The federal government and the Fourth Circuit have ruled that a charitable patient assistant program conceived to increase access to cancer drugs for needy patients violated the federal Anti-Kickback Statute.  In an opinion long on canons of statutory interpretation and short on compassion for sick and dying patients, the Fourth Circuit upheld an HHS advisory opinion ruling that the program funded by a coalition of pharmaceutical manufacturers illegally offered remuneration to induce individuals to purchase federally reimbursable drugs. Unfortunately, this isn’t the first time that HHS has callously blocked such a program.

The case is Pharmaceutical Coalition for Patient Access v. United States, No. 24-1230, 2025 U.S. App. 1465 (4th Cir. Jan. 23, 2025), and it arises from the Coalition’s effort to help financially needy Medicare Part D beneficiaries afford cancer drugs, which can be very expensive to patients because of the way Part D structures co-payments.  The Coalition is a charitable organization led by an independent board of patient advocates and health experts, and any manufacturer of cancer drugs was welcome to join.  However, to prevent free riders, the Coalition would support only those patients using drugs made and sold by Coalition members. 

In forming this charitable Coalition, the founders were not writing on a clean slate.  The Anti-Kickback Statute is a criminal law that prohibits the knowing and willing payment of “remuneration” to “induce” the purchase of federally reimbursable healthcare products or services.  The classic example is physician referrals, where pharmacies, imaging labs, or other providers pay physicians for referring their patients.  Under circumstances on which others in our firm are experts (but not us), those kinds of fees can be impermissible kickbacks, punishable as federal crimes. 

The rub here is that HHS issued an advisory bulletin on patient assistance programs in 2005, in which it informed pharmaceutical manufacturers that they could reduce the risk of Anti-Kickback exposure by designing their programs to avoid incentivizing beneficiaries to choose one drug over another.  The bulletin also encouraged a “coalition” model, under which large groups of manufacturers could agree to support patients using all their drugs covered under Part D.  This “all for one and one for all” approach would defeat the inference that any particular manufacturer was trying to steer patients to its own drugs through financial support. 

The Pharmaceutical Coalition for Patient Access followed the recommended approach, and it took the additional step of requesting an advisory opinion from the HHS Office of Inspector General (“OIG”).  In response, OIG issued an opinion holding that patient assistance under the program was “highly suspect” and would run afoul of the Anti-Kickback Statute “if the required mens rea were present.”  Id. at *5.  The program, according to OIG, was an attempt to “sidestep” the Anti-Kickback Statute. 

A program to help financially challenged cancer patients gain access to essential drugs and that followed the government’s own recommended approach was “highly suspect”?  Pharma manufacturers who funded the program and affirmatively submitted it for government review were “sidestepping” the law?  In our biased view, this seems harsh. 

Regardless, and unfortunately for this charitable Coalition and the needy cancer patients it was conceived to assist, a district judge in Virginia agreed with OIG, and the Fourth Circuit affirmed.  First, the Fourth Circuit rejected the argument that the word “induce” had a criminal meaning and thus required corrupt intent.  Under a plain meaning of “induce,” the program would have the effect of inducing patients to purchase drugs made and sold by the Coalition members.  No corruption was required.  The term “remuneration” carried no connotation of corruption, either.  The statute prohibited “any remuneration (including any kickback, bribe, or rebate).”  Id. at *24-*25.  Sure, kickbacks and bribes implied corrupt intent, but rebates not so much.  The Fourth Circuit concluded that any remuneration means any remuneration.  Again, an intent to corrupt the medical decision making process was not required. 

Second, the Fourth Circuit held that the program constituted a prohibited quid pro quo, i.e., patients receiving support were expected/required to use the Coalition members’ products.  The Coalition argued that there was no quid pro quo because the program collectively supported patients using all their Part D products and thus was “agnostic” on which manufacturers’ drugs were prescribed.  In other words, “the subsidies are not contingent on the purchase of specific, individual drugs.”  Id. at *28-*29.  This argument is eminently logical and makes compelling sense.  But recall that not all cancer drug manufacturers joined the Coalition.  This was dispositive for the Fourth Circuit, which reasoned that the patient subsidies (quid) were limited to the Coalition members’ products (quo), leaving other manufacturers and drugs out of the mix. 

Third, the Fourth Circuit rejected the Coalition’s argument that HHS was impermissibly dispensing disparate treatment because it had pledged to forego enforcement of the Anti-Kickback Statute with regard to other patient assistant programs, but not this one.  The Fourth Circuit agreed with the district court that it had no subject matter jurisdiction because the Coalition was seeking to review an agency enforcement decision.  Such decisions are “committed to the agency’s discretion when no judicially manageable standards are available.”  Id. at *33.  Thus, the Coalition’s disparate treatment challenge “is directed purely against how the Inspector General employs its enforcement discretion.  It therefore must fail as unreviewable.”  Id. at *36-*37.  Although not discussed in this part of the opinion, we cannot help but think that HHS’s 2005 advisory bulletin looms large here.  Did other patient assistance programs follow that guidance and get a pass, while the Coalition’s program did not?  We don’t know, but we can see how disparate treatment would seem really disparate if that were the case. 

The Anti-Kickback Statute is a compelling law aimed at address compelling concerns in the healthcare marketplace.  This particular program seems like an unlikely and unworthy enforcement target.