OIG Issues Favorable Advisory Opinion Regarding Pharmaceutical Manufacturer Arrangement to Provide Financial Assistance to Potentially Eligible Patients

King & Spalding

Last week, OIG posted Advisory Opinion No. 21-08 regarding a pharmaceutical manufacturer’s arrangement to provide financial assistance in the form of transportation, lodging, and meals to patients potentially eligible for treatment with the pharmaceutical manufacturer’s drug. OIG concluded that it would not impose administrative sanctions under the Federal Anti-Kickback Statue, as the requisite intent did not appear to be present, nor under the civil money penalties law relating to beneficiary inducements (the Beneficiary Inducements CMP), as the arrangement promotes access to care and poses a low risk of harm to patients and Federal health care programs within the meaning of an exception to the Beneficiary Inducement CMP (the Promotes Access to Care Exception).

The financial assistance pertains to a one-time gene therapy (the Drug) approved by the U.S. Food and Drug Administration for the treatment of individuals who are confirmed to have a rare, inherited retinal disease caused by mutations (the Genetic Disorder) and who have viable retinal cells. The Drug has the potential to increase vision; there are no other pharmacological treatments available to patients with the Genetic Disorder.

To receive treatment with the Drug, patients must (1) undergo a genetic test to confirm the Genetic Disorder, (2) receive an initial evaluation by the treating physician at an approved treatment center to determine whether the patient has viable retinal cells, (3) receive a surgical injection of the Drug in each eye, as applicable, at least six days apart, at an approved treatment center, and (4) have a post-operative appointment to check the patient’s status. Further, patients are advised to lie in a supine position for as much as 24 hours after the surgical injections and to avoid air travel until any air bubbles formed during the surgical injection dissipate and are confirmed to have dissipated, which may take as long as a week.

The Drug is administered in hospital outpatient settings at facilities that meet certain objective criteria and have been approved by the pharmaceutical manufacturer to serve at treatment centers for the Drug. The pharmaceutical manufacturer has approved 10 treatment centers and expects that even when all facilities that are both willing and qualified to administer the Drug are approved, there will only be 13 to 18 approved treatment centers. Accordingly, patients who live more than 2 hours driving distance, or 100 miles, from an approved treatment center are eligible for financial assistance for transportation, lodging, and meals associated with (1) an initial consultation to determine if the patient has viable retinal cells necessary for administration of the Drug; and (2) administration of the Drug (if the patient has viable retinal cells) and one follow-up appointment. Further, patients eligible for financial assistance who are federal health program beneficiaries must also (1) declare themselves unable to obtain the consultation or Drug due to the necessary travel and lodging expenses and (2) have a verified household gross income that is equal to or below 600 percent of the Federal Poverty Level. Finally, if a third party provides for coverage for any travel-related costs, the pharmaceutical manufacturer will not do so. The pharmaceutical manufacturer certified that it offered the financial assistance to patients regardless of insurance status.

OIG concluded that the arrangement implicates the Federal Anti-Kickback Statute because the free transportation, lodging, and meals constitute remuneration that may be intended to induce patients to purchase the Drug and to receive other federally reimbursable items and services provided by the approved treatment centers. Further, because the financial assistance could enable patients to visit approved treatment centers that patients would not otherwise have selected for treatment, the assistance also constitutes renumeration to the treating physicians and to those approved treatment centers in the form of the opportunity to earn fees related to administering the Drug. Notwithstanding OIG’s concerns, OIG concluded that the risk of fraud and abuse presented by the pharmaceutical manufacturer’s financial assistance, in this case, was sufficiently low under the Federal Anti-Kickback Statute because: (1) the financial assistance enables access to the Drug for Federal health program beneficiaries who may otherwise be unable to obtain the Drug due to the travel and lodging expenses; (2) the financial assistance for travel and lodging enables treatment consistent with the Drug’s label, and is not used as a marketing tool to drive patients to use the Drug; (3) the approved treatment center network is limited, and approved treatment centers are not required to administer a particular volume of the Drug as a condition of remaining in the network; (4) as the Drug is a one-time therapy, administered only to a patient population with an objective verifiable basis for confirming eligibility for the Drug, the risk of the financial assistance interfering with clinical decisions is low; and (5) the financial assistance arrangement includes safeguards that mitigate risk and fraud, e.g., no financial assistance if third-party coverage available.

OIG concluded that the financial assistance would also likely induce patients to select approved treatment centers and treating physicians that patients otherwise may not have selected for federally reimbursable items and services, therefore implicating the Beneficiary Inducements CMP. However, OIG also concluded that the financial assistance satisfied the “Access to Care Exception” to the Beneficiary Inducements CMP, as (1) the financial assistance was available only to patients with incomes equal to or below 600 percent of the Federal Poverty Level, when other coverage was not available, and reduced economic barriers to safe treatment in accordance with the Drug’s label; and (2) the financial assistance carried a low risk of interfering with clinical decision making due to its enabling patients to receive treatment in accordance with the Drug’s label.

Advisory Opinion No. 21-08 is available here.

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