OIG Determines a Drug Manufacturer’s Initiative to Cover Certain Patients’ Transportation Costs Poses Low Risk of Fraud and Abuse

The Department of Health and Human Services, Office of Inspector General (OIG) recently issued an Advisory Opinion analyzing an arrangement where a drug manufacturer (the “Requestor”) provides financial assistance to cover transportation, lodging, and meal costs for certain patients to obtain a gene therapy drug.¹  In Advisory Opinion No. 21-08, the OIG concluded that the proposed arrangement presented a low risk of fraud and abuse under the federal anti-kickback statute (AKS) and civil monetary penalty law (CMP), despite the potential transfer of prohibited remuneration from the Requestor to beneficiaries, physicians, and treatment centers.

The drug in question is a one-time gene therapy to improve vision, which was approved by the U.S. Food and Drug Administration (FDA) to treat individuals with a rare retinal disease. Prospective patients must first undergo a genetic test to confirm the existence of the genetic disorder and then receive an initial evaluation by the treating physician at a limited number of approved treatment centers to determine whether the patient has viable cells to undergo treatment. After the drug treatment, patients must also attend one follow-up appointment.

Under the arrangement, the Requestor offers certain eligible patients and one caregiver financial assistance for transportation, lodging, and meal costs for the initial consultation, drug administration (if the patient has viable retinal cells), and one follow-up appointment. To be eligible, patients must live more than 2 hours driving distance or 100 miles from the treatment center. If eligible patients are federal healthcare program beneficiaries, they also must declare they are unable to obtain the consultation or drug due to the travel expenses and verify their household gross income is equal to or below 600% of the Federal Poverty Level. In addition, the Requestor does not provide assistance for any costs that an insurer or other third party has agreed to cover.

Notably, the Requestor imposed several compliance safeguards to mitigate against the possibility of abusive practices associated with providing remuneration to beneficiaries, including (i) adopting a written policy that specifies the eligibility criteria and ensures the program will be administered in a uniform and consistent manner; (ii) documentation requirements confirming program eligibility and expense tracking, (iii) a prohibition on any advertising surrounding the assistance program; and (iv) requiring confirmation the patient will not seek reimbursement from federal healthcare programs for costs covered under the program.

When analyzing the proposed arrangement, the OIG noted several common fraud and abuse concerns associated with drug manufacturer’s offers to provide beneficiaries with travel, lodging, and meal assistance. First, patient assistance programs can steer patients to select the manufacturer’s drug over a less expensive therapeutic alternative. Second, patient assistance programs can stifle marketplace competition by increasing barriers to entry by forcing other manufacturers to expend additional resources to match the patient support services. Third, the program could increase federal healthcare program expenditures because the Requestor might offset the costs of the patient assistance program by increasing the drug’s price. Fourth, because the Requestor limits the number of facilities eligible to perform the treatment through strict eligibility criteria, the proposed arrangement provides remuneration to the centers and affiliated physicians in the form of the opportunity to earn fees related to the administration of the medication. The financial incentives could induce the physician to select the specific treatment over a less expensive option.

However, the OIG determined the arrangement presented a low risk of fraud under the anti-kickback statute for the following reasons:

• The arrangement provides access to the drug for federal healthcare program beneficiaries who lack the requisite financial resources to receive treatment that has the potential to improve their vision.

• The travel assistance enables eligible patients to adhere to the drug’s FDA-approved label requirements for evaluation and consultation prior to the drug’s administration.

• The reason the number of approved physicians and treatment facilities is very limited is due to legitimate and objective safety criteria, and here, the Requestor certified that it would not condition a facility’s ability to become or remain an approved center on the volume or value of drug treatments provided at that center.

• Because the drug is a one-time treatment, the arrangement is distinguishable from other problematic seeding programs where a manufacturer provides remuneration for an initial dose of a drug to induce patients to continue purchasing the medication.

• The arrangement included additional safeguards to mitigate the risk of fraud and abuse. Notably, the Requestor will not cover costs covered by third parties. In addition, the Requestor generally provides travel to the center nearest to the patient and accepts the individual’s insurance. However, because a patient could become ineligible for treatment if their condition deteriorates, if that center cannot schedule treatment within three months, the Requestor provides assistance for the patient to undergo treatment at the next closest center that can treat the patient within three months.

The OIG also acknowledged that the arrangement implicated the CMP’s beneficiary inducement prohibition because the Requestor’s assistance would influence a patient to select a specific treatment center and physician to administer the drug. Where an arrangement implicates the CMP, the OIG will examine the offering to determine if an exception is satisfied in evaluating a program’s overall compliance risk profile.

Here, the OIG determined that the arrangement satisfied an exception because the remuneration promoted access to care and posed a low risk of harm to beneficiaries and the applicable federal payors. Specifically, the OIG found that the Requestor’s coverage of a beneficiary’s transportation, lodging, and meal expenses eliminated or reduced economic barriers to receiving the treatment. The OIG also concluded the arrangement presented a low risk of harm because the remuneration was (i) unlikely to interfere with, or skew, clinical decision making; (ii) unlikely to increase costs to federal healthcare programs or beneficiaries through overutilization or inappropriate utilization because the drug is a one-time treatment for a discrete patient population; and (iii) did not raise patient safety or quality-of-care concerns. In sum, the arrangement did not constitute an improper beneficiary inducement because the program increases access to care by reducing cost barriers to treatment, increases patient safety, and improves compliance with the FDA-approved labeling requirements.

While informative, it is important to note that the OIG’s Advisory Opinion is expressly limited to the Requestor and specific arrangement disclosed in the Opinion and cannot be relied upon by any other person.

For more information, please contact David M. Blank or Charmaine A. Mech.

[1] OIG Advisory Opinion No. 21-08 (Jul. 8, 2021).