OIG Gives Drug Manufacturer Green Light to Cover Patient Expenses

The Office of Inspector General (OIG) in a Jan. 21 Advisory Opinion (No. 20-02) approved an agreement under which a pharmaceutical manufacturer would provide travel, lodging and other expenses to financially needy patients prescribed the manufacturer’s personalized medication. In doing so, the OIG noted that such an arrangement could potentially violate the Anti-Kickback Statute, (AKS) and the Beneficiary Inducements of the CMP. However, under the limited circumstances of this particular arrangement, the watchdog agency said it would not impose sanctions.

The Arrangement

The pharmaceutical company manufacturers a drug approved by the Food and Drug Administration for two indications. OIG does not identify the name of the drug, nor the manufacturer. The drug is a personalized medication made from a patient’s own cells and described as a “one-time, potentially curative treatment.”

The drug, however, can cause certain life-threatening or even fatal reactions, requiring physicians to monitor patients several times during the first week following its administration. That requires patients to remain near enough to the facility where the infusion takes place to mitigate any risk.

Because only certain physicians who are certified to treat patients, and only certain facilities are able to safely infuse the drug, patients may not always be located close to such care. The FDA requires the pharmaceutical company to implement a Risk Evaluation and Mitigation Strategy (REMS) and only REMS-certified physicians may prescribe the drug. Facilities that can meet certain criteria are eligible to become a center. Currently, just 96 centers across the country are certified to administer the drug, according to the request.

The requestor indicated that indigent or rural patients could be placed at risk if they can’t travel or stay close to a qualified center or provider after receiving the drug. As a result, some may not even receive treatment.

According to the arrangement, children and young adults are provided with travel, modest lodging, meals and certain out-of-pocket expenses ($50 per person) during and after treatment for themselves and up to two caregivers. Those over the age of 26 are reimbursed for themselves and one caregiver.

To be eligible, patients must have a household income that does not exceed 600 percent of the federal poverty level, live more than two hours or 100 miles from the nearest center and have no insurance for non-emergency medical travel.

OIG Analysis

The OIG’s legal analysis focused primarily on the AKS, which makes it a criminal offense to knowingly and willfully offer, pay, solicit or receive remuneration or induce or reward referrals of items or services reimbursable by a federal healthcare program. The OIG noted its job was to determine if the arrangement implicated the AKS, as well as whether it was likely to influence a beneficiary’s selection of a particular provider, practitioner or supplier.

OIG noted that, in general, it is concerned that manufacturers could use the reimbursements to generate business by steering patients to their drugs over competing ones, which could result in increased costs to federal healthcare programs. OIG was also concerned that the requestor could increase the drugs price to recoup costs related to the arrangement, thus resulting in increased costs to federal healthcare programs.

However, it said for reasons stated below, it would not impose sanctions against the requestor:

  • Because a significant number of patients are Medicare or Medicaid beneficiaries and have a median household income of $28,000 a year, the OIG said it would permit the arrangement under these limited circumstances because it would “increase access to care for financially needy patients and those living in rural areas.”
  • Because the remuneration relates to expenses incurred by a patient to adhere to his or her physician’s instructions to receive treatment at a qualified center and to remain close to that center, as required by the FDA-approved prescribing information.
  • Because under requirements imposed by the FDA to ensure patient safety, only physicians who accept responsibility for implementing necessary safety protocols are eligible to participate. Therefore, the number of physicians available is limited. It also noted that the requestor does not require physicians or centers to prescribe its drug exclusively and that any facility that meets uniform requirements may participate. This, the OIG opined, limits the likelihood that the requestor would use the arrangement to reward physicians who prescribe or administer its drug.
  • Because the drug is a one-time potentially curative treatment, the arrangement does not raise the concerns that sometimes come with other arrangements. In addition, the requestor doesn’t advertise the arrangement, limiting the chances that such an agreement would serve as a marketing tool to drive patients to its drug.
  • Because the requestor does not authorize payment for lodging if the patient is eligible to receive lodging at a treatment center when such lodging is available, the arrangement does not duplicate other available financial assistance.

The OIG also determined that the arrangement would implicate the Beneficiary Inducements Civil Monetary Penalty (CMP), which prohibits a person or entity from offering or providing any remuneration to a Medicare or Medicaid beneficiary that the offeror knows, or should know, is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier.

While OIG said such an arrangement could influence a patient to select a physician or center in the requestor’s network they might not otherwise select, it determined that the arrangement satisfies the Promote Access to Care Exception to the CMP. That exception states that remuneration poses a low risk of harm if it is: (i) unlikely to interfere with, or skew, clinical decision making; (ii) unlikely to increase costs to federal healthcare programs or beneficiaries through overutilization or inappropriate utilization; and (iii) does not raise patient safety or quality-of-care concerns.

As with any Advisory Opinion, it is limited to the specific facts in this case. However, it also suggests that OIG might view such arrangements favorably in cases where it improves access to care for financially needy patients.

The Health Law Office of Anthony C. Vitale can assist clients in drafting business arrangements. For more information, you can contact us at 305-358-4500 or send us an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.

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The Health Law Offices of Anthony C. Vitale