OIG Issues Split Decision: Travel Assistance Approved, Fertility Support Under Scrutiny

Footnotes for this article are available at the end of this page.

On July 22, 2024, the U.S. Department of Health and Human Services Office of Inspector General (“OIG”) issued Advisory Opinion 24-05, evaluating two manufacturer-sponsored assistance programs under the federal Anti-Kickback Statute (“AKS”) and the beneficiary inducement prohibition of the Civil Monetary Penalties Law (“Beneficiary Inducement CMP”). The programs proposed offering financial aid to patients for treatment-related travel and fertility expenses. The advisory opinion was requested by a U.S.-based biotechnology company (the “manufacturer”) that develops gene therapies for severe genetic disorders.

The Drugs

The manufacturer’s assistance programs were designed to reduce barriers to accessing treatment for patients suffering from sickle cell disease or beta thalassemia, a rare blood disorder that causes anemia. The only curative treatment for these disorders is a bone marrow transplant, a procedure that is limited by the availability of stem cell donors. The manufacturer’s products provide an alternative treatment option.

• Drug 1 treats beta thalassemia by reintroducing modified blood stem cells into the patient. The drug is manufactured from the patient’s own stem cells and used to create functional copies of a specific gene, which are then administered through an intravenous infusion. Drug 1 requires only a single administration and has the potential to cure the disorder. Currently, there is one alternative gene therapy treatment available on the market.
• Drug 2 treats sickle cell disease by reintroducing modified blood stem cells into the patient. The drug is manufactured from the patient’s own stem cells and used to create functional copies of a specific gene, which are then administered through an intravenous infusion. Drug 2 is a one-time treatment that stabilizes the disease and prevents further progression. Drug 2 has no alternative gene therapy treatments.

Drugs 1 and 2 are developed through an identical process.

1. A patient consults with a physician at a manufacturer-approved treatment center to determine the medical necessity.
2. The patient’s stem cells are collected from the bone marrow through a process called mobilization and apheresis.
3. The manufacturer creates the modified blood stem cells, a process that takes approximately 10 to 15 weeks.
4. The patient undergoes conditioning, which involves several days of chemotherapy to destroy existing stem cells and create space in the bone marrow for the modified cells.
5. The drug is administered to the patient via intravenous infusion.
6. The patient is admitted to the treatment center for observation and recovery, which lasts from several weeks to two months depending on the specific drug.

The Proposed Patient Assistance Programs

The manufacturer presented the OIG with two distinct support programs: a travel assistance program and a fertility support program. These independent forms of assistance are available to all qualifying patients, including those in federal healthcare programs. Each program has its own eligibility requirements, allowing patients to qualify for one type of support even if they do not meet the criteria for the other.

Under the travel assistance program, the manufacturer would provide financial support to cover specific travel, lodging, meals, and related expenses. The support includes coverage for one patient and one caregiver for those aged 26 and older, and one patient and two caregivers for those under 26. The inclusion of caregiver assistance aims to reduce post-infusion complications and improve the patient’s survival and overall outcome.

To qualify for travel assistance, a patient must:

1. have a household income at or below 600% of the federal poverty level (“FPL”);
2. meet the program’s distance requirements;
3. have a scheduled consultation at a treatment center to determine eligibility or have been prescribed one of the drugs for an on-label use; and
4. have exhausted coverage for travel expenses through their insurer or other source.

Partial coverage, up to the limits detailed below, is available for any qualifying non-covered expense where the patient obtains some assistance via an insurer or third party.

The financial assistance provided under the travel program includes:

1. airfare for patients living more than 300 miles from the nearest treatment center or ground transportation for patients living between 100 and 300 miles from the nearest treatment center;
2. lodging costs for those traveling more than 100 miles; and
3. a $50 per person per diem for meals, parking, and local transportation, limited to actual expenses and requiring the submission of receipts for reimbursement.

The manufacturer and a third-party travel vendor would implement and administer the travel assistance program.

Under the fertility support program, the manufacturer would offer patients up to $22,500 in financial assistance for fertility preservation services. The fertility support addresses two key issues. First, the program helps patients who might otherwise avoid treatment due to the risk of infertility caused by the necessary conditioning chemotherapy. Second, the program ensures that a patient’s treatment options are not limited by financial means or the availability of fertility treatments under different insurance plans or state Medicaid programs.

The manufacturer would partner with a third-party vendor to administer the fertility support program. Patients could use the financial assistance to cover some or all costs associated with specified fertility preservation procedures and storage, including sperm banking and egg freezing. The program is designed to provide a one-time award that the patient could use for multiple fertility cycles or attempts until the funds are exhausted.

To qualify for fertility support, a patient must:

1. have a household income at or below 600% of the FPL;
2. have an on-label prescription for one of the drugs; and
3. confirm that they have attempted to obtain, or exhausted, insurance coverage or other third-party financial support for fertility treatments.

The manufacturer certified that it would implement several safeguards to mitigate the risk of abuses related to the programs. First, the manufacturer would not advertise the programs beyond providing general information about the available resources to treatment centers, physicians, and patients. Second, the manufacturer would not use the programs as marketing tools to drive product selection, utilization, or referrals. Third, the manufacturer would not require any treating physician or treatment center to use the drugs exclusively for patients to be eligible for program participation.

The Travel Assistance Program Analysis

The OIG determined that the travel assistance analysis implicates the AKS because the remuneration could induce the patient to select the drug over an alternative treatment or therapy. The OIG also determined that the travel assistance constituted indirect remuneration to the treating physicians and treatment centers (via program reimbursement for treatment related services) through the ability to treat patients they would not have otherwise treated but for the travel assistance. The proposed arrangement was unable to satisfy any AKS safe harbor.

However, the OIG concluded that the risk of fraud and abuse generated by the travel assistance was sufficiently low for several reasons, including:

1. The program’s ability to improve access to care by removing financial barriers for patients to receive medically necessary care they could not otherwise obtain because of the travel expenses.
2. The program ensures compliance with FDA label instructions for post-infusion observation and enhances patient survival rates and overall outcomes by involving caregivers in the recovery process.
3. The program is distinguishable from a problematic seeding arrangement because each drug involves a one-time treatment that does not require additional referrals and is unlikely to increase future federal program expenditures.
4. The program incorporates safeguards to prevent the manufacturer from advertising or promoting the assistance to influence product selection, utilization, or referrals. Additionally, it does not include any exclusivity provision obligating physicians or treatment centers to use or prescribe the drug.

The OIG next analyzed the travel assistance program under the Beneficiary Inducement CMP. The OIG determined that the travel assistance might constitute prohibited remuneration, as the manufacturer would know that the financial assistance might induce beneficiaries to choose one of the approved treatment centers and affiliated physicians over another provider offering an alternative therapy. Unless an exception applies, arrangements that generate prohibited remuneration could be subject to administrative sanctions.

The OIG evaluated the travel assistance program to determine if it qualifies for the exception for remuneration that promotes access to care and poses a low risk of harm. To promote access to care, the remuneration must improve a patient’s ability to obtain medically necessary items or services, encourage or support access to care, or make accessing care more convenient. For it to be considered low risk of harm, the remuneration must not interfere with or skew medical decision-making, increase program costs or utilization, or raise concerns about patient safety or quality of care.

The OIG determined that the travel assistance program qualified for the exception. First, the travel subsidies promoted access to care by enhancing a beneficiary’s ability to obtain necessary medical services by removing or reducing financial and geographic barriers to receiving treatment. Second, the travel subsidies presented a low risk of harm as they did not interfere with clinical decision making or increased patient safety and quality-of-care concerns. On the contrary, the OIG noted that the program supported compliance with the drug’s labeling by ensuring the patient received the requisite amount of post-infusion observation and recovery care. Lastly, the risk of overutilization or inappropriate utilization was low because the drug is administered as a one-time treatment. Because the travel assistance program satisfied the access to care exception, the proposed arrangement would be protected from sanction under the Beneficiary Inducement CMP.

The Fertility Support Program Analysis

The OIG approached the fertility support program under an identical framework because the proposed arrangement implicated the AKS and Beneficiary Inducement CMP for the same reasons described above. However, the OIG declined to evaluate the specific compliance risk presented by the fertility support program because “it lack[ed] sufficient data.” The OIG’s unwillingness to undertake the risk assessment necessitated an unfavorable opinion and conclusion that the fertility support program could generate prohibited remuneration under the AKS and Beneficiary Inducements CMP.

The OIG’s decision to not evaluate the fertility support program was based on the agency’s concerns about the evolving field of gene therapy treatments and their rapid growth in the healthcare marketplace. The OIG stated that the “treatments are novel, and much is yet unknown about them and optimal arrangements for ensuring appropriate access to them.” It was this uncertainty that prevented OIG from evaluating the specific risks and the concerns of providing the manufacturer prospective immunity after implementing the arrangement.

The OIG did caveat its decision by acknowledging it may be willing to undertake a risk analysis of a similar proposal in the future once it collects sufficient data on the costs, benefits, risks, and outcomes of cell and gene therapy treatments. The OIG also suggested that its opinion does not foreclose CMS from testing a model that includes fertility services through its Center for Medicare and Medicaid Innovation, including through the Cell and Gene Therapy Access Mode. Lastly, the OIG stressed that the unfavorable opinion does not prohibit the manufacturer from implementing the fertility support program and noted that any enforcement action would require an assessment of its intent to support a sanction.

Takeaways

The OIG’s favorable opinion on the compliance risks associated with the manufacturer’s travel assistance program aligns with its previous opinions on similar arrangements that met the Beneficiary Inducement CMP access to care exception. While this guidance provides a valuable roadmap, it is crucial to remember that the favorable opinion is specific to the particular facts presented. Manufacturers seeking to implement a comparable travel assistance program must exercise caution when defining eligibility criteria, frequency, duration, and marketing practices for financial support. Additionally, any arrangement should include the appropriate safeguards to maintain a low-risk compliance profile that can withstand regulatory scrutiny.

The more interesting insights relate to the manner in which the OIG determined that the fertility support program presented an elevated compliance risk. The OIG’s reluctance to evaluate the risk associated with the manufacturer’s fertility support program is highly unusual. Typically, unfavorable advisory opinions include specific findings or justifications explaining why an arrangement poses an elevated risk of fraud and abuse under the OIG’s authorities. For instance, in Advisory Opinion 23-08, the OIG found that offering a free item or service could lead to steering, unfair competition, improper utilization, and quality and cost concerns. Similarly, in Advisory Opinion 23-06, the OIG concluded that the arrangement could result in patient steering and unfair competition by favoring referral sources willing to pay for the technical component of a laboratory service. Here, the unfavorable opinion lacks similar reasoning explaining why the arrangement presents an elevated compliance risk.

The curious reasoning raises additional questions. For example, why did the OIG issue a favorable opinion on the manufacturer’s travel assistance program if the agency is not comfortable providing prospective immunity in the gene therapy sector? Was the OIG’s unwillingness to undertake a risk analysis influenced by a recent manufacturer lawsuit concerning a recent unfavorable “verbal” advisory opinion involving a similar fertility support assistance program?¹ Does the OIG’s uncertainty in the gene therapy space prevent it from filing an enforcement action against a manufacturer operating a similar type of assistance program?

Manufacturers should continue to monitor related developments to stay current on compliance risks specific to the industry. For questions about this advisory opinion or any similar arrangement, please contact AGG Healthcare partner David Blank or your regular AGG attorney.

 

[1] Vertex Pharm., Inc. v. U.S. Dep’t of Health & Hum. Servs., et al, No. 24-cv-2046 (D.D.C. July 15, 2024).