On October 5, 2022, OIG posted Advisory Opinion 22-19 in response to a nonprofit corporation’s (Requestor) request to analyze a proposal for certain pharmaceutical companies (each, the Funding Manufacturer) to subsidize: 1) cost-sharing incurred by eligible Part D enrollees when filling prescriptions for the Funding Manufacturers’ Part D oncology drugs, 2) additional funding, such as health insurance premiums, including Medicare Part D premiums for certain Medicare beneficiaries, and select programs to promote oncology screening and health equity, and 3) Requestor’s operating costs (collectively, the Proposed Arrangement). OIG concluded that the Proposed Arrangement would present more than a minimal risk of fraud and abuse under the federal Anti-Kickback Statute (AKS) but would not violate the Beneficiary Inducements Civil Monetary Penalty law (CMP).
The Proposed Arrangement
- Cost-Sharing Subsidies: The Proposed Arrangement would establish a different cost-sharing structure from that enacted by Congress as part of the Medicare Part D program, whereby a Part D enrollee would receive subsidies from Requestor in the amount of: (i) $35 per month for branded drugs and $10 per month for generic drugs; and (ii) either 10% or 25% of the total coinsurance that would otherwise be owed for branded drugs during the catastrophic phase of coverage. The applicable Funding Manufacturer would pay all remaining cost-sharing obligations that a Part D enrollee would otherwise have to pay for that Funding Manufacturer’s Part D oncology drugs.
- Additional Funding: Funding Manufacturers would subsidize costs such as health insurance premiums and select programs like oncology screening. Unlike the cost-sharing subsidies, the premium subsidies would be available to beneficiaries regardless of whether they use any Part D oncology drug manufactured by a Funding Manufacturer.
- Operating Costs: Funding Manufacturers would finance all of Requestor’s operating costs, which Requestor anticipates could total approximately $20 million per year.
Legal Analysis
OIG concluded that the Proposed Arrangement, as a whole, would present more than a minimal risk of fraud and abuse under the AKS. First, OIG concluded that the cost-sharing subsidies of the Proposed Arrangement are designed to remove financial barriers so that eligible Part D enrollees will purchase the Funding Manufacturers’ drugs. Although Requestor has certified that it would make available a list of all covered products in a neutral fashion and not advertise or promote products in connection with the Proposed Arrangement, OIG noted that prescribers would learn over time which products are subsidized under the Proposed Arrangement and could prefer those products over the alternative options. OIG determined that the cost-sharing subsidies are thus designed to induce the purchase of the Funding Manufacturers’ drugs, which would effectively redesign and abrogate the cost-sharing requirements implemented by Congress and create the potential for increased costs to Federal health care programs.
OIG also concluded that subsidies for additional funding and operating costs would implicate the AKS but refused to elaborate on a full analysis of these features separately because these contributions would be tied to the cost-sharing subsidies, such that the Proposed Arrangement should be analyzed as a whole.
Additionally, OIG considered whether the Proposed Arrangement would violate the CMP by influencing Part D enrollees’ selection of a particular provider, practitioner, or supplier. As an initial matter, OIG noted that neither Requestor nor the Funding Manufacturers are a provider, practitioner, or supplier. Then OIG concluded that, because the cost-sharing subsidies would be available to any pharmacy willing to accept the subsidies without regard to a Part D enrollee’s choice of provider, practitioner, Part D plan, or supplier, the remuneration that would be offered by Requestor likely would not influence a beneficiary’s selection of a particular provider, practitioner, or supplier. OIG found that the Proposed Arrangement would not present grounds for the imposition of sanctions under the CMP.
As is typical, OIG stated that Advisory Opinion 22-19 is limited in scope to the Proposed Arrangement and may not be relied upon by anyone else other than Requestor. The OIG Advisory Opinion is available here.
