In Advisory Opinion No. 19-02, issued Jan. 29, 2019, the Department of Health and Human Services' Office of Inspector General (OIG) found that the requesting pharmaceutical manufacturer’s proposal to temporarily loan limited functionality smartphones to certain patients who are prescribed a particular antipsychotic medication did not constitute grounds for penalties under the beneficiary inducement prohibition of the Civil Monetary Penalties Law (CMP) or grounds for sanctions under the federal Anti-Kickback Statute (AKS).

The Food and Drug Administration has approved a digital medicine (DM) version of a drug manufactured by an affiliate of the requestor. The DM drug is embedded with a sensor, and when ingested, the DM drug sends a signal to a patch worn by the patient. This patch records the ingestion, as well as the activity and rest patterns of the patient, and sends this information via Bluetooth connection to a smartphone application. The information on the app is sent to a cloud-based server and can be accessed by the patient’s physician or other healthcare providers. The requestor proposed to loan refurbished smartphones, with the sole capability to use the app and to make calls, to patients who are prescribed the DM drug and who meet the following eligibility requirements:

  1. They have a prescription for on-label use of the DM drug.

  2. They meet applicable prior-authorization or other requirements of the patient’s insurer.

  3. They have an annual income below a specific percentage of the federal poverty level.

  4. They do not possess a device that can run the app.

  5. They are U.S. citizens.

The requestor would not advertise the proposed arrangement to patients, and a patient would have to return the loaned device at the conclusion of the patient’s DM drug therapy or the loaned device would be remotely disabled.

The OIG determined that the proposed arrangement implicates the beneficiary inducement prohibition of CMP and AKS because the ability to make calls on the loaned device would have independent value to a patient and, therefore, would constitute remuneration to the patient.

However, OIG determined that, although the proposed arrangement implicates the beneficiary inducement prohibition of the CMP, it does meet the Promotes Access to Care exception to that law. In analyzing the Promotes Access to Care exception, the OIG determined that the proposed arrangement promotes access to care because it allows beneficiaries to utilize the full benefits of the DM drug, including the adherence tracker. Further, the OIG found that the proposed arrangement presents low risk of harm to federal healthcare programs and beneficiaries for the following reasons:

  1. It is unlikely to interfere with clinical decision-making or skew prescriber decisions regarding the DM drug.

  2. It is unlikely to result in increased costs to the programs or beneficiaries due to overutilization or improper utilization by prescribers or by patients, since patients are not likely to overutilize because the proposed arrangement is not advertised.

  3. It is unlikely to raise patient safety or quality concerns and instead likely would increase patient safety due to increased adherence with the medication.

The OIG noted that, while the considerations under the AKS are slightly different, the same analysis that applied under the Promotes Access to Care exception applies in the context of the AKS. The OIG determined that the requestor would not be subject to sanctions under the AKS based on this same analysis and the safeguards in place under the proposed arrangement, including:

  1. The loaned device would be integrally related to the DM drug.

  2. The device would be available on a temporary basis and provided only to patients for whom a prescriber deemed the DM drug necessary and who otherwise would not be able to fully utilize the DM drug.

  3. The proposed arrangement would not be advertised.

The OIG noted that its opinion on the proposed arrangement applies only to the proposed arrangement and cannot be relied upon by any other entity or individual other than the requestor. However, this opinion is still useful, as it provides insight on the OIG’s analysis of the Promotes Access to Care exception of the beneficiary inducement prohibition of CMP. Further, the OIG cross-referenced the Promotes Access to Care exception analysis under the CMP’s beneficiary inducement prohibition in its analysis of the AKS. This suggests that the factors set forth in the Promotes Access to Care exception are among those to consider when determining the risk of an arrangement that implicates the AKS but does not meet a safe harbor.