With the proliferation of precision and individualized medicine, genetic testing and counseling will likely remain on the radar of the Department of Health and Human Services’ Office of Inspector General (OIG) and the Department of Justice for years to come. Biopharma companies and manufacturers must carefully consider the facts and safeguards applicable to any sponsored genetic testing program to ensure compliance with the federal Anti-Kickback Statute (AKS).

Under one arrangement recently analyzed by OIG in Advisory Opinion 22-06, a biopharma company that manufactures and markets FDA-approved medications to treat a particular heart disease provided free genetic testing and counseling services to patients who met certain clinical criteria. Under the arrangement, the company’s sales representatives distributed materials about the free genetic testing and counseling to cardiologists identified as likely to diagnose and treat patients with the heart disease. The testing and counseling services were performed by outside vendors. OIG concluded that based on the specific facts and safeguards in place outlined below, the arrangement posed a sufficiently low risk of fraud and abuse to not warrant civil sanctions.

According to OIG, the arrangement implicated the AKS because it would result in remuneration that might induce patients to purchase, or their physicians to prescribe, the biopharma company’s medications. OIG noted that the free genetic testing and counseling services have inherent value for patients. With respect to the physicians, the arrangement conferred value by enabling them to offer a service, at no cost to them or their patients, that could create an opportunity for the physicians to bill for other services, such as evaluation and management services involving genetic counseling, and monitoring services.

As always, the Advisory Opinion applies only to the specific arrangement analyzed and does not bind OIG with respect to any other testing arrangement.

With respect to the safeguards in place, first, OIG noted that several features of the arrangement made it unlikely to lead to overutilization or inappropriate utilization. Significantly, the genetic test indicates only whether a patient carries one of the gene mutations. The presence of one of the gene mutations does not determine whether a patient has, or will develop, the disease and is not, standing alone, a sufficient basis to prescribe one of the biopharma company’s medications for a patient. OIG relied on the following certifications from the company in reaching its conclusions that the arrangement was unlikely to lead to overutilization or inappropriate utilization:

• there is no data to support use of the medications for the treatment of patients who have not been diagnosed with the disease;
• it is not medically appropriate or within the standard of care for a physician to prescribe the medications for patients who have not been diagnosed with the disease (which requires a separate, objective clinical assessment);
• the biopharma company does not promote the use of the medications for patients who have not been diagnosed with the disease; and
• the biopharma company does not manufacture, market, promote, or otherwise have a financial interest in any other items or services that are used to diagnose or monitor for the disease.

Further, the company’s arrangement incorporates clear, objective patient eligibility criteria for the genetic testing and counseling services, and the ordering physician must sign an attestation regarding the patient’s eligibility and the clinical appropriateness of the testing for the patient. In addition, the arrangement covered only genetic testing for the specific gene mutations, which has limited utility, rather than testing for a broader range of potential genetic mutations not associated with the disorder. OIG also noted that depending on the circumstances, free genetic testing that covers a wider range of genetic mutations may present a higher risk of overutilization or inappropriate utilization.

Second, the biopharma company’s provision of free genetic testing and counseling services would be unlikely to skew clinical decision-making or raise concerns regarding patient safety or quality of care. The company does not require or incentivize providers who order genetic tests to recommend, prescribe, or administer any of its products. In addition, based on the company’s certifications, the genetic testing may help to improve patient safety and quality of care by shortening the time to diagnosis of the disease.

Third, the company implemented various safeguards to prevent use of the arrangement as a marketing or sales tool to induce physicians to order additional items and services. For example, the company certified that its sales representatives would not distribute marketing materials or genetic testing kits in a manner that considers a physician’s usage of the program or history of prescribing the drug. There were also various limitations on the exchange of data relating to the arrangement that limit the potential for the biopharma company to target specific providers or patients for further testing or to encourage prescribing or purchasing the medications. Specifically, the genetic testing and counseling vendors did not provide the biopharma company with any individually identifiable health information regarding patients who receive a genetic test.

OIG cautioned that it “would likely reach a different conclusion with respect to the risk presented by this type of arrangement if any of these facts were different and there were a more direct nexus between the remuneration [i.e., the free genetic testing/counseling] and ordering or purchasing the manufacturer’s products.” Although OIG opined that this particular arrangement posed a sufficiently low risk of fraud and abuse under the AKS, the facts and safeguards of any similar arrangement would need to be analyzed carefully to rule out possible kickback concerns.