pLOG

2025-03-12

"Regulatory Upgrade of Patient Assistance Programs (PAP) in the Pharmaceutical Industry: From Compliance Management to Digital Transformation"

Regulatory Upgrade of Patient Assistance Programs (PAP) in the Pharmaceutical Industry: From Compliance Management to Digital Transformation

Increasing Regulatory Scrutiny on PAPs with Nearly Two Decades of Medicare Part D

As Medicare Part D has been in effect for nearly 20 years, Patient Assistance Programs (PAPs) established by pharmaceutical companies have increasingly become a focal point of healthcare policy. In recent years, the federal government has intensified regulatory oversight through the Office of Inspector General (OIG) of the Department of Health and Human Services and the Centers for Medicare & Medicaid Services (CMS). In particular, regulations governing PAPs provided through charitable organizations have become stricter, with the establishment of a multi-layered compliance management framework and mandatory regular audits. These measures aim to ensure drug accessibility while preventing the misuse of healthcare resources.

From Direct Subsidies to Independent Charitable Models

In 2005, the OIG issued a Special Advisory Bulletin, explicitly stating that pharmaceutical company-operated PAPs could pose a regulatory risk of violating the Anti-Kickback Statute. Additionally, such programs were considered to have the potential to induce inappropriate prescribing behavior. The advisory clarified that PAPs operating through independent charitable organizations must be subject to regulatory oversight. Conditions for compliance included establishing an independent board of directors, ensuring diversified funding sources, and maintaining transparency in fund allocation.

From Transitional Policies to Strict Regulation

During the initial implementation of Medicare Part D, the OIG allowed pharmaceutical companies to transition beneficiaries to independent charitable organizations within a reasonable timeframe. However, in recent years, regulators have mandated that companies submit clear transition progress reports, explicitly prohibiting the use of transition periods as a means to evade long-term regulatory compliance.

Publicizing Operational Standards for Charitable Organizations

Recent policies emphasize that independent charitable organizations must establish multiple safeguards, including diversifying donation sources, standardizing disease classification, and implementing structured financial approval processes. In 2023, a new regulation was introduced specifically addressing biosimilar drugs, requiring PAPs to clearly label reference drug codes and distinguish financial assistance calculations. These measures aim to enhance transparency in patient support programs while mitigating potential misuse.

Strengthening Compliance Data Management

CMS has placed a strong emphasis on data protection and compliance in data usage, requiring PAPs to maintain strict separation from Medicare system information, with data usage limited solely to eligibility verification. Additionally, electronic auditing technologies have been introduced, including blockchain-based record-keeping and AI-driven anomaly detection, reflecting the increasing trend toward technological regulatory enforcement.

Rising Antitrust Risks and Regulation of Collaborative Agreements

Recently, joint PAP operations by multinational corporations have come under heightened scrutiny. One multinational pharmaceutical company was fined several hundred million dollars for engaging in collaborative behavior, underscoring the government's strict stance on antitrust risks in patient assistance programs.

Digital Regulation and Real-World Data

Starting in 2025, electronic auditing will become a mandatory standard, and PAPs that fail to integrate into the system in time will have their operating qualifications suspended. Industry experts recommend proactively adopting digital compliance solutions to cope with increasingly complex regulatory requirements. Additionally, Real-World Data (RWD) and AI-based approval systems are expected to emerge as new regulatory focal points, signaling a comprehensive shift toward digital transformation in the PAP landscape.