Not All Financial Assistance from Drug Companies Is Considered an Illegal Kickback, Says the OIG
At first blush, you might think it is crazy that a drug company could get away with paying all of those expenses to patients simply so the patients could take their specific drug. However, after looking at all of the facts related to the drug company’s program, the legality of the practice makes sense.
In this article, we will discuss the drug company’s request to the OIG, and we will delve into the reasons leading to the OIG’s conclusion that the financial assistance to patients is not an illegal kickback under the circumstances.
The Facts of the Case
The drug manufacturer requesting the OIG’s opinion makes a drug therapy for the treatment of a very specific type of disease (note: the OIG’s opinion redacts the specific names of the company and drug to protect trade secrets). The drug is not just a pill. Rather, it is a personalized medicine that is made from the patient’s own cells. The drug is a potentially curative treatment that is administered as a one-time infusion.
Administration of the drug involves multiple steps. First, patients undergo a process called “leukapheresis” in which certain cells are removed from the patient’s body. Second, those cells are sent to the drug company’s facility so they can be infused with the DNA of a particular protein. Third, the cells are then sent back to the treating facility where they can be infused into the patient’s bloodstream.
The drug treatment requires that the patient make two visits to a leukapheresis facility. The first visit is so the patient’s cells can be extracted, and the second is so the patient can undergo chemotherapy, infusion of the drug, and post-infusion monitoring.
Further, in compliance with medical care rules (called Risk Evaluation and Mitigation Strategy), the patient must stay within two hours of the leukapheresis facility for at least four weeks after the drug infusion.
The “Arrangement” Made Between the Drug Company and Patient
Because administration of the drug is so specific and requires the patient to remain within two hours of the leukapheresis facility, the drug company has an “arrangement” with patients. That arrangement consists of providing eligible patients, and one caregiver, with travel, hotel lodging, and certain out-of-pocket expenses for the duration of the leukapheresis process, the chemotherapy, the drug infusion, and the post-infusing monitoring.
Trying to get ahead of any appearance of impropriety, the drug company appropriately asked the OIG for an opinion about the arrangement to ensure that it did not run afoul of any federal anti-kickback statutes or other statutory sanctions.
The OIG’s Analysis and Conclusion that the Arrangement is Not Illegal
After discussing the facts presented by the drug company, the OIG was careful to begin by limiting the reach of its opinion to the specific facts presented in this case. While the OIG noted that there was a potential for an arrangement like the one presented by the requesting drug company to be a violation of the federal anti-kickback statute, and possibly other civil statutes. The OIG noted seven main reasons why the arrangement with patients would not lead to sanctions against the company:
- Help to Indigent and Rural Patients. The financial assistance is intended to help poor patients and patients who live in areas that are very far away from a leukapheresis facility, of which there are relatively few in the U.S. Without the financial assistance, concludes the OIG, indigent patients would be disproportionately impacted because they will be unable to travel and stay close to a treatment facility with their own funds.
- Facilitates Monitoring Patient. The “modest lodging” provided allows doctors to be close to and monitor the patient, in order to mitigate the possible lethal side effects of the drug.
- No Limit of Treatment Facility. The fact that the drug company will provide the financial assistance regardless of the treatment facility used for the drug shows that the company is not trying to reward a limited number of prescribers.
- A One-Time-Only Treatment. The fact that the drug treatment is both a treatment of last resort and a one-time-only treatment demonstrates that the drug company is not giving money to patients in order to induce them to keep using their drug. The OIG found it worth noting that the drug company does not advertise for this drug. It is only discussed by a patient’s physician once a patient is an appropriate candidate for the drug.
- Does Not Duplicate Charity Assistance. The financial assistance is not paid if a patient is able to receive lodging and have other expenses paid by a charity.
- Allows Patients to Use Drug as Prescribed. HHS does not have the authority to give financial assistance for travel and lodging to patients. Thus, the drug company’s arrangement allows a patient to follow the requirements of the drug.
- Satisfies Exception to Civil Sanction Rules. Though the arrangement may implicate civil statutes related to “Beneficiary Inducements,” the financial assistance satisfies the “Promote Access to Care” exception to those statutes.
Overall, the notion that a drug company will pay for a patient’s hotel and out-of-pocket expenses initially sounds Pharmaceutical Fraud. Yet, the devil is in the details. Once it is clear that the drug is a personalized, one-time-only drug; and that the financial assistance is geared towards leveling the playing field for poor and wealthy patients alike, then the financial assistance begins to make more sense.
It is important to remember, however, that the OIG’s advisory opinion is strictly limited to its facts. Other payments to patients for use of a particular drug could very well run afoul of federal anti-kickback laws. At Nolan Auerbach & White, LLP, we’ll make sure to keep a watchful eye on such cases.
If you have further questions on this or any healthcare subject, please contact the Whistleblower Firm – Nolan Auerbach & White, LLP. We have the experience and resources to protect Healthcare Fraud whistleblowers.