OIG Approves Pharmaceutical Manufacturer’s Loaning of Smartphones to Support Digital Medicine (DM)

Holland & Knight LLP

Holland & Knight LLP

On Jan. 29, 2019, the Office of Inspector General (OIG), in Advisory Opinion 19-2, issued its first opinion on the new "promotes access to care" exception to the beneficiary inducement Civil Monetary Penalties (CMP) law and its first guidance on Digital Medicine (DM) technology as part of a patient assistance program.

This favorable opinion demonstrates that, with proper safeguards in place, the OIG shows its willingness to support low-income patients with technologies that can enhance patient care. The requester is a pharmaceutical manufacturer that makes a DM product recently approved by the FDA, which is a combined drug/ingestion sensor that can monitor patient utilization of the drug used to treat mental illness. Patients with this particular mental illness have drug adherence problems causing them to have poor outcomes and higher use of additional healthcare services. The DM technology, which requires an app, allows the patients’ physicians and caregivers to access the drug utilization information through a web-based portal. To use the technology, the patient must have a smartphone capable of running the app. For low-income patients without access to a smartphone, the pharmaceutical manufacturer proposes to loan them a phone.

The OIG based its favorable opinion on the following factors: (1) the smartphone would be limited in functionality and would include only the DM app and telephone capability necessary for the patients to access the DM drug system (i.e. the phone would have no camera, web browser or ability to download other apps); (2) the support would be limited to patients who already had a prescription for the DM, no access to a compatible phone and income below a certain threshold; and (3) the smartphone would be loaned for a limited time not to exceed more than 12 weeks which is the intended intervention time.

As to the CMP analysis, the OIG concluded that the arrangement satisfied the new “promotes access to care” beneficiary exception because the smartphone would allow proper use of the new DM technology for improving care access, would not interfere with clinical decisions and would not increase costs to the federal program or beneficiaries. The advisory opinion provides useful compliance guidance for the industry.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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