The decision has significant practical implications. First, the decision affirms that the AKS is not limited to what the government might characterize as “corrupt transactions,” aligning with decisions in the Second and Fourth Circuits. Second, the advisory opinion (AO) process remains a critical compliance tool, and requestors now have a stronger basis to expect reasoned engagement with OIG on a developed evidentiary record. Third, the court’s holding that the 60-day deadline runs from receipt of a request, and cannot be tolled by regulation, changes the dynamics of the AO process. Finally, the decision may affect other HHS processes governed by mandatory statutory deadlines, including the CMS National Coverage Determination process and potentially even the FDA Citizen Petition process. 

Statutory Framework

The AKS makes it a criminal offense to knowingly and willfully offer or pay remuneration to induce a person to purchase, order, or arrange for federally reimbursable items or services.² The statute covers remuneration provided directly or indirectly, in cash or in kind, and includes safe harbors for specified arrangements.³

The BIS separately prohibits offering or transferring remuneration that a person knows or should know is likely to influence a Medicare or state health care program beneficiary’s selection of a particular provider, practitioner, or supplier.⁴ The BIS includes a statutory exception for remuneration that promotes access to care and poses a low risk of harm to patients and federal health care programs.⁵ OIG’s regulations explain that the exception covers items or services that improve a beneficiary’s ability to obtain care through a federal health care program and are unlikely to skew clinical decision-making, increase program costs through overutilization or inappropriate utilization, or raise patient-safety or quality-of-care concerns.⁶

Congress required the Secretary of HHS (who has delegated his authority to OIG) to issue advisory opinions within 60 days after receiving a request.⁷OIG regulations, however, started the clock only after formal acceptance and permitted tolling while OIG sought additional information or outside expert advice.⁸

Vertex’s Fertility Support Program and OIG’s Advisory Opinion

Vertex developed a gene therapy for sickle cell disease and transfusion-dependent beta-thalassemia. The treatment requires intensive chemotherapy that can cause infertility. In its advisory opinion request, Vertex proposed providing eligible patients with up to $70,000 for fertility services, including counseling, fertility drugs, collection and storage of oocytes or sperm, genetic testing, intrauterine insemination, and in-vitro fertilization procedures.⁹The proposed program would be available only to patients who had been prescribed the gene therapy for an FDA-approved indication, had a household income at or below 670% of the federal poverty level and whose insurance did not cover those services.

More than a year after receiving the request, OIG issued an unfavorable opinion (or, rather, determined that it did not have sufficient information to issue a favorable opinion). OIG concluded that the program would provide remuneration to patients in the form of the fertility support and to providers because it creates an opportunity for treatment centers and physicians to earn fees associated with treatment. But, OIG determined that it lacked data to evaluate the relevant factors for assessing the potential fraud and abuse risks of these remuneration streams (e.g., whether the proposal would increase or decrease access to health care services; increase or decrease costs to federal health care programs; improve or worsen patient outcomes; create unfair competitive effects; and risk improper steering). Without such data, OIG could not conclude that the arrangement would pose a sufficiently low risk of fraud and abuse to grant prospective immunity, i.e., a favorable opinion. Consequently, OIG concluded that the proposed fertility support would generate prohibited remuneration under the AKS if the requisite intent were present.

OIG also concluded that the program would generate prohibited remuneration under the BIS and that it lacked data that would allow it to determine whether the proposed fertility support would improve the ability of patients to access the product such that the Promotes Access to Care Exception to the BIS would apply.

Vertex challenged both the advisory opinion and HHS’s timing regulations. The U.S. District Court for the District of Columbia granted summary judgment to HHS and Vertex appealed.¹⁰

D.C. Circuit Decision

The AKS does not require remuneration or inducement to be corrupt

The court held that “induce” and “remuneration” carry their ordinary meanings. “Induce” means to influence or prevail on a person, while “remuneration” includes valuable compensation such as payments, goods, or services.¹¹ The court rejected Vertex’s argument that the AKS reaches only corrupt transactions.

The statutory safe harbors were central to the court’s reasoning. If “induce” were limited to a specialized meaning in criminal law, i.e., one that incorporated common law liability for criminal solicitation or facilitation, many safe harbors protecting ordinary health care transactions, such as certain employment compensation and cost-sharing waivers, would have little work to do. Reading the terms broadly gives effect to the statute’s structure and its detailed exceptions (and the related regulatory safe harbors).¹²

Applying that interpretation, the court concluded that paying up to $70,000 for fertility services is remuneration intended to influence patients who might otherwise decline treatment because of fertility concerns.¹³ The court therefore affirmed the lower court’s AKS analysis. The court did not decide whether the arrangement also provided remuneration to treatment centers or physicians through the opportunity to earn treatment-related fees.

OIG must meaningfully address evidence supporting a statutory exception.

In contrast to its AKS analysis, the court held that OIG’s determination that the program would violate the BIS was arbitrary and capricious because OIG failed to reasonably explain why the Promotes Access to Care Exception did not apply.¹⁴ Vertex submitted evidence including: studies showing that fertility concerns deter patients from treatment; evidence that patients lack financial means to afford fertility treatment; and CMS guidance recognizing that the lack of access to fertility treatment presents a significant barrier to gene therapy.¹⁵

OIG responded that it “lack[ed] data,” but did not identify what information was missing, explain why it could not obtain that information, or address why Vertex’s evidence was insufficient.¹⁶ The court held that this conclusory denial did not satisfy the Administrative Procedure Act’s requirement for reasoned decision-making.¹⁷

HHS regulations that delay the 60-day advisory opinion deadline are unlawful.

The court also struck down the regulatory provisions that delayed or tolled the advisory opinion timeline. The AKS requires the Secretary of HHS to issue an advisory opinion no later than 60 days after receiving a request.¹⁸ OIG regulations nevertheless added up to 10 business days for formal acceptance, and stopped the clock while OIG requested additional information or awaited expert advice.¹⁹ The court held that these provisions conflicted with the statutory text.

The court further explained that an agency’s practical need for additional time in a complex area cannot expand its statutory authority, and the absence of a specified consequence for missing the deadline does not authorize the agency to regulate around it. The court set aside 42 C.F.R. §§ 1008.39(a) (second sentence), 1008.41(e), and 1008.43(c) to the extent they tolled the statutory period.²⁰

Key Takeaways and Implications

Broad Reach of the AKS. The Second, Fourth, and D.C. Circuits now read “induce” and “remuneration” broadly.²¹This evolving caselaw creates a more difficult landscape for patient support arrangements (and certain other arrangements): a program may implicate the AKS even when designed to facilitate access to care, address a legitimate medical need, or reduce a financial barrier, even if it does not include corrupt medical decision-making. A legitimate patient access objective does not, by itself, place an arrangement outside the AKS. Given the AKS’s broad reach, companies should design programs to fit within a safe harbor or statutory exception wherever possible, recognizing other legal and factual defenses commonly exist on a case-by-case basis (e.g., good faith, no quid pro quo, reliance on program-specific guidance from various agencies, etc.).

Potential Tension with OIG’s Other Patient Travel Support AOs and Impact on OIG Analysis Going Forward. OIG has issued favorable AOs for patient travel support programs, including AO 20-02, AO 24-03 and AO 25-06.²² Those programs covered travel, lodging, meals, and related expenses for patients receiving gene therapy at specialized treatment centers. OIG recognized that the arrangements implicated the AKS but found a sufficiently low risk of fraud and abuse to warrant favorable treatment. It also found that the support satisfied the Promotes Access to Care Exception because it reduced geographic and financial barriers to treatment at a limited number of qualified centers. In responding to the D.C. Circuit’s order that OIG must now reconsider whether the Promotes Access to Care Exception applies, OIG will have to consider whether an unfavorable advisory opinion to Vertex on that specific point could create tension with those other opinions. It could raise broader questions around whether OIG applies a consistent analytical framework across AOs.

The court’s decision also arguably goes further than OIG did in the AO. OIG only concluded that it did not have sufficient data to issue a favorable AO around the AKS issues, and then issued an unfavorable opinion hypothetically conditioned on the requisite nefarious intent being present. The D.C. Circuit arguably went further in condemning the proposed fertility program and its implications under the AKS; the court more strongly asserted its belief that the program would indeed violate the AKS. It is unclear how that thinking, particularly on a potentially underdeveloped record, might impact OIG’s assessment of these issues going forward, including whether OIG might be now less likely to issue favorable opinions because of the court’s framing of how this program may implicate the AKS.

The AO Process Is Tightened and Potentially Other HHS Programs are Affected. The decision reinforces the significance of the AO process. OIG must now do more than state that it “lacks data”: it must identify the information it needs, explain why it could not obtain it, and address why the applicant’s evidence is insufficient. For companies seeking an AO, a complete, well-organized record is therefore strategically important because it can narrow disputed issues, support engagement with OIG, and provide a basis for judicial review if the agency relies on a conclusory rationale.

Following the decision, OIG updated its website to acknowledge the unlawful timing regulations and stated that it intends to continue administering advisory opinion requests in accordance with 42 C.F.R. Part 1008.²³ Because the agency almost never issues an advisory opinion within the statutorily mandated 60-day deadline, the decision could significantly affect OIG’s advisory opinion process. Importantly, while the decision gives requestors clear deadlines and potential protection from unexplained conclusions, it does not require OIG to issue a favorable opinion. Previously, OIG could rely on 42 C.F.R. § 1008.15(c) to decline a request or decline to issue an opinion when an informed opinion could not be made, or could be made only after extensive investigation, clinical study, testing, or collateral inquiry. Although the court did not expressly invalidate this provision, OIG’s ability to rely on it going forward is uncertain, given that the practical effect of the court’s decision is that OIG must meet its statutory deadlines.

Now, constrained by the 60-day deadline without the ability to toll it, OIG may be more inclined to issue unfavorable opinions where it cannot meet the deadline. In exchange for more time to consider the matter and potentially issue a favorable opinion, OIG might ask requestors to agree they will not challenge the agency’s timeliness. Or it may be that informal discussions between OIG and a potential AO requestor prior to AO submission may effectively allow both parties more time to define the type of record evidence that OIG would find most helpful in making a decision withing the 60-day window. In any case, and outside limited statutory exceptions, OIG remains statutorily required to issue an opinion.²⁴Combined with the Court’s mandate that OIG engage substantively with the evidence, the AO process serves as a critical compliance tool for assessing AKS and BIS exposure.

Implications Across HHS: Statutory Deadlines as Hard Deadlines. The court’s invalidation of OIG’s tolling regulations means the OIG advisory opinion 60-day deadline runs from receipt of the request and cannot be delayed by OIG. That reasoning could affect other HHS processes with fixed response periods, including CMS National Coverage Determinations,²⁵ where agencies may delay accepting a request or toll deadlines, or even the FDA Citizen Petition process, in which FDA has 180 days to rule upon a Citizen Petition.²⁶ Companies should reassess statutory and regulatory deadlines that affect their submissions and treat them as potentially enforceable rather than discretionary.

King & Spalding is an industry leader in helping Life Sciences Companies comply with fraud and abuse laws, including the federal Anti-Kickback Statute. We routinely consult with companies on compliance issues and assist with developing and evaluating potential patient support arrangements. We also regularly work with OIG in many capacities, including through the OIG advisory opinion process. King & Spalding is happy to assist companies with developing patient support programs, with or without obtaining an OIG advisory opinion, to help ensure companies meet government expectations and take necessary steps to help avoid government scrutiny.