OIG Issues Advisory Opinion Permitting Drug Manufacturer to Provide Travel, Lodging, and Expenses to Patients in Limited Circumstances

King & Spalding

On January 15, 2020, OIG issued Advisory Opinion No. 20-02 analyzing an arrangement between a pharmaceutical manufacturer and certain drug recipients whereby the manufacturer provides certain drug recipients with financial assistance for travel, lodging and per diem expenses to stay near the site of the drug infusion for a period of approximately four weeks after the drug infusion. OIG analyzed the arrangement under the Anti-Kickback Statute (AKS) and the Beneficiary Inducements Civil Monetary Penalties provision (CMP). OIG concluded that even though the arrangement would implicate the CMP, the arrangement would fall within the Promotes Access to Care Exception to the Beneficiary Inducements CMP; and even though the arrangement could generate prohibited remuneration and implicate the AKS, OIG would not impose administrative sanctions.

The drug manufacturer’s proposed arrangement concerns a one-time use drug meant to treat two diseases, one affecting primarily children and young adults and one affecting primarily adults. The drug is manufactured from a patient’s cells and carries an FDA black-box warning for potentially life-threatening side effects including a “Syndrome.” The FDA’s prescribing protocol requires patient monitoring for signs of the Syndrome and instructs patients to remain within a certain proximity of the infusion center for four weeks. The drug manufacturer is also required to implement a Risk Evaluation and Mitigation Strategy (REMS) that includes only using REMS-certified physicians and entering into arrangements with REMS-compliant infusion centers. The infusion centers and physicians are not required to prescribe the drug manufacturer’s drug and any physician or center that meets the criteria may become involved in the arrangement.

Because of the severe consequences of being far away from a center, including possible death, the drug manufacturer proposed providing patients and caregiver(s) with one round-trip to the center, lodging, meals and certain out-of-pocket expenses for the period of monitoring after the infusion. Assistance would only be given to those who have been prescribed the drug and who have a household income that does not exceed 600 percent of the Federal Poverty Level and live a certain distance away from the infusion center. Further, the financial assistance would not be advertised to patients.

OIG found that the arrangement would implicate the AKS because the meals, lodging, and travel expenses would constitute remuneration that may induce beneficiaries to select the manufacturer’s drug and may influence patients to choose a certain center—effectively “steering” patients to a certain drug or center. In addition, this assistance would constitute remuneration to the centers and to physicians by affording them an opportunity to earn fees relating to administration of the drug. However, OIG also found that (1) the arrangement would help disproportionately needy or rural patients; (2) the arrangement would enable patients to meet the FDA monitoring requirements; (3) the physicians and centers who may administer the drug are limited as necessary for patient safety and compliance with FDA regulations; (4) the drug is a one-time, potentially curative treatment; (5) the arrangement would be available only to patients who live far away from the center and only if the center does not provide lodging; and (6) the Secretary does not have authority to pay for these non-medical expenses. For these reasons, OIG determined it would not impose administrative sanctions under the AKS.

Lastly, OIG concluded that the Promotes Access to Care Exception to the Beneficiary Inducements CMP applies because the arrangement “improves a beneficiary’s ability to obtain the items and services payable by Medicare and Medicaid program” and poses a low risk of harm.

Although OIG advisory opinions are technically not recognized as precedent for any other arrangements, they can serve as a helpful tool to ascertain the boundaries of what arrangements fit within the safe harbors, and what facts and safeguards incorporated into an arrangement will result in a lower risk of causing OIG to impose administrative sanctions.

Advisory Opinion No. 20-02 is available here.

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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