Last week, OIG posted Advisory Opinion No. 22-06 regarding a biopharmaceutical company’s (BioPharm Co.) arrangement to provide free genetic testing and genetic counseling services to patients potentially eligible for treatment with the biopharmaceutical company’s drug (the Arrangement). OIG concluded that it would not impose administrative sanctions under the federal Anti-Kickback Statue (AKS), or under the civil money penalties law relating to beneficiary inducements (the Beneficiary Inducements CMP) because, according to OIG, the Arrangement posed a sufficiently low risk of fraud and abuse.

BioPharm Co. sought OIG approval to provide free genetic testing and genetic counseling services to potentially eligible patients pertaining to two drugs (the Medications) prescribed to treat a rare disease (the Disease). The Disease, which affects the heart and can lead to heart failure and death, can be hereditary or occur spontaneously. The Medications are the only items or services that BioPharm Co. manufactures, promotes, markets, or has any financial interest in related to the Disease.

Patients with the Disease often do not receive a correct diagnosis until many years after Disease onset because the Disease is rare and its symptoms are nonspecific. Diagnosis of the Disease requires an objective clinical assessment consisting of diagnostic and other testing. BioPharm Co. proposed to provide free genetic testing (the Genetic Test) and genetic counseling services (the Counseling Services) to adults in the United States who fit the following criteria: (i) the individual has been diagnosed with the Disease; (ii) the individual’s physician suspects the individual has the Disease based on clinical evidence but has not yet made a diagnosis; or (iii) the individual has not been diagnosed with the Disease, but a family member has a confirmed diagnosis of the hereditary form of the Disease (each an Eligible Patient).

To provide the Genetic Test and the Counseling Services, Biopharm Co. entered into contracts with third party vendors (the Testing Vendor and the Counseling Vendor). BioPharm Co.’s contracts with the Vendors require them to bill only BioPharm Co. for the respective services rendered and not to promote their other services to any physician who ordered the services. Further, while the Testing Vendor provides monthly reports about the Arrangement to BioPharm Co. to track participation, the information provided does not include individually identifiable health information and the data will not be used for sales and marketing activities.

OIG concluded that the arrangement implicates the federal AKS because the free Genetic Test and Counseling Services may induce Eligible Patients to purchase, or their physicians to provide, the Medications or other products manufactured by BioPharm Co. However, OIG concluded that it would not impose sanctions under the AKS because: (1) the Genetic Test indicates only whether a patient had a genetic mutation associated with the Disease, not whether a patient presently has the Disease, and therefore is unlikely to lead to overutilization or inappropriate utilization; (2) the Arrangement is unlikely to skew clinical decision making or raise concerns regarding patient safety or quality of care because BioPharm Co. does not require or otherwise incentivize providers who prescribe the Genetic Tests to recommend, prescribe, or administer any other products or services manufactured by BioPharm Co.; and (3) there are various safeguards to prevent the Arrangement from being used as a sales and marketing tool, including limitations on use of the data arising from the Arrangement for sales or marketing purposes and prohibitions on Vendor promotion of other services or the Arrangement generally.

OIG also concluded that it would not impose sanctions under the Beneficiary Inducements CMP, even though implicated by the Arrangement’s potential to induce an Eligible Patient to seek further care from the provider who ordered the Genetic Test, for the same reasons stated above as to the AKS.

OIG Advisory Opinion No. 22-06 is available here.