The Department of Health and Human Services Office of Inspector General (HHS OIG) recently issued an advisory opinion in response to a proposal by a drug manufacturer to enter into an arrangement with select hospitals to provide a certain number of trial units of a long-acting antipsychotic drug for inpatient use for treatment of adults with a specified Disorder. The manufacturer specifically asked HHS OIG if the arrangement would result in sanctions under the exclusion authority at section 1128(b)(7) of the Social Security Act or the civil monetary penalty provision at section 1128A(a)(7) of the Act, as those sections relate to the Federal anti-kickback statute.
Requestor noted that “medication nonadherence is common for patients” with the Disorder and that nonadherence leads to negative outcomes among patients, such as an exacerbation of symptoms, increased rates of hospitalization, and longer lengths of hospital stays, all of which can contribute to increased costs to the healthcare system. The Requestor went on to note that this Drug can provide uninterrupted medication coverage for an extended period of time (taken once per month), thereby reducing nonadherence and the risk of negative outcomes.
Background on the Proposed Arrangement
The Drug is administered by a health care professional via subcutaneous injection in either an inpatient or outpatient setting. When administered in an inpatient setting, it is not separately reimbursable by a federal health care program, and Requestor is not aware of a federal health care program that imposes a separate cost sharing obligation for the Drug. When administered to Medicare patients in an outpatient setting, the drug is covered by Medicare Part B or Part D, depending on which setting the drug is dispensed, but the Medicare patient is often subject to any applicable cost-sharing obligations in an outpatient setting.
Under the Proposed Arrangement, Requestor would allow hospitals that do not accept and dispense samples that comply with the Prescription Drug Marketing Act of 1987 to request up to 20 units per month, limited to 2 free units of the Drug (so 2 months) per eligible inpatient, per calendar year. The ordering system would prohibit pharmacists from placing an order that would result in the delivery of units beyond the hospital’s limit.
To participate, a hospital would have to register and enroll in the Proposed Arrangement through an online portal and would have to annually renew its participation. Upon initial enrollment, the program administrator would ship up to 5 free trial doses of the Drug, based on the request of the hospital’s pharmacist. Once the trial units are administered to eligible inpatients, the pharmacist could then place an order to replace those administered. The maximum inventory of the Drug a hospital could have is five units. Additionally, the hospital would need to certify that it will comply with terms and conditions.
For a patient to qualify for the free Drug, the patient must have been diagnosed with the Disorder, the administration of the Drug must be consistent with the label, and the patient must be a current inpatient at a Participating Hospital. Patients would not be obligated to continue using the Drug after discharge or after receiving their two free doses for the year. There are no known clinical barriers to transitioning from the Drug to another long-acting or oral antipsychotic medication.
The program would not be advertised in any mass consumption forums, but would instead be promoted via field-based sales representatives, Requestor-approved communications sent directly to hospitals, or prescriber-accessible websites. The Proposed Arrangement would not give any prescriber a financial incentive to prescribe the specific Drug for inpatients over any alternative.
HHS OIG Analysis
Ultimately, HHS OIG found that the Proposed Arrangement would generate prohibited remuneration under the Federal anti-kickback statute if the requisite intent were present, but HHS OIG would not impose administrative sanctions on the Requestor in connection with the Federal anti-kickback statute.
HHS OIG noted that “[t]he Proposed Arrangement would implicate the Federal anti-kickback statute because the free trial units would constitute remuneration that Requestor offers and provides to hospitals, and hospitals may be referral sources for the Drug.” However, the Agency goes on to say, “[b]ecause no safe harbor is available to protect the Proposed Arrangement, we evaluate the facts and circumstances of the Proposed Arrangement and assess risks such as overutilization, increased costs to Federal health care programs, corruption of medical decision-making, patient steering, and unfair competition. For the combination of the following reasons, we believe that the risk under the Federal anti-kickback statute would be sufficiently low.”
HHS OIG noted that Participating Hospitals would allow prescribers to make independent decisions about whether the Drug is clinically appropriate for a particular patient and no financial incentive is given to induce prescribers to prescribe the Drug as opposed to a competitor. Additionally, the Agency recognized that a Participating Hospital may avoid some costs of administering a daily oral antipsychotic for the duration of the patient’s stay, the Participating Hospital would still need to administer oral antipsychotic drugs for many patients before administering the Drug, either during the acute phase of an inpatient stay or to establish tolerability to the active ingredient.
Additionally, HHS OIG found that the Proposed Arrangement would be “unlikely to increase costs to the Federal health care programs” and could potentially even reduce costs over time. The Proposed Arrangement also “include[s] a number of safeguards to minimize the risk that the free trial units would be misused.”
As is the case with the HHS OIG advisory opinions, the opinion is limited to the specific facts presented by the Requestor in connection with the Proposed Arrangement. The opinion cannot be relied on by any company other than Requestor.