- July 1, 2024
- Alerts
OIG Approves Drug Refund and Discount Program
The U.S. Department of Health and Human Services, Office of Inspector General’s (OIG) trend of ensuring access to care in socially compelling circumstances continued with the issuance of its favorable Advisory Opinion (24-04). In this recent opinion, OIG permitted a corporate affiliate of a pharmaceutical manufacturer (Affiliate) to refund, waive, or delay receipt of payment (the Refund) for a therapeutic drug used to treat an extremely rare immunodeficiency disorder in children that typically results in death within two years after birth if left untreated. Additionally, OIG allowed the Affiliate to offer discounts on the drug when certain requirements are met (the Discount).
A manufacturer developed the only U.S. Food and Drug Administration-approved drug that may rebuild the immune system of pediatric patients diagnosed with this particular disorder. The Affiliate provides supply chain support services for the manufacturer’s drug, a one-time potentially curative treatment that specially trained surgeons implant in the patient. These surgeons administer the drug at only one treatment center in the country. The Affiliate created the Refund and Discount programs to address the treatment center’s hesitancy to purchase the drug and incur financial liability if insurers would not reimburse the center for the drug.
Although the Refund implicates the Federal Anti-Kickback Statute (AKS) and the Beneficiary Inducements Civil Money Penalty (CMP), OIG determined that it would not impose sanctions under these authorities because the Refund has appropriate AKS safeguards and is unlikely to influence patients to select a particular provider from whom to receive care. Similarly, OIG determined that the Discount does not generate prohibited remuneration because the statutory exception and regulatory safe harbor for discounts protects it. This is because –
It is important for entities to remember that this favorable opinion is based on unique and specific facts. Therefore, entities considering similar, socially compelling refunds or discounts for patients should consult legal counsel and proceed carefully to ensure compliance with the AKS and CMP.
A complete copy of Advisory Opinion 24-04 is available here:
Should you have any questions regarding the above, or would like to seek your own advisory opinion, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at info@garfunkelwild.com.
A manufacturer developed the only U.S. Food and Drug Administration-approved drug that may rebuild the immune system of pediatric patients diagnosed with this particular disorder. The Affiliate provides supply chain support services for the manufacturer’s drug, a one-time potentially curative treatment that specially trained surgeons implant in the patient. These surgeons administer the drug at only one treatment center in the country. The Affiliate created the Refund and Discount programs to address the treatment center’s hesitancy to purchase the drug and incur financial liability if insurers would not reimburse the center for the drug.
Although the Refund implicates the Federal Anti-Kickback Statute (AKS) and the Beneficiary Inducements Civil Money Penalty (CMP), OIG determined that it would not impose sanctions under these authorities because the Refund has appropriate AKS safeguards and is unlikely to influence patients to select a particular provider from whom to receive care. Similarly, OIG determined that the Discount does not generate prohibited remuneration because the statutory exception and regulatory safe harbor for discounts protects it. This is because –
- The Refund is not advertised and is limited in time and scope. It involves a one-time, potentially curative drug purchased in a three-year window for an exceedingly small patient pool. The Refund is disclosed on cost reports and invoices.
- Among other conditions, Refund eligibility requires the treatment center to obtain prior written approval from the patient’s insurer that the insurer will cover the drug for the patient and for the insurer to refuse or delay payment for the drug later despite its earlier approval.
- Any potential influence on where a patient gets care for the disorder occurs because of the drug’s manufacturing and distribution limitations, not the Refund.
- The Affiliate certified that its Discount involves a “discount” and that it meets the obligations as an “offeror” under the discount safe harbor.
It is important for entities to remember that this favorable opinion is based on unique and specific facts. Therefore, entities considering similar, socially compelling refunds or discounts for patients should consult legal counsel and proceed carefully to ensure compliance with the AKS and CMP.
A complete copy of Advisory Opinion 24-04 is available here:
Should you have any questions regarding the above, or would like to seek your own advisory opinion, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at info@garfunkelwild.com.