On August 5, 2015, the Department of Health and Human Services Office of Inspector General (OIG) issued Advisory Opinion No. 15-11 (the “Advisory Opinion”) in which it positively opined on an existing bridge program pursuant to which the manufacturers that co-promote an antineoplastic drug (the “Requestors”) provide a temporary free supply of the drug to patients, including Medicare Part D beneficiaries, while they are awaiting coverage determinations from their respective health insurers related to the drug.

Temporary Free Drug Supplies Provided to Patients

Under the starter program, as described in the Advisory Opinion, the Requestors provide a limited supply of the antineoplastic drug to patients.  The temporary free drug supplies are dispensed by a pharmacy that does not fulfill prescription orders for the general public; rather it merely administers similar free drug programs for other pharmaceutical manufacturers and other third parties on a fee-for-service basis.  To be eligible for the program, an individual must be a new patient, receiving a prescription for the drug for an on-label diagnosis, insured, and have experienced at least a five business-day delay in receiving a coverage determination for the drug from his or her insurer.  Patients who qualify receive a free 30-day supply of the drug, with a 30-day refill available if the delay in receiving a coverage determination persists or the patient is actively appealing a coverage denial.

Requestors Would Not Be Subject To Administrative Sanctions Under the Anti-Kickback Statute

In concluding that it would not impose administrative sanctions under the Anti-Kickback Statute on the Requestors related to their sponsorship of the starter program, the OIG cited several factors.  First, the risk of overutilization is minimal because the arrangement applies only to on-label use of the drug and each patient enrolled in the program is in no case eligible for more than two 30-day free supplies.  Second, there is low risk of patient inducement based on the opportunity to receive free drugs, because the program is not actively marketed to patients, and—despite being open to all new patients—an extremely small percentage of the drug (0.0008%) is being sent to patients through this program.  Third, there is no risk of a prescriber overprescribing the drug for his or her own financial benefit, as the drug is self-administered and the prescriber does not bill any third party payor, including Medicare, for the drug.  Similarly, because the pharmacy dispensing the free drug supply to a patient under the starter program does not dispense to the general public, there is low risk that the program would induce the patient to obtain other federally-reimbursable drugs from the pharmacy.  Finally, there is no cost to federal health care programs, or any commercial payors for that matter, since the drugs are provided for free.

Interestingly, the fact that the OIG would permit a 30- to 60-day free supply of drugs to a Medicare Part D patient is a deviation from its guidance in a November 2005 Special Advisory Bulletin on Patient Assistance Programs for Medicare Part D Enrollees regarding the provision of free drugs to Medicare Part D enrollees outside the Part D benefit.  Therein, CMS indicated that a manufacturer could provide free drugs to a Medicare Part D enrollee, but would need to continue to do so through the end of the plan year.  It seems that OIG is permitting the provision of a temporary supply of a drug to a Medicare Part D enrollee for a limited time period because the drug does not yet meet the definition of “covered Part D drug” as defined in 42 CFR 423.100 – the enrollee’s Part D plan is not yet covering the drug, either because the Medicare Part D plan has yet to issue a coverage determination or it has denied coverage of the drug and the patient has initiated an appeal.

OIG Advisory Opinion Offers Insight Into OIG’s Position

While such starter or bridge programs are commonly offered by pharmaceutical manufacturers—particularly for high-cost, specialty drugs that are frequently subject to prior authorization—to   both commercially insured patients and federal health care program beneficiaries, there was no existing OIG position as to whether such programs implicated the Anti-Kickback Statute or existing OIG guidance as to potential safeguards that could be employed with such programs to minimize exposure under the Anti-Kickback Statute.   In February 2008, the OIG did approve a similar “free trial supply” arrangement involving a hemophilia drug that was reimbursable under Medicare Part B.  In OIG Advisory Opinion No. 08-04, the OIG cited similar safeguards, including that the program provided only a temporary supply (up to ten weeks), it entailed no cost to federal health care programs, patients had therapeutic alternatives and could readily switch treatments, and the federal health care program beneficiaries had a substantial—20%--cost-sharing for the product following utilization of the free temporary supply.  Unlike the Advisory Opinion in which all patients are entitled to a free temporary supply, the program discussed in OIG Advisory Opinion 08-04 provides a free temporary supply to approximately 10% of hemophilic patients selected by treating physicians.  In addition, both the August 5 Advisory Opinion and OIG Advisory Opinion 08-04 involve the free drug supply being dispensed by pharmacies that did not provide pharmacy services to the general public—a crucial fact relied upon by the OIG in determining that it would not subject the Requestors to administrative sanctions under the Beneficiary Inducement Civil Monetary Penalties Statute.

Although the Opinion can be replied on only by Requestors, pharmaceutical manufacturers sponsoring starter or bridges programs or interested in creating a starter or bridge program will find the safeguards discussed in the Advisory Opinion instructive in the design of their programs.