OIG Approves Pharmaceutical Manufacturer’s Proposed Travel-Related Subsidies

The Department of Health and Human Services, Office of Inspector General (“OIG”) recently released a favorable advisory opinion, OIG Advisory Opinion No. 24-13 (the “Opinion”) to a pharmaceutical manufacturer (the “Requestor”). In the Opinion, OIG analyzes whether the provision of assistance for travel and associated expenses for qualifying patients receiving a cell therapy product 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. 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 Opinion requestor is a manufacturer of a cell therapy product (the “Product”), which is a potentially curative one-time treatment. The Product is manufactured from a patient’s tumor sample, which is collected at an approved treatment center (“Treatment Center”). The tissue-procurement phase requires the patient to stay at the Treatment Center between one and five days, then return for a seven-day chemotherapy regimen once the Product is manufactured. The U.S. Food and Drug Administration recommends that patients stay within two hours of the Treatment Center for several weeks for post-treatment monitoring, though the exact duration is left to the independent medical judgment of the patient’s treating physician. The average treatment journey takes approximately one month. Treatment Centers are qualified using objective criteria including the ability to conduct tumor tissue procurement, properly store the Product, and perform T-cell therapy regimen administration. Requestor approves any willing provider that meets the uniform eligibility criteria, and expected or actual use of the Product does not affect the Treatment Center’s ability to become or remain a Treatment Center. While the number of Treatment Centers is increasing, Requestor does not expect that Treatment Centers will be available in every state.

Requestor does not advertise the Arrangement beyond providing a general overview of the patient support resources that are available for qualifying patients, and does not use it as a marketing tool to drive product utilization or referrals. Requestor offers the Arrangement to patients, including federal healthcare program enrollees: (1) who are residents of the United States or a U.S. territory; (2) whose income is at or below 600% of the federal poverty level; (3) who meet program distance requirements; and (4) who have an on-label prescription for the Product. Under the Arrangement, Requestor covers certain costs for patients and caregivers, including: (1) round-trip economy airfare for patients living over 300 miles from a Treatment Center; (2) ground transportation costs for patients living between 100 and 300 miles from a Treatment Center; (3) modest hotel accommodations for patients living over 100 miles from a Treatment Center; and (4) a per diem for meals and other authorized expenses. Requestor does not provide the Arrangement to a patient to the extent that assistance for travel, lodging, meals, or associated expenses is available from any other source.

OIG observed that the Arrangement implicates the AKS because Requestor’s assistance with travel and related expenses: (1) constitutes remuneration to eligible patients that might induce them to purchase the product; and (2) constitutes remuneration to Treatment Centers and treating physicians in the form of the opportunity to earn fees related to administering the Product, which may induce Treatment Centers to recommend, and physicians to order, the Product. But OIG concluded that the risk of fraud and abuse was sufficiently low under the AKS for three reasons: (1) the Arrangement removes a barrier to accessing medically necessary care that is furnished by Treatment Centers; (2) the Product is a one-time, potentially curative treatment, which distinguishes the Arrangement from problematic seeding arrangements; and (3) the Arrangement includes additional safeguards, including being offered only when assistance is otherwise unavailable (decreasing the likelihood that Requestor would use the Arrangement as a marketing tool) and not requiring physicians or Treatment Centers to prescribe or use its Product exclusively.

OIG also observed that the Arrangement implicates the Beneficiary Inducement CMP because Requestor should know that patients likely would be influenced to select a Treatment Center and a physician practicing at a Treatment Center over other providers and suppliers because the Arrangement facilitates the patient to travel to the Treatment Center to obtain the Product and enables the caregiver to remain near the Treatment Center during a patient’s treatment with the Product. However, OIG concluded that the Arrangement satisfies the Promotes Access to Care Exception to the Beneficiary Inducements CMP because it is likely that the support Requestor provides could remove or reduce potential financial and geographic barriers to receiving treatment with the Product and thus could improve a beneficiary’s ability to obtain items and services payable by Medicare or Medicaid. Additionally, it poses a low risk of harm to Medicare and Medicaid beneficiaries and programs because: (1) it is designed to increase patient safety by facilitating access to treatment with the Product and assuring adequate post-treatment monitoring, consistent with recommendations of the FDA and the patient’s treating physician; (2) it is unlikely to increase costs to federal healthcare programs or beneficiaries through overutilization or inappropriate utilization because the Product is a one-time, potentially curative treatment; and (3) it does not raise patient safety or quality-of-care concerns, as it is designed to increase patient safety by facilitating compliance with Product administration requirements.

Analysis

OIG would decline to impose sanctions under the Beneficiary Inducements CMP because of its evaluation that Requestor’s Arrangement fell within the Promotes Access to Care Exception. As OIG stated in the preamble to its Final Rule interpreting this exception, “We recognize that there are socioeconomic, educational, geographic, mobility, or other barriers that could prevent patients from getting necessary care (including preventive care) or from following through with a treatment plan. Our interpretation of items or services that ‘promote access to care’ encompasses giving patients the tools they need to remove those barriers.”¹

OIG’s determination that Requestor’s Arrangement satisfies the Promotes Access to Care Exception to the Beneficiary Inducement CMP is consistent with its evaluation of similar arrangements.² OIG has also found that other arrangements meet the exception.³

In contrast, OIG will find that the exception is not met where the proposed offering does not help a beneficiary access federally reimbursable items or services.⁴

The Promotes Access to Care Exception to the Beneficiary Inducements CMP does not apply to the AKS. Under the AKS, OIG considers not only whether the remuneration might influence a beneficiary to select a particular provider, practitioner, or supplier, but also whether it could influence a person to select an item or service that is reimbursable by federal healthcare programs. Although this additional risk is not discussed in the analysis of the Promotes Access to Care Exception, OIG often will rely on a similar analysis to determine that it would not impose sanctions under the AKS.⁵

Though OIG concluded that it would not sanction this pharmaceutical manufacturer for its Arrangement, this Opinion — and others exploring the sanctionability of offers of assistance to federal healthcare program beneficiaries — illustrates that healthcare stakeholders should work with experienced counsel to carefully analyze contemplated arrangements to ensure compliance with healthcare fraud and abuse authorities. For more information on OIG Advisory Opinion No. 24-13 or other issues addressed herein, please contact AGG Healthcare attorney Lisa Churvis.

[1] 81 Fed. Reg. 88388, 88393 (Dec. 7, 2016).

[2] See, e.g. AO 24-05 (assistance for travel-related expenses protected because it could increase patient safety, and the limited number of treatment centers and extended stay requirements during treatment created financial and geographic barriers to care that requestor’s arrangement could alleviate); AO 24-03 (same); AO 21-08 (same); AO 20-09 (same); AO 20-02 (same).

[3] (See, e.g. AO 19-02 (approving loan of limited-functionality smart phone that could run an application that allowed a patient to access the full scope of benefits of a digital medicine drug); AO 17-01 (approving free or reduced-cost hotel lodging and hospital cafeteria meals).

[4] See, e.g. AO 23-08 (exception not applicable for offer of hearing aid where hearing aid was not covered by Medicare and was not necessary for a Medicare-covered implantable hearing solution to function); AO 20-08 (no protection for big-box retailer gift cards that would reward patients who access care because the gift cards did not improve patients’ ability to access items and services payable by Medicaid or Medicare and were cash equivalents not protected by the exception); AO 19-03 (home safety assessment performed by community paramedic did not improve patient’s ability to obtain federally reimbursable items or services); AO 18-05 (care coordination center that provided access to a resource library, support groups, stress reduction workshops, and low-cost rideshare programs did not meet the exception because its offerings did not necessarily improve a beneficiary’s ability to obtain federally reimbursable items or services).

[5] See, e.g. AO 19-02.