On January 24, 2019, OIG issued Advisory Opinion No. 19-02, analyzing a proposed arrangement in which a pharmaceutical manufacturer would loan smartphones to patients who meet certain poverty level requirements in order to provide the patients the ability to use the manufacturer’s antipsychotic Digital Medicine (DM Drug).  OIG analyzed the proposed arrangement under both the Beneficiary Inducements Civil Money Penalties provision (CMP Law) and the Federal Anti-Kickback Statute (AKS). The agency concluded that the proposed arrangement would satisfy all the criteria for the CMP Law exception for promoting access to care, and although the proposed arrangement could potentially generate prohibited remuneration under the AKS, OIG would not subject the requestor to administrative sanctions. A copy of Advisory Opinion No. 19-02 can be found here.

The DM Drug at issue is an FDA approved drug “which consists of a tablet of the [d]rug embedded with an ingestible sensor.” Once ingested, the sensor gives off an electrophysiological signal detected by a patch worn on the patient’s stomach. The patch records when the medication is taken and other indicators such as the patient’s rest patterns and activity. The information stored on the patch can only be viewed when the data is transferred via a Bluetooth® connection to a smartphone application (the App). “With the patient’s consent, the patient’s health care provider(s) and caregiver(s) can access this information through web-based portals.”

Because the information can only be accessed via a smartphone App, the manufacturer proposes loaning a device with highly limited functionality (a Loaner Device) to patients who: “(1) have a prescription for the DM Drug for on-label use; (2) meet any applicable prior-authorization or therapeutic-step-edit requirements required by the patient’s insurer; (3) have an annual income below a specific percentage of the Federal poverty level; (4) do not already possess a device capable of running the App; and (5) are United States citizens or legal permanent residents.” The manufacturer would contract with a specialty pharmacy who would provide the Loaner Device to eligible patients. This arrangement would not be advertised to patients; instead, the prescribers would screen potential candidates and complete the enrollment forms on behalf of the patients. The prescribers would not receive any additional compensation for prescribing the DM Drug as opposed to any other treatment and would not be separately reimbursed for onboarding the patient. The Loaner Device would come preloaded with the App and the ability to make domestic calls (necessary for the patient to access support for the DM Drug system). All other features of the phone would be permanently disabled. The Loaner Device would only be available for the duration of the DM Drug therapy, which the manufacturer estimates to be 8-12 weeks. At most, a patient could only maintain the Loaner Device for two, 12-week periods.

OIG found that the “Loaner Device would provide something of value to the patients receiving it and would be remuneration to the patient.” However, OIG then went on to find that the proposed arrangement would satisfy all of the criteria of the exception for promoting access to care to the CMP Law.  It would promote access to care for patients who otherwise would not be able to benefit from the DM Drug and also poses a low risk of harm by “(i) being unlikely to interfere with clinical decision making, (ii) being unlikely to increase costs to Federal health care programs or beneficiaries through overutilization or inappropriate utilization, and (iii) not raising patient safety or quality-of-care concerns.” In light of the above, OIG concluded it would not subject the manufacturer to sanctions in connection with the proposed arrangement under either the CMP Law or the AKS.

The Advisory Opinion, of course, is limited in scope to the proposed arrangement and may not be relied on by any persons other than the requestor. Nevertheless, the opinion provides a good indication of how OIG might respond to similar requests from other pharmaceutical manufacturers in the future.