OIG Approves Pharmaceutical Manufacturer’s Proposed Free Vaccination Program

The Department of Health and Human Services, Office of Inspector General (“OIG”) recently released a favorable advisory opinion, OIG Advisory Opinion No. 24-11 (the “Opinion”), to a pharmaceutical manufacturer (the “Requestor”). In the Opinion, OIG analyzes whether the provision of free meningococcal vaccinations to eligible patients provided one of two drugs manufactured by the Requestor (the “Arrangement”) would constitute grounds for sanctions under the civil monetary penalty provisions at section 1128A(a)(5) and (7) of the Social Security Act (the “Act”), as those sections relate to the commission of acts described in section 1128B(b) of the Act (the “Federal Anti-Kickback Statute” or “AKS”) or prohibition of inducements to beneficiaries. The Requestor also sought confirmation that the Arrangement would not expose it to sanctions under the exclusion authority at section 1128(b)(7) of the Act. Requestor certified that it has no financial relationships related to meningococcal vaccines with any of the manufacturers of meningococcal vaccines. OIG concluded that though the Arrangement would generate prohibited remuneration if the requisite intent were present, the OIG would not impose sanctions.

The Advisory Opinion

The Requestor is a manufacturer of two pharmaceutical products approved by the U.S. Food and Drug Administration (“FDA”) for the treatment of several different rare disorders (the “Products”). Both Products carry a “black box” warning — the strongest warning required by FDA — indicating potentially fatal reactions. Patients treated with the Products have a 1,000 to 2,000 times greater risk of contracting meningococcal disease than otherwise healthy people living in the United States. Thus, FDA generally directs healthcare professionals to complete or update meningococcal vaccination at least two weeks prior to administering the first dose of one of the Products. FDA has expressed concern that existing Risk Evaluation and Mitigation Strategy (“REMS”) programs are insufficient to ensure patients receive the recommended vaccinations and has urged Requestor to update and improve its REMS programs. Despite the vaccines typically being covered by commercial and federal healthcare programs, many patients experience practical and logistical barriers to accessing the vaccines, including: (1) providers treating patients for the rare disorders at issue may practice in specialties that have less familiarity with meningococcal vaccines and may be less likely to stock the vaccines in their clinics; and (2) pharmacies may be unwilling to administer meningococcal vaccines to individuals who fall outside the vaccines’ FDA-approved age ranges, despite FDA’s recommendation that all patients receive meningococcal vaccines before being treated with one of the Products.

Requestor implemented the Arrangement to remove these barriers by offering free meningococcal vaccinations to patients who: (1) have been prescribed one of the Products for an on-label indication; (2) enroll in Requestor’s patient support program; and (3) have a prescription for a meningococcal vaccine (or vaccines). There are no financial eligibility requirements for the Arrangement, which would be available to patients regardless of their selection of prescriber (as long as the prescriber enrolls in the REMS). Via its patient support program, Requestor arranges for the patient’s vaccination through one of two methods: (1) via a third-party vendor with which Requestor contracts for this purpose (the “Vendor”); or (2) by shipping the appropriate vaccines directly to the patient’s prescriber or other healthcare professional who will administer the vaccinations. Requestor covers the full cost of the vaccines and vaccine administration conducted by the Vendor. But a physician or other healthcare professional administering the vaccine may bill an administration fee of approximately $20 (though not the cost of the vaccine itself) to federal payors. In most cases the prescriber ordering one of the Products is not the same provider who administers the vaccines.

Kicking off its AKS analysis, OIG recognized that the most significant impacts of the Arrangement are to enhance compliance with FDA-recommended safety protocols for patients taking the Products and to address concerns raised by FDA about insufficient use of meningococcal vaccines among patients taking the Products. OIG observed that the free vaccines and the opportunity to bill an administration fee under the Arrangement constitute remuneration under the AKS, but opined that its risk of engendering fraud and abuse is sufficiently low for three reasons. First, the provision of free vaccinations is unlikely to be a significant factor inducing any patient to choose one of the Products. Second, the Arrangement is unlikely to result in inappropriately increased costs to federal healthcare programs because the vaccines are not billed to any payors. While healthcare professionals administering the vaccines may bill federal healthcare programs only for an administration fee, those are costs that the government — through FDA — has actively encouraged. Finally, the nominal administration fee available under the Arrangement is unlikely to corrupt medical decision-making.

In contrast, OIG concluded that the free vaccinations offered by Requestor under the Arrangement does not generate prohibited remuneration under the civil monetary penalty provision prohibiting inducements to beneficiaries (the “Beneficiary Inducements CMP”) because Requestor, a pharmaceutical manufacturer that does not own or operate, directly or indirectly, any providers or suppliers of the Product, is not a “provider, practitioner, or supplier” for purposes of the Beneficiary Inducements CMP. Additionally, the vaccines are unlikely to influence federal healthcare program beneficiaries to choose a particular physician for the order or receipt of one of the Products because all patients are eligible to receive the free vaccinations regardless of which physician has prescribed the Products.

Analysis

Though OIG granted this pharmaceutical manufacturer a favorable Opinion, provision of free drugs generally may implicate both the AKS and the Beneficiary Inducements CMP. Here, however, a leading consideration in OIG’s AKS analysis was that Requestor’s Arrangement aligned with FDA goals (i.e. increasing both Requestor’s efforts to ensure patients receive the recommended vaccinations and compliance with FDA-recommended protocols for those taking the Products). The outcome here echoes previous advisory opinions in which pharmaceutical manufacturers sought approval for proposed arrangements that they posited were consistent with FDA-required Risk Evaluation and Mitigation Strategies for their products.¹ Though seemingly looked upon with favor, manufacturers considering assisting patients with REMS requirements should remember that any advisory opinion is limited to its facts and is binding only with respect to the requesting party.

OIG’s Beneficiary Inducement CMP analysis of this Arrangement also comports with its prior guidance. As a general rule, the beneficiary inducement law does not apply to pharmaceutical manufactures, as discussed in OIG’s August 2002 Special Advisory Bulletin on gifts and inducements offered to beneficiaries. In the bulletin, OIG stated that it does not believe that drug manufacturers are “providers, practitioners, or suppliers” for the limited purposes of the Beneficiary Inducement CMP, unless the manufacturer also owns or operates, directly or indirectly, pharmacies, pharmacy benefits management companies, or other entities that file claims for payment under the Medicare or Medicaid programs.

The favorable Opinion issued in this case illustrates that healthcare stakeholders should work with experienced counsel to carefully analyze contemplated arrangements to ensure compliance with and associated risks related to healthcare fraud and abuse authorities. For more information on OIG Advisory Opinion No. 24-11 or other issues addressed herein, please contact AGG Healthcare attorney Lisa Churvis.

[1] See, e.g. AOs 20-02 and 20-09 (each approving provision of certain travel-related expenses for eligible patients to increase compliance with REMS requirement to remain within two hours of facility administering infusion for four weeks); AO 21-19 (approving free provision of REMS-recommended eye drops that mitigate side effects for patients using one of its products).