In its first advisory opinion of the year, the Department of Health and Human Services Office of Inspector General (OIG) issued a favorable advisory opinion on January 15, 2025 that addressed an arrangement by a pharmaceutical manufacturer to offer certain patients free access to a pharmaceutical product that has limited coverage by Federal health care programs. The opinion, offers guidance to pharmaceutical companies and administering providers about the mechanics of free or discount programs for their products or services that present low risk of fraud and abuse. The opinion aligns with the OIG’s recent assessment of a supplier’s loyalty program issued in December 2024.
The Approved Arrangement
The request that generated the new advisory opinion was submitted by a pharmaceutical manufacturer whose product is intended for initiation in patients with mild cognitive impairment or mild disease-related dementia and confirmed presence of amyloid pathology. Patients prescribed the product receive intravenous infusions once every two weeks in an outpatient setting, and may be infused in the treating physician’s office, outpatient locations with some affiliation with the treating physician, and/or independent infusion centers. If the product is covered by Medicare for the patient, there is an administration fee for its infusion under Medicare Part B that would be approximately $129.16 per infusion. The product does not have other Federal health care reimbursement currently.
The pharmaceutical company, however, currently runs a program to provide the product at no cost to patients, including Federal health care program enrollees, who meet the program’s eligibility criteria. Among other things, eligibility for the product is not contingent on past, present, or future purchases of the product and requires satisfaction of objective financial status criteria, including attestations by patients receiving the product that they are unable to afford cost-sharing associated with the product. It is this program that the manufacturer sought approval for from the OIG.
OIG Opinion
According to the OIG opinion, the program implicates the Federal anti-kickback statute and civil monetary penalties law with respect to both patients who are Federal health care program enrollees and their administering providers. It concluded this because participation in the program for free constitutes remuneration to Federal health care program enrollees that might induce the enrollee to continue using the product once it is reimbursable by the applicable Federal health care program. Additionally, the program provides remuneration to administering providers by giving them an opportunity to earn an administration fee when such fee is billable to a Federal health care program. Finally, no safe harbor to the Federal anti-kickback statute applies to the program.
Despite these potential concerns, the OIG concluded that the risk of fraud and abuse presented was sufficiently low. First, the arrangement is unlikely to inappropriately increase costs to Federal health care programs. No product given under the arrangement is billed to Federal health care programs, and the only cost related to the product that could be billed to a Federal health care program is the administration fee for the infusion only when a patient cannot afford cost sharing associated with it; the patient is free to switch products at any time; and eligibility for the product is not contingent on past, present, or future purchases of the product.
Second, the arrangement does not give prescribers a financial incentive to order the product. Of note, although the administering provider could charge an administrative fee for the infusion of the product, the risk that this fee would induce a physician to select this product over another is low given the physician could bill for both the product and the infusion if prescribing a different product.
Third, the proposed arrangement does not steer patients to any particular provider or insurance plan. Eligibility is not based on the provider, practitioner, or insurance plan of the patient; further, patients are free to change providers at any time without affecting their eligibility.
The OIG also determined that the arrangement does not implicate the Beneficiary Inducements CMP because, for the purposes of the CMP, pharmaceutical manufacturers are not providers, practitioners, or suppliers unless they own or operate, directly or indirectly, pharmacies, pharmacy benefits management companies, or other entities that file claims for payment under the Medicare or Medicaid program. And, even if this manufacturer fell into that category, the free product will be made available not based on a patient’s selection of a provider.