On this Ropes & Gray podcast, health care partner Michael Lampert and counsel Sam Perrone, and litigation & enforcement partner Andrew O’Connor, rejoin to discuss patient assistance programs, recent enforcement actions, and related regulatory considerations. The conversation covers the legal framework governing these programs, including the Anti-Kickback Statute (“AKS”), Civil Monetary Penalties Law (“CMPL”), and False Claims Act (“FCA”). They focus on recent settlements and agency actions, and highlight key factors that influence regulatory outcomes for patient assistance programs.
Transcript:
Sam Perrone: Hello, and welcome to today’s Ropes & Gray podcast. This is the second of a two-part podcast. My name is Sam Perrone—I’m a counsel in Ropes & Gray’s health care group. I advise a range of health care clients on enforcement, regulatory, and compliance issues. With me today are Michael Lampert and Andrew O’Connor. Michael is a partner in the health care practice whose work centers around providing strategic, regulatory, and transactional advice to clients in all sectors of the health care industry, and co-heads our Chambers Band 1-Ranked False Claims Act (“FCA”) practice. Andrew co-heads our False Claims Act practice and focuses on high-stakes litigation and investigations in the health care and life sciences space. Today, we’ll be discussing patient assistance programs. I’m excited to discuss these topics with both of you. We’ll begin by discussing general background on patient assistance programs and the recent Teva settlement, and then, we’ll cover a few recent Office of Inspector General (“OIG”) advisory opinions. Before we proceed further, let’s start off by discussing generally what patient assistance programs are.
Michael Lampert: Good idea—good to be grounded. Patient assistance programs—often sponsored by drug manufacturers, but not always—are designed to provide free or discounted meds to people who are uninsured, underinsured, or otherwise unable to afford their prescribed therapies. Now, as we all know, drugs can be really expensive, and with those high costs, these programs can be really important for patients to get access to the drugs they need. For some drugs, even drugs that are covered by insurance, whether a patient with limited resources has to pay the insurer-assigned copay may make all the difference between being able to access therapy and not, and that, in particular, can be the case for some novel therapies.
Sam Perrone: These programs are important for all of the reasons Michael described, but of course, they need to be implemented carefully in compliance with various laws, including the Anti-Kickback Statute (“AKS”), the Civil Monetary Penalties Law (“CMPL”), and the False Claims Act.
Michael Lampert: Exactly, and here’s why:
- The Anti-Kickback Statute prohibits offering or providing anything of value to induce, among other things, the recipients to buy items that are reimbursable by federal health care programs, like Medicare and Medicaid. So, helping to pay for drugs is something of value—and, obviously, the point of an arrangement like that is to help people buy drugs, which can be covered by federal health care programs, so you can see the immediate connection.
- Similarly, the Civil Monetary Penalties Law prohibits offering remuneration to a Medicare or Medicaid beneficiary that’s likely to induce that person to select a particular provider or supplier for an item reimbursable by Medicare or Medicaid. Now, drug manufacturers aren’t providers or suppliers, so they aren’t covered, but pharmacies are, and so, if a program is tied to a particular pharmacy, the CMPL matters.
We’ll get into applying these considerations in a little bit, but that’s the general framework.
Andrew O’Connor: And Michael, anything that could potentially violate the Anti-Kickback Statute would also pose some False Claims Act risk, because under amendments about 15 years ago to the Anti-Kickback Law, any claim that’s made on a government payor that results from a kickback violation is defined to be a “false claim.” That means that both the government, and importantly, relators, can file False Claims Act suits that are predicated on alleged kickback or even CMPL violations. And so, that raises the risk of individuals, but also competitors and other companies out there who feel like some of these patient assistance programs might be giving their competitors an unfair advantage, having the ability to file suit in the name of the United States.
Sam Perrone: Speaking on enforcement, a recent Department of Justice (“DOJ”) settlement with Teva Pharmaceuticals concerning patient assistance programs is definitely worth mentioning.
Michael Lampert: That’s right. In October 2024, Teva entered into a settlement agreement with DOJ and others paying $450 million to resolve FCA allegations that included allegations related to copayment assistance. Now, this was connected to a broader industry investigation into drug manufacturers’ financial contributions to patient assistance charities, and it had already involved settlements with a dozen different drug companies (some of which were household names), four charitable organizations, and one pharmacy aggregating over $1 billion. That investigation is still ongoing, so it’s not narrow and focused exclusively on Teva.
Sam Perrone: The first part of this settlement involved allegations that Teva violated and conspired to violate the Anti-Kickback Statute and the False Claims Act by paying Medicare patients’ copays for their multiple sclerosis (“MS”) drug, Copaxone, from 2006 through 2017. Essentially, Teva was accused of coordinating with third parties, including a specialty pharmacy and two copay assistance foundations, to ensure that donations to these foundations were used specifically to cover the copays of Medicare patients using Copaxone. At the same time, Teva allegedly raised Copaxone’s price. Here, the government alleged that by ensuring the donations were used to cover Medicare copays, Teva essentially funded kickbacks designed to induce the specialty pharmacies’ selection of Copaxone for Medicare beneficiaries, therefore allowing Teva to continue to profit off the increased price. Because claims submitted to Medicare pursuant to an arrangement that violates the AKS can constitute a false claim, the government here alleged that Teva caused the submission of false claims to Medicare.
Michael Lampert: There were some other allegations—price-fixing allegations—that were part of the settlement, so the $450 million number shouldn’t be viewed as all about copay assistance (but it’s still really a big number). And from a purely human perspective, it’s a big number when one zooms out and considers that that element of the settlement is for conduct that helped patients with MS afford a drug that they needed. Sure, there may be considerations that could have been alleged around other drugs including generic alternatives and perhaps big-picture considerations at drug pricing generally. But, from an AKS perspective alone—which feels really appropriate in a case involving the AKS—any alleged inducement was for a patient with MS to fill a script that their doctor wrote, and in that frame, it’s a really big number.
Sam Perrone: The $450 million settlement is a substantial amount—it goes without saying. I think that reflects the seriousness of DOJ’s allegations here. It’ll be interesting to see how this impacts Teva and the broader pharmaceutical industry moving forward.
Turning to the OIG’s advisory opinions, OIG has issued a number of recent advisory opinions related to patient assistance programs including in recent years.
Michael Lampert: As a refresher, the advisory opinion process is meant to offer the opportunity for companies to get an opinion from OIG as to whether OIG would exercise its enforcement authority in connection with a particular, specific proposed or existing arrangement. Now, the opinions technically are binding on only OIG and the requester, but because the AKS is a scienter-based law, in order to violate the AKS, one has to know that what one is doing violates the law. Reading and understanding how OIG applies the law to other instances that may be very similar to one’s own is of enormous value to the industry.
Sam Perrone: With that covered, let’s dive in. In 2024, OIG published 16 advisory opinions—a slight uptick from 2023, during which only 11 advisory opinions were issued. Of the 16 advisory opinions, 14 were favorable and two were unfavorable—and seven of those 16 opinions focused on patient assistance programs.
Michael Lampert: Now, no surprises, but as a general matter, factors that OIG says it considers in these cases include (i) whether an arrangement might unduly influence clinical decision-making, (ii) whether an arrangement might affect demand for a particular drug or result in increased government health care program expenditures, or (iii) whether an arrangement might affect competition. Now, it’s hard to see how a lot of copay assistance programs wouldn’t have any effect on at least some of those measures, but, big picture, the favorable opinions had features that would cause them to score more favorably on at least some, whether due to the program structures, or as we’ll discuss, the nature of the disease or therapy at issue.
Sam Perrone: Before we jump into the advisory opinions from 2024, let’s discuss one more recent favorable opinion on patient assistance programs. Advisory Opinion 25-1 was a favorable OIG opinion on a pharmaceutical company’s patient assistance program. The company provides a drug, likely Leqembi® (lecanemab), created through a collaboration between Biogen and Eisai, that treats Alzheimer’s (specifically, those with mild cognitive impairment or mild Alzheimer’s disease-related dementia and confirmed presence of amyloid pathology) for free to eligible patients, including federal health care program beneficiaries, if they meet certain criteria including being a U.S. resident, 18 years old or older, prescribed the drug for an on-label use, and having income at or below 500% of the Federal Poverty Level (“FPL”). There’s a process that allows for patients who exceed the income criteria to apply for an exception if they can demonstrate an unanticipated hardship that leaves them unable to afford the product. We should also note that CMS requires, as one condition of Medicare coverage with a drug, that the treating physician enroll the patient in a CMS-approved prospective comparative study.
Michael Lampert: I’d say that really a few factors made this a bit of an easy one for a favorable opinion. First, the drug was to treat Alzheimer’s. There are clear indications for medical appropriateness the really aren’t going to be affected by cost. And Sam, as you just noted, it was required that treating physicians enroll patients in approved prospective comparative studies—there was a framework around the delivery of this care. Second, the program didn’t cover only copays, giving remuneration (i.e., the waived cost) only to patients and still requiring federal health care programs to bear their share of the cost. Instead, the program waived the entirety of the charge benefiting both patients and federal health care programs together. And on that measure, while there might have been some sort of a pull-through consideration (that is, consideration that providing free product to some patients might cause physicians to write scripts for others), the program, viewed on the basis just of those drugs that were directly affected, did not cost Medicare or Medicaid a penny.
Andrew O’Connor: Yes, Michael, and importantly, there was not an indication that the programs steered patients to any particular provider or insurance plan. The clients were choosing their own doctor, the doctors were making the decisions, and switching providers didn’t affect patient eligibility. And as you noted, the free drug itself isn’t billed to the payor, even though there are some administrative costs—that also reduces the risks in OIG’s calculus.
Sam Perrone: While we’re on this subject, let’s discuss some other advisory opinions from 2024 that speak to the “demand” theme. Advisory Opinion 24-02, for example, was a favorable opinion for a non-profit organization providing financial support to patients with rare disorders and demonstrated financial need. That non-profit established a variety of so-called “disease funds.” Each fund provided support to patients, including through (i) cost-sharing subsidies for prescription drugs and other items or services, (ii) financial support to cover, in whole or in part, medical expenses not covered by insurance, (iii) subsidies for insurance premiums, and (iv) emergency relief. Each disease fund was supported by a pharmaceutical manufacturer, which had a product that treated the relevant disease. Andrew, what made this opinion favorable?
Andrew O’Connor: I think there’s a number of factors similar to the point Michael made a few minutes ago. Here, the support being provided was not just the cost to the patient for their share of the drug price. In addition to that, you had independent decision-making on the part of the physician, and there was patient choice in terms of where they were going for treatment and to the pharmacy. There were also limitations on the amount of information about patients that the organization was sharing with the manufacturer. Now, interestingly, one unique aspect of this opinion was that it came with a time limit—OIG said the Advisory Opinion would only be good for two years. The reason for that was, earlier this year, the out-of-pocket expenses for Part D coverage had been capped, and so, OIG’s position is that it would need to re-assess the potential incentives and pros and cons of this program after seeing what the new out-of-pocket cap does to the market. So, it is possible that OIG revisits its balancing test on this issue here in a couple years when the Advisory Opinion expires in 2027.
Sam Perrone: As for the Anti-Kickback Statute, OIG concluded that the arrangement implicated the Anti-Kickback Statute because drug manufacturers, through the requester, provide various categories of remuneration to patients, including federal health care program beneficiaries, and that remuneration led to inducement. However, OIG stated that it would not seek enforcement against the arrangement. In its opinion, OIG explained how they looked at the disease funds work and saw that while some funds went toward drugs made by the donors, most of the funds actually helped patients in other ways—like covering medical services, insurance, or emergencies. Plus, the program had additional strong safeguards: it was based on disease state (not specific drugs), it didn’t favor any particular treatment, it limited donor involvement, and it helped only patients who really needed financial support. Because these protections are in place and most of the funds are not going back to the donors, the OIG felt comfortable not taking action.
Andrew O’Connor: And thus, we teased out these common threads across a number of the advisory opinions we’re talking about. One was providing support that was not just limited to the patient share of the drug cost. Another is we see the focus on patients with rare diseases. And part of the calculation on OIG’s part may be that simply the financial impact to the government is inherently limited just by the number of patients we have with a particular condition, so OIG may be more willing to allow programs like this to the extent they feel comfortable that the ultimate impact on Medicare and Medicaid is not terribly significant.
Michael Lampert: I think that’s a really good point from a financial angle, and also, from a practical angle. In a rare disease setting where there are fewer treatment options and where the need for treatment’s unambiguous, seems harder credibly to say that a financial arrangement is inducing care and really moving the clinical needle rather than just enabling access to a clinical decision that’s already been made.
Sam Perrone: The Advisory Opinion 24-04 is another good example of this. This one involved a time-limited program to refund, waive, or delay payment for a drug, likely RETHYMIC®, manufactured by Enzyvant Therapeutics, in case of insurance reimbursement denial or delay, along with certain discounts. The focus on patient families makes a lot of sense given that the lack of RETHYMIC is significant, to say the least—over $2.7 million per implant. This program contains six key features:
- It was limited in both scope and duration, applying to a one-time, potentially curative treatment—immune reconstitution—for the ultra-rare condition of congenital athymia, which affects only 17 to 24 out of every 4 million children born each year in the United States.
- The program required that the treatment center provide both “clinical and financial clearance” for the patient, including written approval indicating from the patient’s insurer that treatment with a drug is covered for the patient.
- The treatment center was obligated to comply with all known prior authorization and claims processing requirements, as well as to appeal any reimbursement denial from the insurer.
- The requester assumed the financial risk that would otherwise fall to the patient if the insurer denied coverage for the drug.
- If the insurer denied coverage, the patient would receive the drug free of charge.
- The refund program incorporated transparency measures, such as reporting the existence of the program on invoices and providing information to federal and state health care officials upon request.
Andrew, I’ll ask you again: What made this opinion favorable?
Andrew O’Connor: It’s always tough to get inside OIG’s head on these things, but let’s go back to some of the factors that Michael mentioned. Was there undo influence in clinical decision-making? Is this increasing the cost to the government? And is it impacting competition or steering patients? Really, on each of those fronts, there were some pretty good mitigating factors here for the applicant. So, you have a situation where insurance has already approved the treatment, which really reduces the risk of medically unnecessary treatments being incentivized by the particular support provided. Similar, on the cost to the government, you have a product that’s been provided, and then, in some cases, given away for free afterwards at potentially no cost to the government. And here, again, there’s safeguards in place that would prevent steering, given that we’re talking about a rare condition with really only one primary treatment.
Sam Perrone: Good point. It’s important to remember that there is a real human element to these opinions and analysis. Advisory Opinion 24-07, which also related to the financial need and Federal Poverty Level of the patient, received a favorable opinion, and likewise, underscores the relevance of whether a program is “independent.” This Opinion was related to a patient assistance program to subsidize cost-sharing obligations for low-income Medicare enrollees with diabetes residing in a specific rural area. Michael, what factors contributed to this favorable opinion?
Michael Lampert: I think there were a few—and probably, the core was the identity of the requester. The requester here wasn’t a drug company; it wasn’t affiliated with a drug company; it wasn’t a pharmacy; it wasn’t affiliated with a pharmacy—it was a grant-making foundation that was formed with the proceeds of the sale of the assets of a not-for-profit hospital to a for-profit acquirer. So, in that setting—and that’s not unique—the non-profit sold its assets. They were non-profit charitable assets. They needed to be dedicated to delivery and support of health care in the area, and that’s, therefore, what the foundation intended to do. The foundation decided, in this setting, to do so by supporting not really delivery of care but supporting the access of care—access to particular diabetes meds to patients in the area. And so, when we zoom out a whole lot and we think about the purpose of what was happening and understanding that the AKS is a purpose-based statute, the purpose here was for a foundation to carry out its mission of supporting the health in the community. Under the program, participants could get prescription drugs that were approved by FDA and covered by Medicare Part D for the treatment of diabetes at any pharmacy. Now, designated “participating pharmacies” had additional conveniences because patients could get the drugs and not have to front any out-of-pocket expenditures. If a pharmacy was non-participating, then the patients had to go to the pharmacy, pay out-of-pocket for their copay, and then get reimbursement from the requester. OIG concluded that the arrangement’s design reduced the likelihood of steering Medicare enrollees to specific products or pharmacies.
Now, in candor, maybe that’s true—maybe that’s not. As a consumer, I would say that I will choose the avenue that requires the least of me, and that would tend to mean that I’d go to the pharmacy where I wouldn’t need to be bothered with reimbursement. So, maybe the more accurate analysis here would be that the point of the arrangement was not to drive patients to particular pharmacies, but, again, as I mentioned, was instead to use the charitable proceeds from the sale of a hospital to help patients access care. And it so happened that after applying a whole variety of screening factors, which are listed in the Advisory Opinion, the foundation selected certain pharmacies that met the grade to participate. I think this actually could be an example of the difference between, on the one hand, remuneration that is intended to drive to a particular provider (which is not the case here), or, on the other, remuneration that might have the ancillary effect of doing so, but where that isn’t the goal.
Andrew O’Connor: Returning to that second theme—facilitating access to treatment—let’s talk about Advisory Opinion 24-03. This was another favorable opinion, and it involved a pharmaceutical manufacturer providing assistance for travel, lodging, meals, and other expenses for patients receiving gene therapy. This particular therapy treats sickle cell disease in patients with recurring issues who are over 12 years of age, and it also is used to treat transfusion-dependent beta thalassemia. Now, some of the specific support that was provided included things like round-trip airfare for patients and their caregivers, for folks who are a certain number of miles away. It also included ground transportation, hotel rooms, things like that—out-of-pocket expenses associated with the transportation. Michael, curious about your thoughts on what may have led OIG to a favorable decision here.
Michael Lampert: Though this arrangement doesn’t clearly fit within a safe harbor to the Anti-Kickback Statute, OIG found that the arrangement, Advisory Opinion 24-03, was favorable in part because it satisfied the “Promotes Access to Care” exception in the Civil Monetary Penalties Law. Now, that exception permits arrangements that (i) facilitate patient access to care and (ii) pose a low risk of harm to federal health care programs. The latter—the low risk of harm to federal health care programs—is assessed by whether (a) the arrangement is likely to interfere with or skew clinical decision-making; (b) the arrangement is likely to increase cost to federal health care programs or beneficiaries through overutilization or inappropriate utilization; or (c) the arrangement raises patient safety or quality of care concerns. OIG concluded favorably on each point. This involved a one-time curative treatment for a horrible condition, and that the treatment itself is so grueling, surely contributed to OIG’s analysis.
Now, OIG concluded that the arrangement is unlikely to affect clinical decision-making, is unlikely to increase cost to federal health care programs and doesn’t raise safety concerns made the Anti-Kickback Statute analysis a bit of a fait accompli. So, the arrangement got a green light. And again, driving factors surely were that no one would undergo the treatment if they didn’t need it, that there was no other treatment available, and that the treatment required for patients a huge expense of extended travel to a qualified treatment center—there was just no other way to get the care.
Sam Perrone: Advisory Opinion 24-13 likewise involved an arrangement that was also found to meet the “Promotes Access to Care” exception. The assistance program provided for certain travel, lodging, meals, and associated expenses for patients who have an income at or below 600% of the Federal Poverty Level receiving a cell therapy product manufactured by a pharmaceutical manufacturer. The product in this case was likely AMTAGVI® (lifileucel), a tumor-derived autologous T-cell immunotherapy for advanced melanoma manufactured by Iovance Biotherapeutics. The drug is a one-time treatment, which reduces the risk of problematic seeding arrangements. Additionally, the manufacturer does not use the arrangement as a marketing tool. One question you might have is: Why do these entities request an advisory opinion if it falls under the exception? The answer might be that the “Promotes Access to Care” exception is not very clearly defined, and therefore, the parties may have sought firmer assurances from the OIG that its protection was available. In addition, along the lines of what Michael just mentioned a moment ago, the “Promotes Access to Care” exception is an exception under the Civil Monetary Penalties law, and so its availability does not provide strict comfort under the Anti-Kickback Statute. By going to OIG for an advisory opinion, the parties here were able to obtain comfort on both fronts under both laws.
That was a great discussion, Michael and Andrew. Thanks for joining me. Michael, any takeaways you’d care to offer?
Michael Lampert: Thanks for having us, Sam. I guess I’d offer three:
- The first would be whether a program that one is considering relieves cost just for patients, or also for federal health care programs themselves? We reviewed a couple of examples that cut along those lines.
- Second, if the program does relieve cost just for patients—meaning that federal health care programs are still bearing their share—does the program move the needle on which therapy, or which provider, a patient gets? We saw examples cutting along those lines too. As long as it doesn’t move that needle, it’s more likely to get favorable treatment.
- Maybe, to be pithy, number three, is a program a patient assistance program or is it a sales assistance program? A program designed so it’s much more clearly the former than the latter is obviously going to fare much more favorably.
Andrew O’Connor: That’s right. As the regulatory environment continues to evolve, organizations are going to have to stay on top of these issues and continue to violate their patient support programs to minimize legal risk.
Sam Perrone: Thanks so much for tuning in to part two of this two-part podcast. If you missed part one, be sure to go back and give it a listen. For those of you listening who would like more information on the topics discussed today or our health care group more broadly, please don’t hesitate to contact any of us. You can also subscribe and listen to other Ropes & Gray podcasts wherever you listen to your podcasts, including on Apple and Spotify. Thanks again for listening.
