HHS Yanks Compliance Endorsement for Patient Assistance Program

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

By Eric Topor

The HHS took the unusual step of rescinding an advisory opinion after learning the affected patient assistance charity had improper relationships with unspecified drug company donors. The Nov. 28 action by the Department of Health and Human Services Office of Inspector General affects the Caring Voice Coalition (CVC), a charity that subsidizes medical costs for Medicare beneficiaries and other patients. The OIG said in the rescission notice, with CVC’s name redacted, that the charity “provided patient-specific data to one or more donors” that would allow a donor to correlate its donations with the amount of subsidized prescriptions or product orders and give donors improper influence over CVC’s disease fund categories.

The action comes as the Department of Justice has been investigating pharmaceutical companies over alleged improper relationships with patient assistance programs (PAPs), which give financial assistance to patients with chronic diseases. The rescinded advisory opinion for CVC doesn’t force the organization to shut down, though a representative said the PAP is examining next steps.

Capitol Hill is paying attention to the OIG’s action. Sen. Ron Wyden (D-Ore.), the ranking Democrat on a panel with authority over Medicare, sent a Nov. 28 letter asking the OIG for additional information about the decision to rescind the CVC advisory opinion. Wyden specifically asked for the identity of the donors involved in the improper conduct, how the OIG discovered the misrepresentations, and whether the OIG plans to conduct reviews of advisory opinions issued to other patient assistance programs.

CVC identified itself as the subject of the original advisory opinion in 2006 ( No. 06-04) and a subsequent modification in 2015, both posted on CVC’s website as evidence of its adherence to government compliance standards.

The OIG said the improper activities it cited violated certifications that supported the favorable opinion in No. 06-04, which said CVC’s proposed patient assistance operations wouldn’t result in fraud enforcement actions under the federal anti-kickback law. The OIG said CVC’s material misrepresentations to the agency necessitated the immediate rescission of the advisory opinion and the retroactive revocation of any legal protections the opinion conferred back to the original issuance of the opinion in 2006.

Larger DOJ Investigation

The Justice Department issued subpoenas and investigative inquiries to Gilead Sciences Inc., Jazz Pharmaceuticals Plc., Celgene Corp., Novartis AG, and others in relation to PAP investigations, and United Therapeutics Corp. said July 27 that it had set aside $210 million to settle a potential False Claims Act lawsuit against the company relating to its donations to PAPs. CVC filings with the Internal Revenue Service acknowledge millions in donations from multiple donors but do not identify them.

The U.S. Attorney’s Office for the District of Massachusetts issued several of the pharmaceutical company subpoenas, including those to Jazz, Gilead, and Pfizer, and Alexion Pharmaceuticals Inc. Attorney Jesse A. Witten told Bloomberg Law that the rescission was likely part of a much larger investigation, referencing the DOJ subpoena to pharmaceutical companies over their donations to various PAPs.

Witten, a partner at Drinker Biddle & Reath in Washington who specializes in health-care fraud defense, said, “As pharmaceutical companies decide how to provide patient assistance, it’s important to consider the compliance measures that PAPs have in place.”

Kevin McAnaney, a health-care attorney with the Law Offices of Kevin G. McAnaney in New York and a Bloomberg Law health-care advisory board member, said Nov. 28 that the public posting of the rescission notice was significant, as there was no specific need for the OIG to make the notice public. McAnaney, who is also a former chief of the Industry Guidance Branch of the OIG, suspected that “there was prodding from the DOJ” to make the notice public.

Aegerion Pharmaceuticals, now a subsidiary of Vancouver-based Novelion Therapeutics, settled a False Claims Act lawsuit on Sept. 22 for $40.1 million with the U.S. Attorney’s Office for the District of Massachusetts for alleged misstatements made to physicians about its cholesterol drug Juxtapid. The government also alleged in the settlement that Aegerion used its donations to another PAP, Patient Services Inc., to induce purchases of Juxtapid. The government’s allegations against Aegerion regarding its relationship with Patient Services included the drugmaker’s participation “in establishing the patient eligibility criteria” for patients taking Juxtapid, which is similar to the conduct the OIG ascribed to CVC as necessitating the rescission of its favorable advisory opinion. Aegerion also is facing a criminal trial on the same allegations after a federal judge rejected a one count misdemeanor plea deal with a $6.2 million fine as too lenient.

The Internal Revenue Service has been investigating the relationship between several pharmaceutical companies and another PAP, Chronic Disease Fund (CDF), and whether the charity should retain its tax exempt status. CDF has filed at least eight lawsuits in 2017 in several federal courts to quash IRS subpoenas relating to the relationship between CDF and pharmaceutical companies Biogen, Teva Neuroscience Inc., Bayer HealthCare Pharmaceuticals, Johnson & Johnson, Genentech Inc., and Novartis.

Advisory Opinion Modifications, Termination

The OIG itself hasn’t publicly rescinded a favorable advisory opinion before the CVC rescission, according to its archives, though it has modified opinions as circumstances change and its own views on how to protect Medicare and Medicaid from fraudulent conduct evolve. The modification of CVC’s original advisory opinion was one of numerous PAP advisory opinions the OIG modified after issuing new compliance guidelines for PAPs in a 2014 Supplemental Special Advisory Bulletin.

The OIG terminated a favorable December 2011 advisory opinion to athenathealth Inc. in April 2014 after it decided that a fee for an electronic referral service could generate improper referrals. However, the termination of athenahealth’s advisory opinion was due to the OIG’s own change of viewpoint, not any violation of certifications the OIG relied on in issuing the opinion.

McAnaney said the person at CVC who signed the certifications that OIG deemed to be violated could also face individual liability.

Charity Operations in Limbo

According to the rescission notice, CVC told the HHS OIG that it may cease operations as a result of the retracted advisory opinion. Greg Smiley, president and chief executive officer of CVC, said in a statement Nov. 29 that the charity’s board of directors will determine what course of action to take following the rescission letter.

Smiley said, “We are very disappointed to receive this news, particularly given the work we have undertaken over the past six months, including dramatic leadership and comprehensive policy overhauls to ensure that we comply with the laws and regulations applicable to the independent patient assistance program industry.”

The OIG said it’s not requiring CVC to shut down operations, though the charity could face enforcement actions if conduct is discovered that violates the law or applicable regulations. It’s not clear from the OIG’s notice when the improper donor relationship that triggered the rescission occurred.

To contact the reporter on this story: Eric Topor in Washington at etopor@bloomberglaw.com

To contact the editor responsible for this story: Peyton Sturges at psturges@bloomberglaw.com

For More Information

The rescission notice is at http://src.bna.com/uxp.

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Health Care on Bloomberg Law