OIG Issues Favorable Advisory Opinion for Free Drug Sample Arrangement

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On November 10, 2021, OIG issued Advisory Opinion No. 21-16 permitting an arrangement whereby a drug manufacturer (Requestor) provides free samples of a long-acting injectable atypical antipsychotic drug (the Drug) to certain hospitals. Under the proposed arrangement, hospitals that do not accept and dispense Prescription Drug Marketing Act of 1987 (PDMA)-compliant samples in their facilities are permitted to request up to a maximum number of free units of the Drug to be dispensed solely to inpatients. After careful consideration of the facts presented, OIG determined that although this arrangement implicated the federal Anti-Kickback Statute, it presented a sufficiently low risk that OIG would not impose administrative sanctions under that law.

OIG noted that the arrangement implicates the Anti-Kickback Statute because the free trial units of the Drug are remuneration provided to the hospitals, and the hospitals are referral sources for the Drug. However, OIG considered the following factors in deciding that the arrangement presented a low risk under the Anti-Kickback Statute:

  • The risk of a participating hospital steering inpatients to the Drug is low because for the first 14 days after the initial administration of the Drug, a patient must receive concurrent treatment with daily antipsychotics. These daily antipsychotics are not provided for free and therefore the hospital does not benefit from administering the Drug under the arrangement. Further, the patient may switch from the Drug to a daily or oral antipsychotic medication after being discharged without facing a clinical barrier.

  • There is a low risk of overutilization because the prescribing physician is not given an incentive to prescribe the Drug to inpatients as opposed to a competing drug or daily oral alternative.

  • The arrangement is unlikely to increase costs to federal healthcare programs because the Drug is not separately billable during the inpatient stay. Although the Drug could be billed if the beneficiary continued to receive the Drug after discharge, the long-term likelihood of positive treatment outcomes could reduce aggregate expenditures by federal programs. There is a potential cost savings to federal healthcare programs because studies show that the Drug could reduce incidences of nonadherence and the risk of negative outcomes (e.g., hospitalizations).

  • Hospitals are obligated to only agree to give the free trial units to patients diagnosed with a specific disorder for whom a physician has determined that the Drug is clinically appropriate and increases the long-term likelihood of positive outcomes.

  • The arrangement is not advertised to the public. Hospitals are made aware of this offer by field-based sales representatives or through Requestor-approved communications sent directly to the hospital. Hospitals must enroll in the arrangement to receive the free trial units of the Drug and receive only a limited number of units per year and per patient. As part of enrollment, hospitals must agree to a number of terms that OIG considered to be safeguards against abuse, such as:

    • Hospitals must agree not to sell, resell, trade or distribute for sale, or bill for the free trial units.

    • Prescribers are required to act in accordance with professional standards.

    • The participating hospital must understand that it is not under any obligation to prescribe, use, or continue using the Drug as a condition of receiving free units.

OIG did not opine on matters relating to the arrangement as it relates to outpatient settings, potential liability under PDMA, or the False Claims Act.

The full text of Advisory Opinion No. 21-16 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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