mere fact that a fund serves only Federal health care program beneficiaries increases risk to the Federal health care programs. Key factor for PAPs that include Federal health care programs, in whole or part, is eligibility selection methodology + Reasonable X Cost of the particular drug for which + Verifiable the patient is applying assistance is a stand-alone factor in determining + Uniform measure of financial need financial need + Applied in a consistent manner X Generous financial need criteria + Flexibility to consider variables may be evidence of intent to fund a beyond income particular drug 11

12 II. INDEPENDENT CHARITY PAPS OIG Opinion (July 2007) Foundation is a nonprofit, tax-exempt, charitable organization Analysis of an arrangement to subsidize cost-sharing and premium obligations owed by financially needy patients, including Medicare or Medicaid beneficiaries, with certain chronic diseases OIG determined that the arrangement did not constitute grounds for CMP and did not find requisite intent under AKS 12

13 II. INDEPENDENT CHARITY PAPS OIG Opinion (cont.) Among other things, OIG determined: Contributions made by donors to Foundation cannot reasonably be construed as payments to Federal health care program beneficiaries to arrange for referrals Sufficient safeguards in place by Foundation, including: No direct or indirect control Financial eligibility determine based on objective criteria Donor unable to correlate donation with use of its products/services No guarantee that any of the donor s patients, clients, or customers receive any financial assistance from the Foundation Foundation s subsidy is not likely to improperly influence any beneficiary s selection of provider, practitioner, supplier or product 13

14 II. INDEPENDENT CHARITY PAPS Modification #1 to OIG Opinion (Sept. 2011) Foundation was providing assistance through its Open Funds to financially needs patients, including Federal health care program beneficiaries and commercially insured patients, pursuant to original OIG opinion Foundation sought clarification that it could establish new Medicare Access Funds to provide charitable assistance solely to needy Medicare beneficiaries with specified disease states Donors would have option to earmark funds for Open Funds, Medicare Access Funds, or both Needy Medicare beneficiaries would be provided funds from Medicare Access Funds first, but would have access to Open Funds if needed 14

15 II. INDEPENDENT CHARITY PAPS The modified opinion issued by the OIG stated: 1. Funds targeting Medicare beneficiaries was problematic under the CMP law prohibiting inducements to beneficiaries, but OIG would not enforce. 2. Funds targeting Medicare beneficiaries was problematic under the CMP law prohibiting inducements to beneficiaries, and OIG would enforce. 3. No change to analysis provided in original Opinion

16 II. INDEPENDENT CHARITY PAPS Modification #1 to OIG Opinion (cont.) No change to original OIG analysis All original safeguards in same place and would apply Analysis may differ if the Medicare Access Funds included singleproduct or single-manufacturer disease states The Proposed Arrangement represents a departure from patient assistance programs we have addressed in the past in that the Requestors would expressly limit the aid provided by the proposed funds to qualified Medicare beneficiaries. However, based on the totality of facts and circumstances, and for the reasons set forth in OIG Advisory Opinion No and herein, we conclude that the modification would not affect our conclusion in OIG Advisory Opinion No (emphasis added) 16

17 II. INDEPENDENT CHARITY PAPS Modification #2 to OIG Opinion (Dec. 2015) Foundation responded to a May 2014 letter from the OIG related to changes or modifications to the program features in light of Supplemental Special Advisory Bulletin Foundation confirmed to the OIG: It will not define disease funds by reference to specific symptoms, severity of symptoms, method of drug administration, stages of particular disease, type of drug treatment, or other way of narrowly defining a widely recognized disease state, except for certain metastatic cancers. It will not maintain any disease fund that provides assistance for only one drug, or only the drugs made or marketed by one manufacturer or its affiliates. It will not limit assistance to high-cost or specialty drugs, and will include 17 assistance for generic or bioequivalent drugs.

18 III. MANUFACTURER PAPS

19 III. MANUFACTURER PAPS Manufacturer PAPs Including Part D Enrollees OIG guidance states manufacturer PAPs that subsidize Medicare Part D cost-sharing amounts present heightened risks under the AKS Manufacturer is giving something of value (i.e., Part D subsidy) to Medicare beneficiaries Increases costs to Medicare by counting towards Medicare beneficiary s TrOOP expenditures and shielding beneficiaries from inflated prices Lock beneficiaries into the product 19

20 III. MANUFACTURER PAPS Manufacturer PAPs Operating Outside Part D OIG guidance distinguishes PAPs for financially needy Medicare Part D enrollees operated completely outside the Part D benefit Beneficiary provides product without using Part D insurance benefit No claim for any covered outpatient product is submitted to the Part D plan or beneficiary Assistance provided by manufacturer does not count toward Medicare beneficiary s TrOOP or total Part D spending for any purpose 20

21 III. MANUFACTURER PAPS Manufacturer PAPs Operating Outside Part D Safeguards to ensure that Part D plans are notified that the product is being provided outside the Part D benefit so that no payment is provided and no part of its costs are counted toward TrOOP PAP provides assistance for whole Part D coverage year (or remaining portion) PAP assistance remains available even if the beneficiary s use is periodic during the coverage year PAP maintains accurate and contemporaneous records to permit verification Eligibility for PAP assistance is determined based solely on patient financial need using a methodology (e.g., percent of Federal poverty level) that is reasonable and applied uniformly and consistently May not take into consideration the providers, practitioners, or suppliers used by the patient or the Part D plan in which the patient is enrolled PAP operates in compliance with all then-existing guidance from CMS 21

22 III. MANUFACTURER PAPS Manufacturer PAPs Operating Outside Part D PAP questionnaire and implementation of data sharing arrangement with CMS Require PAP enrollees to certify that they: (i) will not submit any claim for reimbursement to any third party insurer, including a Medicare Part D plan, for any product provided by the PAP; and (ii) will not claim TrOOP costs from a Medicare Part D plan for the value of the product provided by the PAP Do not provide PAP patients any information regarding their value or cost of the products received 22

23 III. COPAYMENT COUPONS Any form of direct support offered by manufacturers to insured patients to reduce or eliminate immediate out-of-pocket costs for specific prescription medications, including print coupons, electronic coupons, debit cards, and direct reimbursements Coupons constitute remuneration offered to consumers to induce the purchase of specific items and the AKS and FCA are implicated when offered to a FHCP beneficiary Harm FHCPs by causing HCPs and beneficiaries to choose an expensive brand-name drug when a less expensive alternative is available Also removes market constraints on drug prices 23

24 III. COPAYMENT COUPONS Manufacturers that desire to assist Federal health care program beneficiaries who cannot afford their copayments have the option of donating to independent charities that provide financial support to patients without regard for the particular medication a patient may be using.... the offerors of coupons ultimately bear the responsibility to operate these programs in compliance with Federal law. Pharmaceutical manufacturers that offer copayment coupons may be subject to sanctions if they fail to take appropriate steps to ensure that such coupons do not induce the purchase of [FHCP] items or services, including, but not limited to, drugs paid for by Medicare Part D. 24

25 IV. KEY CONSIDERATIONS

26 IV. KEY CONSIDERATIONS INDEPENDENT CHARITY PAPS OK to include Federal health care program beneficiaries, exclusively or with commercial patients, if safeguards in place Disease fund should not be defined such that it provides assistance for only one drug, or only the drugs made or marketed by one manufacturer or its affiliates No direct or indirect manufacturer/affiliate influence or control over charity or assistance program Assistance awarded by charity in a truly independent manner that severs any link between the manufacturer s funding and the beneficiary Disease funds should not be defined by reference to specific symptoms, severity of symptoms, method of drug administration, stages of particular disease, type of drug treatment, or other way of narrowly defining a widely recognized disease state 26

27 IV. KEY CONSIDERATIONS INDEPENDENT CHARITY PAPS Charity provides assistance based on reasonable, verifiable, and uniform measure of financial need that is applied in a consistent manner Cost of the particular drug for which the patient is applying assistance is a stand-alone factor in determining financial need Generous financial need criteria may be evidence of intent to fund a particular drug Foundation provides assistance to all eligible, financially needs applicants on a first-come, first-served basis, to the extent funding is available 27

28 IV. KEY CONSIDERATIONS INDEPENDENT CHARITY PAPS Charity awards assistance without regard to manufacturer s interests and without regard to beneficiary s choice of product, provider, practitioner, supplier or Part D drug plan Disease funds should not be limited to assistance for high-cost or specialty drugs, and include assistance for generic or bioequivalent drugs Foundation does not make referrals or recommendations regarding any specific provider, practitioner, supplier, product or insurance plan Patients are free to switch provider, practitioner, supplier, product or insurance plan at any time Manufacturer does not solicit or receive data to determine referrals Applications should not be informed of the identify of donors 28

29 IV. KEY CONSIDERATIONS MANUFACTURER PAPS Seek legal counsel if you are considering a manufacturer PAP that subsidizes Medicare Part D cost-sharing amounts Effective implementation of safeguards to ensure that no claim for any covered outpatient product is submitted to the Part D plan or beneficiary nor counted TrOOP Defining scope of PAP (e.g., on-label) and setting eligibility requirements Detailed patient application to collect all necessary information for tracking and reporting and patient certifications Process for obtaining and confirming patients income eligibility Effective implementation of CMS questionnaire and data sharing agreement Auditing 29

30 Question & Answer CBI PAP LEGAL UPDATE MEDICARE & MEDICAID A REVIEW OF COMPLIANCE WITH GOVERNMENT PROGRAMS attorney advertisement Copyright Cooley LLP, 3175 Hanover Street, Palo Alto, CA The content of this packet is an introduction to Cooley LLP s capabilities and is not intended, by itself, to provide legal advice or create an attorney-client relationship. Prior results do not guarantee future outcome.