Providing Travel and Lodging to Patients Prescribed Certain Drugs is Not Necessarily Pharmaceutical Fraud
Indeed, the solution to a legal problem depends on the surrounding facts. The procedural television show Law & Order presents examples of that principle all the time. When someone is killed on the show, we try to determine whether it was murder, self-defense, or something in between. It all depends on the facts of the case.
That same principle – context matters – is also true with regard to how drug manufacturers handle financial assistance to patients who take certain medications. In some cases, it is legal for a drug manufacturer to provide money to patients for travel, lodging, and other expenses when that patient takes the manufacturer’s drug. OIG Advisory Opinion No. 20-02 explains the reasoning behind why for-profit companies giving financial assistance to patients can sometimes be appropriate.
Catalyst for the OIG’s Advisory Opinion-Financial Assistance
A drug company provides a medication that helps both children and adults in treating a specific disease. (The OIG typically protects companies by not identifying names or products in their published opinions.) The drug is a “personalized” medicine, in that it is a one-time treatment that is developed from the patient’s own cells. The medicine is potentially curative.
The drug developed by the drug company has certain requirements that may make it prohibitive for some patients who need the drug to be able to take the drug. Those requirements are as follows:
- A physician must monitor patients for four weeks after getting the drug because the drug has the potential for fatal reactions.
- Monitoring a patient requires the patient to be close to a facility that administers the drug.
- Only certain physicians and certain facilities, who will follow certain protocols, can prescribe and administer the drug.
Given those requirements, there may be patients who need the drug, but live too far away from a physician or facility to be able to be monitored for four weeks as the drug requires. Many patients in rural areas face this problem.
In addition, it may be far too costly for patients to rent a hotel room close enough to a facility to take advantage of the drug, even though it could help them. Thus, rural patients and patients of limited means may not have access to the potentially life-saving effects of the drug because of the monitoring requirements.
Who is Eligible for the Financial Assistance?
To solve the problem of access, the drug company came up with an arrangement in which it would provide financial assistance to cover expenses like travel, lodging, meals, and other out-of-pocket expenses to eligible patients, and one or two caregivers. To be eligible, a patient must meet the following criteria:
- Needs and was prescribed the drug company’s drug;
- Has a household income that does not exceed 600 percent of the Federal Poverty Level (median household income for those who received assistance in 2018 was $28,000);
- Lives more than two hours driving distance or 100 miles from the nearest facility that administers the drug;
- Has no insurance for non-emergency medical travel; and
- Agrees not to request reimbursement from federal health care programs for costs already covered by the drug company’s arrangement.
What Laws are Implicated by Such Financial Help?
The OIG pointed to two federal laws that may be implicated by a drug company providing financial assistance to its patients.
First, the federal anti-kickback statute makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a federal health care program. In other words, it could be a crime to pay money to motivate someone to take your company’s drug. The penalty for such a crime is serious. It provides for a maximum of $100,000 fine and/or 10 years in prison. The anti-kickback statute, however, has a safe harbor provision in which a company will not be held liable if a practice is “unlikely to result in fraud or abuse.”
Second, a federal law, called the Beneficiary Inducements CMP, could result in civil monetary penalties if a company offers money to a Medicare beneficiary, knowing that the money would influence the beneficiary to select a certain drug. There is a safe harbor provision related to that law as well, which removes any liability if the financial assistance is unlikely to (i) interfere with medical decisions, (ii) increase federal health care costs, and (iii) impact patient safety.
The OIG’s Analysis – The Drug Company’s Financial Assistance in this Case is Acceptable
Looking at the facts and the applicable law, the OIG determined that the drug company’s arrangement in this case would satisfy the safe harbor provisions of both the criminal anti-kickback statute and the civil Beneficiary Inducements CMP law. Thus, the OIG found the drug company’s arrangement legal under the circumstances.
The OIG came to that conclusion for six main reasons:
- Gives Help to Patients in Need. Poor patients, or those living in remote parts of the country would be disproportionately impacted by health risks or death if they could not travel to a facility to receive the drug and remain close for monitoring.
- Allows for Required Monitoring. The only way the drug can be safely administered is if a patient can be monitored for four weeks.
- Limited Treating Facilities. Because facilities that administer the drug must meet safety requirements, there are only a limited number of them in the country. Without financial assistance many patients in need would not be able to reach a facility for treatment.
- Patients Treated Only Once. Because the drug is a one-time treatment, there is no risk that the financial assistance would induce a patient to take the drug again or choose it over other medications.
- Does Not Duplicate Other Assistance. The financial assistance is not paid if a patient is eligible to receive lodging already from the treating facility.
- Government Does Not Provide Financial Assistance. Because the government does not have funds to give the kind of financial assistance contemplated by the drug company’s proposed arrangement, the drug company’s arrangement is not duplicating other government assistance.
Based on all of the above, the OIG concluded that it would not impose sanctions on the drug company requesting the advisory opinion in the scenario that the company presented. So, as you can see, the facts of a case matter. While some payments to patients may be illegal, others may not – it all depends.
If you have further questions about potential Pharmaceutical Fraud, please contact the Whistleblower Firm – Nolan Auerbach & White, LLP. We have the experience and resources to protect healthcare fraud whistleblowers.