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March 17, 2023

OIG Releases Advisory Opinion on Limited Provision of Free Drug

On February 23, 2023, the HHS OIG released an advisory opinion concerning a request by a pharmaceutical company (“Requester”) for review under the Anti-Kickback and Beneficiary Inducements CMP provisions of a program to provide patients with a certain drug free of charge for a limited time if they experience a delay in their insurance approval process (the “Arrangement”).  OIG found that the Arrangement lacked the requisite intent to violate the Anti-Kickback Act and did not generate prohibited remuneration under the Beneficiary Inducements CMP.

The drug at issue in OIG’s opinion treats an inherited genetic disorder that causes a severely compromised immune system. The condition, which impacts about six to fifteen new patients each year in the United States, is typically diagnosed within a few months after birth and is fatal if left untreated.   The drug is the only currently available therapy approved in the United States to treat the condition. Under the Arrangement, the Requester provides patients with a free 14-day supply of the drug if they experience a delay of at least 48 hours in receiving a coverage determination from their insurance. 

OIG noted that the Arrangement implicated Federal anti-kickback concerns but that the Arrangement was low risk. First, OIG found that the Arrangement is unlikely to lead to overutilization of the drug due to the limitations of the Arrangement.  It applies to patients who are diagnosed with the condition, are prescribed the drug for the first time, and are experiencing a delay in receiving a favorable coverage decision.  Second, OIG concluded that the drug is distinguishable from other “seeding programs'' where a manufacturer offers a limited amount of the drug to induce a patient to obtain subsequent supplies.  The Arrangement is a gap-filler for the insurance coverage determination process, and assuming approval, the patient and insurance company will be subject to cost-sharing obligations regardless of the initial Arrangement.  OIG also noted that the prescriber receives no financial benefit from the self-administered Drug and that the Arrangement imposes no cost on Federal health care programs. 

OIG also concluded that the remuneration offered by the Requestor under the Arrangement is unlikely to influence a beneficiary to purchase the drug from the specialty pharmacy that dispenses the drug.  First, OIG noted that Requestor does not own or operate the specialty pharmacy that dispenses the drug and, as a result, would not be considered a provider, practitioner, or supplier for the purposes of the Beneficiary Inducements CMP.  Second, OIGnoted that although the specialty pharmacy is a “supplier” under the CMP because it provides the drug, it is the only pharmacy that dispenses the drug. Thus, patients must obtain the drug from the specialty pharmacy regardless of the Arrangement. 

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