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DOJ Reaches Settlements with “Independent” Charities

on Friday, 6 December 2019 in Health Law Alert: Erin E. Busch, Editor

On October 25, 2019, the Department of Justice (DOJ) announced settlements with two foundations totaling $6 million.[1]  The DOJ alleged that the charities worked with various pharmaceutical companies to establish programs that funneled money to patients taking specific drugs manufactured by those pharmaceutical companies.  According to the DOJ, these programs increased the risk of abuse to federal health care programs because they caused patients to disregard what otherwise may have been high prices for the drugs in question when making decisions related to care. 

While these settlements occurred with regard to chartable entities in the pharma industry, they serve as good reminders to providers that may be providing funds or other assistance to patients or potential patients through foundations or other charities, whether independent or not.  Stated plainly, funneling dollars or assistance programs through third party charities, let alone affiliated foundations, does not always insulate the provider from potential compliance implications.  Likewise, it must be noted that the OIG does not consider a provider-affiliated foundation to be an “independent charity.” 

While the OIG has blessed certain charitable arrangements involving independent charities, these programs almost always have characteristics and safeguards built in to sever the link between the donor (provider) and the recipient of the assistance (the federal program beneficiary).  Examples of programmatic safeguards that can be implemented in financial assistance programs run by independent charities are:

  • Ensuring that financial assistance decisions are made by the independent charity without influence from the provider.
  • Not tying receipt of benefits to receipt of any particular services from any particular provider.
  • Confirming and documenting that a patient access issue actually exists.
  • Not tracking or reporting the number of referrals or other business generated by patients utilizing such assistance programs to the hospital or other providers.
  • Making programs available to patients of other unaffiliated providers and competitors.
  • Limiting assistance to nominal dollar amounts, consistent with current OIG guidance.

Each potential assistance program is facts and circumstances based.  Likewise, the OIG has provided a number of new safe harbors in recent years designed to improve patient access to care, which may provide added flexibility to providers.  Nonetheless, prior to commencing or continuing any patient assistance program, whether through affiliated or independent charities, it is important to ensure that all compliance risks are understood and appropriate safeguards are put in place. 

Andrew D. Kloeckner



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