An essential component of patient care hinges on a provider’s ability to accurately and efficiently diagnose diseases and prescribe effective treatments. The U.S. Department of Health and Human Services, Office of Inspector General’s (OIG) favorable advisory opinion (25-07) facilitates a provider’s ability to do just that.
OIG approved a drug manufacturer’s (Manufacturer) proposal to offer a free laboratory test (Test) to help providers determine whether patients have a specific genetic or molecular mutation, and if so, whether those patients are candidates to be treated with Manufacturer’s FDA-approved drug (Drug) or a different FDA-approved competitor drug.
According to OIG, the proposed arrangement (Arrangement) constitutes remuneration to providers and patients, including Federal health care program enrollees, because the free Test may induce them to prescribe or purchase the Drug. OIG also notes that the Test has value even if patients have insurance because they still have cost sharing responsibilities associated with the Test, and that it may create opportunities for providers to bill for other future services. As such, OIG determined that the Arrangement implicates the Federal Anti-Kickback Statute (AKS) and the Beneficiary Inducements Civil Monetary Penalty (CMP), but concluded that the risk of fraud and abuse was sufficiently low to issue this favorable opinion because:
- The Test is an FDA-approved companion diagnostic test for the Drug and is required to determine whether the Drug (or a competitor drug) is indicated for patients. Manufacturer’s drug is only authorized for patients with positive Test results, while the competitor drug is authorized for those with positive or negative Test results;
- Manufacturer does not require or incentivize providers who order the Test under the Arrangement to recommend, prescribe, or administer any products Manufacturer makes, including the Drug;
- The risk of skewed clinical decision-making or steering is reduced because Manufacturer does not discuss the Drug in connection with the Arrangement, nor do providers receive any remuneration; and
- Manufacturer certified that it does not distribute materials about the Arrangement in a manner that takes into account a provider’s use of the Arrangement or prescribing history, including for the Drug.
OIG observed that other safeguards limit Manufacturer from targeting providers or patients in the future because:
- The lab performing the Test does not provide Manufacturer with any individually identifiable patient health information and Manufacturer prohibits its personnel from accessing data it gets from the lab;
- Manufacturer does not use data from the lab for sales and marketing purposes, nor does it proactively provide information about the Arrangement directly to providers or patients; and
- The terms of the contract between the Manufacturer and the lab prohibit the lab from promoting the Arrangement to providers or patients.
The Arrangement also satisfies the “Promotes Access to Care Exception” under the CMP for the reasons stated above and because it does not raise patient safety or quality-of-care concerns.
Oncology providers or life sciences companies interested in similar diagnostic and access-oriented programs should consult qualified counsel to ensure that such arrangements comply with applicable laws or safe harbors.
A complete copy of the Advisory Opinion is here.
Should you have any questions regarding the above or wish to have a proposed arrangement evaluated for compliance with applicable laws, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at [email protected].