Office of Inspector General (OIG) Issues Unfavorable Advisory Opinion to Specialty Pharmacy For Support Service Payments
On August 15, 2014, the OIG issued an unfavorable Advisory Opinion to a specialty pharmacy in connection with the pharmacy’s proposal to pay local retail pharmacies for support services that they provide in connection with patient referrals to the specialty pharmacy. The specialty pharmacy dispensed specialty pharmaceuticals that are often unavailable to retail pharmacies. Under the proposed contractual arrangement, the specialty pharmacy would pay local pharmacies for support services, including accepting new patients and recording their demographic information; recording patient-specific medication history and use and providing ongoing medication assessment; counseling patients on appropriate use of their medications and informing them about the specialty pharmacy’s services; obtaining patient consent to transfer the prescription to the specialty pharmacy; and transmitting the prescription to the specialty pharmacy. The retail pharmacy was paid a “per-fill fee” at the time that the initial prescription was transmitted and upon each subsequent refill.
In evaluating the arrangement which was the subject of Advisory Opinion 14-06, the OIG concluded that the per-fill fees were “inherently subject to abuse” because they were paid only when the support services provided by the retail pharmacy resulted in a referral to the specialty pharmacy. The OIG concluded that there was significant risk that the per-fill fees would represent compensation for the local pharmacies generating business (including federal health care program business), rather than compensation for bona fide, commercially reasonable services. The unfavorable Advisory Opinion graphically illustrates the inherent risks in entering into arrangements where payments to the service provider are only made when a referral is generated.