HHS-OIG has repeatedly stressed that donations to copayment assistance organizations from pharmaceutical manufacturers are not per se violations of the federal Anti-Kickback Statute (AKS). Instead, through various Advisory Opinions, HHS-OIG has announced various factors that must exist to shield the donor-pharmaceutical manufacturers and the recipient-organizations from AKS liability.

For example, in a January 2015 Advisory Opinion, HHS-OIG stressed that the organization must be an “independent, bona fide charitable assistance program.” HHS-OIG stated that such an “interposition” between patients and pharmaceutical manufacturers should “provide sufficient insulation so that the [organization’s] assistance to patients should not be attributed to any of its Donors.”

With the assistance of qui tam relators, the government is starting to look behind the “independent” façade of some of these assistance programs. Inter alia, the relators allege that the organizations are acting as mere pass-through entities for industry players. For instance, in a False Claims Act qui tam case against Medco Health Systems Inc., the court partially denied the defendant’s motion to dismiss the action, alleging that Medco and its subsidiaries paid kickbacks to a hemophilia charity with the intention of inducing referrals of government healthcare beneficiaries.

Specifically, the relator alleged that when the defendants considered decreasing donations to the charity, the defendants allegedly received a letter from the charity director outlining how such a reduction could negatively impact the defendants’ bottom lines. The relator alleged that defendants responded by quantifying the return on investment if they increased contributions from $175,000 to $350,000 and what was the likely business deterioration to the market share if contributions were not increased. After crunching the numbers, the defendants allegedly decided to increase contributions to the charity.

In swaying the court to deny the defendants’ motion to dismiss, the relator used many of the factors laid out in recent HHS-OIG advisory opinions to argue that the defendants knew that their arrangement with the charity was an illegal kickback scheme. He argued that the arrangement evidenced defendants’ control over the charity, the lack of independence between the defendants and the charity, defendants’ financial interest in the donations, and the connection between the donations and referrals, all of which violated the Anti-Kickback statute, as interpreted by HHS-OIG.

More information for whistleblowers is located at the Nolan Auerbach & White website.