OIG Advisory Opinion Regarding Payments by a Medical Manufacturer for Travel, Lodging, and Other Costs – To Patients Who Are Prescribed the Manufacturer’s Drug. The legal reasoning.
The legal reason behind the OIG’s advisory opinion in the matter of the pharmaceutical that pays certain travel, lodging, and other costs follows. The OIG did find that, based on the submitted facts, the remuneration did not violate the Anti-Kickback Statute (AKS).
The OIG analyzed whether the facts, as presented by the pharmaceutical company, could be considered violations of the Anti-Kickback Statute including the “Beneficiary Inducements CMP. “The conclusion reached by the OIG was that the Office of Inspector General would not impose sanctions on Requestor under the Federal Anti-Kickback Statute or Beneficiary Inducements CMP in connection with the Arrangement.
Analysis of the AKS by the Office of Inspector General
The OIG stated, in its advisory opinion, that the Arrangement did touch upon the AKS in two ways:
- The offer of payment for travel, lodging, and other financial assistance should be considered “remuneration” which may include the patients who receive the remuneration to buy the Requestor’s Drug.
- As the travel, lodging, and additional financial assistance offer by the Requestor to the patients – allows the patients to “travel to, and stay near, a Center and Provider that the patient may not otherwise have selected for Drug treatment, this assistance constitutes remuneration to Providers and Centers, in the form of the opportunity to earn fees related to infusing the Drug, that may induce them to order the Drug.”
The remuneration (for travel, lodging, and expenses) is
- “inherently tied” to the “volume of referrals” of the Drug manufactured by the Requestor
- Potentially benefits the Providers and Centers – by “steering federally reimbursable business to them.”
The OIG advisory opinion states that the Office is normally concerned when manufacturers provide financial help (for travel, hotels, meals, and other related expense) to patients who are prescribed medications – because the drug manufacturer could use the remuneration to “generate business for themselves by steering patients to their drugs over competing drugs, which could be less expensive but equally effective.” The favoring of the manufacturer over other drug makers could result in improper cost increases to the federal programs that pay for the medications and treatments.
The OIG’s analysis included these concerns:
- Even though the Requestor doesn’t request that the federal healthcare programs (such as Medicare and Medicaid) pay for the remuneration (the costs of the Arrangement), the manufacturer could increase the price of the drug to recoup its remuneration cost. This price increase could result in increased federal healthcare costs for the Drug.
- The arrangements for payment for travel, lodging, and financial insistence could “encourage manufacturers to compete for market share using the free items and services they provide to patients and referral sources. “
- “Because Requestor sets the eligibility criteria that facilities must meet to participate in Requestor’s network as a Center, Requestor theoretically could drive patient volume to a limited group of Providers that Requestor unilaterally selects in return for an agreement by the Providers to exclusively prescribe its Drug.”
The DOJ reported several new cases in which health care companies and doctors agreed to pay millions to settle claims of healthcare fraud due to AKS and Stark violations.
The reasons the OIG will not impose AKS sanctions on the Requestor for the Arrangement
The advisory opinion states the Office of Inspector General will not impose sanctions under the federal AKS for the following reasons:
- The pharmaceutical company certified that the remuneration is designed to help rural and indigent patients travel and be near a Center (or an “affiliated facility performing leukapheresis”) for the Drug treatment. The Drug treatment includes:
- Conditioning chemotherapy
- Infusion of the drug
- Monitoring of the patient after the infusion
Without the benefits, indigent patients or rural patients “could be disproportionately impacted by significant health risks or even death” if they couldn’t travel to and stay near an approved Center.
Some of the patients who are eligible for the Drug are “needy Medicare or Medicaid beneficiaries.”
Families with low-income who are eligible for financial assistance to travel to the Center for the treatment may not be able to afford the travel, lodging, and other Drug-related treatments including “expenses associated with staying for at least a month near a Center after treatment.”
The OIG added that there is evidence through patient interviews that the non-medical costs of travel and lodging are a concern for patients. Without the funds, patients would need to return home – and they would not receive “the benefit of FDA-required safety monitoring.”
The OIG states that the Office will permit the Requestor, for financially needy patients and rural patients, to pay for travel, living expenses, and other aid (for certain patients) – so they can obtain access to care that complies with the Drug’s recommendations (REMS and ETASU).
- The “modest lodging Requestor provides under the Arrangement following infusion enables physicians to meet the FDA requirements in the Drug’s prescribing information and to mitigate patient harm from potentially lethal Drug side effects.”
While the OIG is normally concerned when a drug-maker provides sizable remuneration to a patient – to use the manufacturer’s drug – the OIG does recognize the remuneration for the infusion of the Drug does allow “an eligible patient and his or her caregiver to follow the requirements of the Drug’s prescribing information.”
- “The FDA required Requestor to implement a Risk Evaluation and Mitigation Strategy (“REMS”), which includes elements to assure safe use (“ETASU”) to mitigate the risks of the Syndrome and neurological toxicities associated with the use of the Drug.” Only Centers that can meet the REMS and ETASU requirements (such as agreeing to be responsible for implementing proper safety procedures) may administer the Drug. This means there will only be a limited number of Centers that can administer the Drug. The efforts by the manufacturer to limit “drug distribution networks to particular facilities to reward their physicians may create risks under the Federal anti-kickback statute.”
In this case, however, the limited network of Centers is needed to help ensure patient safety and to comply with the FDA’s requirements to implement REMS and ETASU procedures. The OIG considers that the pharmaceutical company isn’t requiring that Providers prescribe their Drug exclusively.
“The Drug’s patient safety risks, and Requestor’s assurance that any willing facility that meets all REMS with ETASU requirements and Requestor’s uniform criteria may participate in the Arrangement, limit the likelihood that Requestor uses the Arrangement to reward a limited number of Providers who prescribe and administer its Drug.”
- The Drug is only prescribed in very specific cases – for patients with “relapsed or refractory Disease who have undergone two or more lines of systemic therapy.” The remuneration Arrangement is only available when the Drug “is prescribed and administered in accordance with its label. “Essentially, the Drug is a “treatment of last resort,” for patients who have the underlying Disease. The Drug is a “one-time, potentially curative treatment.” This means the Arrangement doesn’t raise the concern (often raised in other financial arrangements) that the Arrangement will induce patients to receive an initial dose of the Drug – in order to induce the patient to make further purchases (through a federal healthcare program) of the drug. The drug manufacturer also isn’t advertising the Arrangement. In short, the OIG reasoned that the Requestor isn’t using the Arrangement as a marketing tool to “drive patients to Requestor’s Drug. “
- Eligibility for the Arrangement is limited. Patients must live either more than 2 hours away or more than 100 miles away from a leukapheresis facility and Center. They must live 300 miles away to receive airfare assistance. This distance requirement also “mitigates the risk that Requestor uses the Arrangement as a marketing tool for patient referrals. “Other eligibility limitations also mitigate against using the Arrangement for Drug marketing purposes.
- FDA doesn’t pay the bills. While FDA does require the Providers inform patients that patients need to stay near a Center after the infusion for safety purposes – FDA does not have any authority to pay for travel and lodging for outpatients who receive the Drug.
- The pharmaceutical company “certified that due to the unique characteristics of the Drug’s manufacturing process and its safety risks, leukapheresis cannot take place at a medical facility unless it is either part of, or affiliated with, a Center and has been evaluated and approved as part of Requestor’s process for qualifying Centers to perform all stages of Drug treatment.”
“Requestor’s qualification process ensures that the leukapheresis facility is capable of correctly collecting, storing, packing, and shipping a patient’s cells and that the Drug can be properly matched to each individual patient.” In addition, Requestor certified that it limits reimbursement to obtain leukapheresis under the Arrangement to expenses incurred during a two-night stay.”
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Beneficiary Inducements CMP
The OIG concluded that “We believe the risk that the remuneration would interfere with, or skew, clinical decision making is sufficiently low here because, as discussed in detail in the Federal anti-kickback statute analysis above, the provision of remuneration during Drug treatment is designed to increase patient safety—and mitigate potentially lethal side effects—in connection with the Drug’s REMS with ETASU.”
“We conclude that the Arrangement presents a low risk of harm and satisfies the Promotes Access to Care Exception to the Beneficiary Inducements CMP.”
Limitations of the advisory opinion
The OIG advisory opinion states that the opinion is limited to the Arrangement – and not any ancillary arrangements.
The opinion of the OIG is also limited in the following ways:
- The opinion only applies to the Requestor and not to other individuals or entities.
- The opinion can’t be introduced into evidence by any individual or entity (other than the Requestor) to prove the person/entity didn’t violate the AKS.
- The opinion only, to the extent the opinion applies, applies to the statutory provisions identified in the opinion. “No opinion is expressed or implied herein with respect to the application of any other Federal, state, or local statute, rule, regulation, ordinance, or other law that may be applicable to the Arrangement, including, without limitation, the physician self-referral law, section 1877 of the Act (or that provision’s application to the Medicaid program at section 1903(s) of the Act). “The “Act” refers to the AKS.
- The advisory opinion doesn’t bind any agency other than the U.S. Department of Health and Human Services.
- The advisory opinion only applies to the specific arrangements set forth in the opinion.
- The opinion doesn’t apply to any claims of liability “of any party under the False Claims Act or other legal authorities for any improper billing, claims submission, cost reporting, or related conduct. “
- Other limitations set forth in the advisory opinion.
The OIG advisory opinion essentially provides that the financial Arrangement by the pharmaceutical company is warranted because the manufacturer isn’t using the Arrangement for marketing, the aid is necessary for qualified applicants from rural areas and due to indigency, the Drug infusion is a one-time possibly curative event, and for other reasons.
Doctors and medical practices should contact Cohen Healthcare Law Group, PC for legal advice on HIPAA right of access and other HIPAA issues. Our experienced healthcare attorneys help healthcare providers establish HIPAA compliance protocols