What’s New/Significant

The Office of Inspector General (OIG) of the U.S. Department of Health & Human Services on Jan. 15 approved an arrangement through which a pharmaceutical manufacturer (Requestor) sought to provide financial assistance for travel, lodging and other expenses to certain patients who are prescribed the Requestor’s drug (Arrangement). The OIG concluded that while the Arrangement could potentially generate prohibited remuneration under the federal Anti-Kickback Statute (AKS) if the intent was to induce or reward referral of federal health care program business, the OIG would not impose administrative sanctions in connection with this Arrangement.

The OIG limited the application of its opinion to the Requestor and to the specific facts of the Arrangement. While the OIG’s decision not to impose sanctions suggests it might be open to similar kinds of patient assistance programs, manufacturers must carefully evaluate the legal implications of these programs.

Facts

Requestor’s drug is a personalized medicine made from the patient’s own cells approved for two indications—one in adults and one in children and young adults. It is a one-time, potentially curative treatment. The drug has a black box warning and is subject to a Risk Evaluation and Mitigation Strategy (REMS), requiring only REMS-certified physicians to infuse the drug at 100 inpatient and outpatient infusion facilities certified in the U.S. Physicians are required to monitor patients for signs and symptoms of certain life-threatening or fatal reactions two to three times during the first week following drug infusion. Patients must remain within proximity of the center for at least four weeks after infusion. Patient proximity to the center is important for patient safety because improper treatment of a potential reaction could negatively impact the drug’s effectiveness or harm the patient.

Under the Arrangement, the Requestor proposed the following:

  • Reimbursement for gas and tolls or arrangements for transportation via bus, rail, rental car or air travel for a patient and caregiver to and from the closest center.
  • Reimbursement for modest lodging near the center during drug treatment and post-treatment monitoring if the patient is not eligible to receive lodging from the center.
  • Out-of-pocket expenses of up to $50 per person per day for costs including meals and parking.

Eligible patients must (i) have been prescribed the drug for the indication approved by the U.S. Food and Drug Administration (FDA), (ii) have a household income that does not exceed 600% of the federal poverty level, (iii) live more than two hours or 100 miles from the nearest center, and (iv) have no insurance for nonemergency medical travel.

Requestor certified that it has a written policy detailing the eligibility criteria, applies the policy uniformly and consistently, and maintains individualized documentation reflecting each patient’s eligibility and any reimbursement provided.

The Arrangement requires patients and caregivers to agree not to seek reimbursement from federal health care programs for costs covered by the Arrangement.

Analysis

The OIG reviewed the Arrangement to determine whether it implicated the AKS as well as the Beneficiary Inducements Civil Money Penalties section of the Social Security Act (Beneficiary Inducements CMP).

AKS. The OIG determined that the Arrangement did implicate the AKS, which makes it a criminal offense to knowingly and willfully offer or receive remuneration to induce or reward the referral of items or services reimbursable by a federal health care program. The Arrangement implicated the AKS in that (i) the assistance provided to patients could influence them to purchase the drug and utilize a center that they may not have otherwise chosen for treatment, and (ii) the assistance was a form of remuneration to the centers.

The OIG ultimately concluded, however, that it would not impose sanctions on the Requestor for possible violations of the AKS for the following reasons:

  • Benefit to Patients. The Arrangement provides greater access to care for lower-income or rural patients by enabling them to travel and stay in proximity to a center. These patients would otherwise be disproportionately impacted by significant health risks, including death, if they were unable to obtain treatment at a center.
  • Adherence to FDA Requirements. The Arrangement allows a limited number of REMS-certified physicians to meet FDA requirements that patients receive treatment at a center.
  • Likelihood of Marketing Potential. The drug is a one-time, potentially curative treatment, and the Arrangement does not raise seeding concerns that are sometimes present in other arrangements. These conditions limit the likelihood that the Arrangement would serve as a marketing tool to drive patients to the drug.
  • No Duplication of Reimbursement. The Arrangement does not provide charitable assistance that is otherwise available from a center. The Requestor provides travel and lodging only to the center nearest the patient that is accepting new patients.

Beneficiary Inducements CMP. The OIG also concluded that the Arrangement implicated the Beneficiary Inducements CMP, which prohibits offering any remuneration to a Medicare or Medicaid beneficiary that could reasonably influence a patient to select a physician or center that the patient may not otherwise have chosen. Under the Promotes Access to Care Exception to the Beneficiary Inducements CMP, however, the Arrangement (i) was unlikely to interfere with, or skew, clinical decision-making; (ii) was unlikely to increase costs to federal health care programs through overutilization or inappropriate utilization; and (iii) did not raise patient safety or quality-of-care concerns. In its analysis, the OIG concluded that the Arrangement satisfied the exception in that it (i) was not available under federal insurance programs, (ii) did not duplicate any patient assistance provided by the center, (iii) was designed to increase patient safety under the REMS and (iv) became available to a patient only after his/her physician prescribed the drug.