New Rare Disease Patient Access Advisory Opinion Addresses Inflation Reduction Act

On April 8, 2024, the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) published Advisory Opinion 24-02, a favorable opinion regarding certain single-donor rare disease state patient assistance funds operated by an independent charity.  Notably, the advisory opinion is in effect only until January 1, 2027 (the Effective Period), two full years after the implementation of the Inflation Reduction Act (IRA) out-of-pocket cap on Medicare Part D cost-sharing obligations. The key factors leading to HHS-OIG’s approval of the arrangement are set forth below.

The Arrangement

The Requestor, a 501(c)(3) nonprofit organization, maintains multiple “Disease Funds” that provide financial support to patients with certain medical conditions and demonstrated financial need. The Disease Funds are designed around clinically recognized rare disorders that affect fewer than 200,000 U.S. patients. Each Disease Fund has a single pharmaceutical manufacturer donor that manufactures or markets a drug approved to treat the condition addressed by the Disease Fund. The Disease Funds are available to all eligible patients, including Federal Health Care Program (FHCP) beneficiaries, and patients may be eligible for financial assistance through a Disease Fund regardless of whether they are taking the donor’s drug. Importantly, the Requestor makes decisions regarding which Disease Funds to create and what categories of assistance to provide based on the needs of patients and without influence by donors. Further, the Requestor limits the information it provides to donors, and donors are not allowed to influence which drugs or other items or services their contributions will be used to support.

The Disease Funds provide various types of financial support to patients including cost-sharing subsidies for prescription drugs and other items and services, support for medical expenses not covered by insurance, subsidies for insurance premiums, and emergency relief. The arrangement involves 12 such Disease Funds; however, the Requestor operates additional Disease Funds that are not included as part of the arrangement. 

The Agency’s Analysis

While HHS-OIG was reviewing the arrangement, Congress enacted the IRA, which eliminates Medicare Part D enrollees’ 5% cost-sharing in the catastrophic phase beginning in 2024 and caps out-of-pocket costs for Part D drugs beginning in 2025. According to HHS-OIG, this reduction in cost-sharing obligations imposed on Medicare Part D beneficiaries could decrease demand for the types of cost-sharing subsidies provided by the Disease Funds under the arrangement. HHS-OIG went on to state that the changes imposed under the IRA could alter how HHS-OIG views the balance of benefits and potential risks presented by the arrangement. Without citing any supporting evidence of this purported uncertainty, HHS-OIG stated the advisory opinion will terminate on January 1, 2027, two full years after the implementation of the IRA’s out-of-pocket cap on Part D drugs. 

In previous guidance, HHS-OIG has consistently warned that independent charity PAPs funded by pharmaceutical manufacturers implicate the Anti-Kickback Statute (AKS) and are susceptible to fraud and abuse risks. Here, HHS-OIG acknowledged that the arrangement implicates the AKS because it permits drug manufacturers to provide various types of remuneration to patients, including FHCP beneficiaries, which could induce the purchasing or ordering, or the arranging for the purchase or order, of a drug reimbursable by an FHCP. However, HHS-OIG concluded that the arrangement does not implicate the beneficiary inducement prohibition under the civil monetary penalty statute because a patient’s eligibility is not contingent on the selection of a particular provider or pharmacy.

Though the HHS-OIG found that the arrangement implicated the AKS, for the following reasons it declined to impose administrative sanctions on the Requestor in connection with the arrangement during the Effective Period:

• First, the Disease Funds vary significantly in the proportion of funds spent to support the purchase of the manufacturer donor’s drugs. The HHS-OIG noted that the arrangement helpfully includes a number of mitigating features, such as (i) defining Disease Funds based on established disease states, (ii) awarding assistance without regard to the prescribed treatment regimen for a particular patient, (iii) limitations on the sharing of information with donors, and (iv) application of a financial eligibility process.
• Second, the Disease Funds provide assistance to patients with a demonstrated financial need. Given the increasing cost of prescription drugs, the assistance provided under the Disease Funds may be particularly impactful for eligible patients suffering from rare diseases. Further, while less than one-third of the funds spent by the Disease Funds support the purchase of the drugs manufactured by donors through cost-sharing subsidies, the remainder of the funds go toward other types of financial assistance, including cost-sharing for other items and services, medical assistance, premium support, and emergency relief.

It is unprecedented for HHS-OIG to publish a time-limited advisory opinion. The agency asserted that as IRA implementation continues to unfold, HHS-OIG may need to reevaluate its current strategy for reviewing arrangements involving cost-sharing obligations for Part D beneficiaries. 

Patient access stakeholders and advocates should closely monitor Part D redesign implementation under the IRA and consider whether and to what extent the Part D redesign affects patient access.  In particular, stakeholders should consider whether new patient access challenges emerge from the Part D redesign and monitor for impact on patient access generally and rare disease independent charity funds in particular.