This article originally appeared as a Fraud and Abuse Practice Group Email Alert by the American Health Lawyers Association. Copyright 2014, American Health Lawyers Association, Washington DC. Reprint permission granted.
On August 15, 2014, the U.S. Department of Health & Human Services, Office of Inspector General (OIG) issued a “negative” opinion regarding a specialty pharmacy’s proposal to pay a per-fill fee to local pharmacies for support services they provide in connection with patient referrals to the specialty pharmacy. Finding that the per-fill fee could materially influence the local pharmacies’ referral decisions, the OIG concluded that the proposed arrangement implicated the antikickback statute and posed more than a minimal risk of fraud and abuse.
The Requestor of the advisory opinion is a specialty pharmacy that dispenses specialty drugs used to treat a variety of chronic and life-threatening diseases, including cancer, HIV/AIDs, multiple sclerosis and hemophilia (Requestor). According to the Requestor, the specialty drugs may be unavailable at local retail pharmacies for various reasons, including, for example, manufacturers limit their distribution networks to a small number of pharmacies, payors designate specific dispensing pharmacies for specialty drugs, and/or specialty drugs require special handling or inventory management services.
The Requestor asked the OIG whether it would be permissible to enter into agreements with various local pharmacies and pharmacy networks pursuant to which the Requestor would provide specialty drugs to their patients. In exchange for a per-fill fee amount, the local pharmacy would be required to provide various support services, including: (1) accepting the prescription from the patient or prescriber; (2) gathering patient and prescriber demographic information; (3) recording patient-specific medication history and use, including drug names, strength and directions; (4) patient counseling; (5) informing the patients about access to specialty drugs, including the availability from pharmacies other than the Requestor’s pharmacy; (6) obtaining patient consent to forward the prescription to the Requestor; (7) transferring prescription information to the Requestor; and (8) providing ongoing patient assessments for subsequent refills. The Requestor certified that the per-fill fee, which is paid upon the receipt of the initial prescription and each subsequent refill, is fair market value for the support services.
The OIG concluded that the antikickback statute was implicated by the proposed arrangement because the Requestor would pay a per-fill fee for support services each time a local pharmacy referred a specialty drug prescription to the Requestor. In its analysis, the OIG noted that the Requestor paid the local pharmacy for support services only if the services result in a referral to the Requestor. Thus, the OIG found that such per-fill fee is “directly linked” to business generated by the local pharmacy for the Requestor, and could materially influence the local pharmacy’s referral decisions. While the OIG recognized that the local pharmacy’s support services may benefit the patient in terms of care coordination, the OIG noted that the antikickback statute is implicated if one purpose of the remuneration is to generate referrals. The OIG stated that there is “significant” risk that the per-fill fees are compensation to the local pharmacy for generating referrals, rather than solely compensation for bona fide, commercially reasonable services.