Following an unfavorable decision by the Office of Inspection General’s (OIG) regarding a free drug program run by Caring Voice Coalition, Inc. (CVC), CVC publicly announced that it would stop providing free medications to financially needy Medicare beneficiaries. As a result, OIG decided to rescind its decision and announced that it will not pursue administrative sanctions against any pharmaceutical company that provides free drugs through CVC, as long as the pharmaceutical company complies with the following safeguards:

  • The free drugs are provided in a uniform and consistent manner to federal health care program beneficiaries who: (1) were receiving cost sharing assistance from CVC for the same drug(s) as of November 28, 2017; and (2) have been impacted by CVC’s decision not to provide assistance in 2018.

  • The free drugs are awarded without regard to the beneficiary’s choice of provider, practitioner, supplier, or health plan.

  • The free drugs are not billed to any federal health care program, counted toward the beneficiary’s Medicare Part D true out-of-pocket costs, resold, or otherwise billed to a third-party payer.

  • The provision of the free drugs is not contingent on any future purchases or orders of the drugs or any other item or service.

  • The drug company maintains accurate, contemporaneous, and complete records of the free drugs it furnishes to federal health care program beneficiaries.

In its letter to pharmaceutical companies, the OIG warned that free drug programs – if not properly structured – can implicate, and potentially violate, the Federal anti-kickback statute. For example, free drug programs that provide assistance only during a portion of the Medicare Part D coverage year, such as only during the Medicare Part D coverage gap (i.e., “wrapping around” the Part D benefit).