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Volume XI, Number 64

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OIG Issues Advisory Opinion Allowing Pharmaceutical Company’s Payment of Travel, Food and Lodging Expenses for Indigent and Rural Patients

In its final Advisory Opinion of 2020, the U.S. Department of Health and Human Services Office of Inspector General (OIG) approved a pharmaceutical company’s request to provide financial assistance to patients who were prescribed a cancer drug that the company manufactured. In Advisory Opinion 20-09, the OIG determined it would not impose sanctions under the Anti-Kickback Statute (AKS) or beneficiary inducement provision of the Civil Monetary Penalties Law (CMP) for an arrangement where a pharmaceutical manufacturer covers the expenses for qualifying patients for travel, lodging and limited out-of-pocket expenses (i.e., meals) related to the treatment of the patient with the manufacturer’s drug. The drug is subject to a Risk Evaluation and Mitigation Strategy, which includes elements to assure safe use to mitigate the risks of life-threatening or fatal reactions and neurological toxicities. Treatment requires retrieval of the patient's cells (leukapheresis) to manufacture the drug, the patient to receive conditioning chemotherapy, infusion of the personalized drug and extended post-infusion patient monitoring.

To be eligible for the financial assistance, the patient must be prescribed the drug, meet certain financial need criteria, live a certain distance from the nearest leukapheresis facility and certified medical center that accepts the patient's insurance (if applicable) and must lack third-party insurance coverage for the travel and other expenses related to the treatment. Only medical centers that meet the manufacturer’s objective criteria as having the expertise, health care professional teams and infrastructure to follow the drug’s prescribing information and safely infuse the drug can administer the treatment. The manufacturer will certify any medical center that meets its objective criteria. The financial offer is made to every patient regardless of insurance status.

Federal Anti-Kickback Statute

According to the OIG, the proposed arrangement implicates the AKS in two ways. First, providing free travel, lodging and other assistance to patients constitutes remuneration that may induce them to purchase the drug. Second, the financial assistance to patients is indirect remuneration to the medical centers where the treatment will occur. The financial assistance allows patients to select a health care provider and medical center that the patient may not have otherwise selected for the treatment. As a result, according to the OIG, physicians might prescribe the drug and/or medical centers might develop programs for administration of the drug.

The OIG expressed concern that by providing financial assistance for travel, lodging and meals, manufacturers could potentially steer patients to choose their drugs over less expensive but equally effective drugs, which could result in inappropriate cost increases to Federal health care programs. The OIG also stated that even though costs of the arrangement are not directly shifted to Federal health care programs, the manufacturer can recoup the costs of the arrangement through drug price increases. The OIG also noted that manufacturers can potentially use financial assistance to patients as a means of marketing their drugs. Lastly, the arrangement could drive patient volume to a limited number of medical centers that the manufacturer unilaterally selects in return for an agreement from the medical center to exclusively prescribe the drug.

Despite these concerns, the OIG stated that it would not impose sanctions under the AKS for the following combined reasons which serve to reduce the risk of fraud and abuse:

  • The remuneration will help indigent and rural patients travel and stay near a medical center that is certified to provide the drug treatment and post-treatment monitoring. This provides greater patient access to the treatment.

  • The remuneration will promote patient safety by enabling medical centers to meet FDA requirements in the drug's prescribing information, mitigate patient harm and ensure the patient/caregiver follows the drug's prescribing information.

  • The likelihood of the manufacturer using the arrangement to reward medical centers for administering and prescribing the drug is limited as only a limited number of medical centers can appropriately and safely administer the drug, the manufacturer does not require medical centers or prescribers to prescribe its drug exclusively, and any medical center can administer the drug so long as it meets all safety requirements mandated by the drug's label and with the manufacturer's uniform criteria to become a participating medical center.

  • According to its label, the drug is essentially a treatment of last resort that is a one-time, potentially curative treatment. Thus, the OIG found there not to be a risk the manufacturer would provide an initial dose for free or on a subsidized basis to induce patients to continue using the drug when the cost would be fully payable by a Federal health care program, a practice the OIG calls “seeding.”

  • The manufacturer does not market the arrangement — limiting its likelihood to be a marketing tool to drive patient volume.

  • Remuneration for travel and lodging is provided only to patients who reside more than two hours driving or more than 100 miles from the nearest medical center (patients who live 300 miles away are eligible to receive airfare assistance), which limits the risk of the arrangement being a marketing tool. Additionally, patients who qualify for free lodging from other organizations for the treatment of the drug are ineligible to participate in the arrangement.

  • In order to adhere to the drug's prescribing information, patients need to stay in proximity of the medical center post-infusion, but there is currently no federal health care program provision that will allow the patient to be reimbursed for these non-medical items and services. As a result, the manufacturer's support allows eligible patients to adhere to the on-label administration of the drug.

  • The travel and/or lodging provided to the patient to facilitate the collection of the patient’s cells is not likely to induce the patient to purchase the drug due to the unique circumstances regarding the drug’s manufacture and safety risks. According to the OIG, the manufacturer’s certification process ensures the medical center capable of correctly collecting, storing, packing and shipping a patient’s cells and ensures the drug can be properly matched with each individual patient. Only about 100 of these facilities exist nationwide. Moreover, the manufacturer will only cover expenses incurred during a two-night stay.

Civil Monetary Penalties for Beneficiary Inducements

The OIG also evaluated whether the arrangement is likely to influence a patient's selection of a particular prescriber or medical center for services that may be reimbursed by Medicare or a state health care program, potentially triggering liability under the CMP Law. The OIG found the arrangement is likely to influence a patient to select a particular medical center or prescriber that the patient may not otherwise have selected as it only allows the patient to select the qualified medical center that is closest to the patient. As a result, the OIG believes the arrangement implicates the CMP Law, but also found that the arrangement satisfied the Promotes Access to Care Exception to the CMP Law beneficiary inducement prohibition.

The OIG arrived at this conclusion because it found the remuneration would likely not interfere with clinical decision-making as the arrangement promotes patient safety and quality of care — and the drug is unlikely to be overutilized as it is prescribed as a treatment of last resort and is potentially curative.

Conclusion

The OIG’s guidance regarding whether pharmaceutical companies may provide direct assistance to patients using their drugs, and what forms of assistance are permissible, is complex and fact-specific. In 2020, for example, the OIG issued two other Advisory Opinions regarding patient assistance. In Advisory Opinion 20-02, the OIG permitted another pharmaceutical company to provide travel, lodging and meal assistance to patients. By contrast, in Advisory Opinion 20-05, the OIG issued a negative advisory opinion to a pharmaceutical company that wanted to provide financial assistance to help patients afford their copayments. 

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© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume XI, Number 14
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About this Author

Gary Rom Health Care Attorney Faegre Drinker Indianapolis, IN
Associate

Gary Rom goes beyond rule-based counsel to help health care clients develop creative, compliant solutions to launch and promote drugs and medical devices and their corresponding support programs.

An agile advisor and former legal associate for Eli Lilly and Company, Gary is intimately aware of the interplay between how products are marketed and how that marketing impacts competitor complaints, consumer protection actions and product liability. He partners with clients to help them understand that balance and navigate it aptly, accounting for business objectives and regulatory...

317-569-4684
Jesse Witten, Drinker Biddle Law Firm, Washington DC, Healthcare and Litigation Attorney
Partner

Jesse A. Witten defends health care providers, pharmaceutical manufactures and other clients in the health industry against fraud and abuse matters in government investigations and litigation, particularly False Claims Act matters. Jesse also assists clients in internal corporate investigations and self-disclosures to the government of regulatory violations and Medicare/Medicaid overpayment. He counsels clients on compliance with Anti-Kickback Statute and Stark Law and laws governing the sale and marketing of medical devices and pharmaceutical products...

(202) 230-5146
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