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March 29, 2021

Health Headlines – March 29, 2021


OIG Issues Favorable Advisory Opinion Regarding Free Drug Provided by Pharmaceutical Manufacturer to Patients – On March 18, 2021, OIG issued Advisory Opinion 21-01, addressing whether a pharmaceutical manufacturer may provide a personalized medicine made from a patient’s own cells as a one-time, potentially curative treatment (the Drug) to a patient. Under the arrangement, the pharmaceutical manufacturer offers the Drug at no charge to patients unable to afford the Drug who are either uninsured or insured under plans that will not cover the Drug (the Arrangement). OIG concluded that it would not impose administrative sanctions under the federal Anti-Kickback Statute and that the Arrangement does not implicate the beneficiary inducement provision of the Civil Monetary Penalties Law. 

The pharmaceutical manufacturer’s patient eligibility requirements for the Arrangement are as follows:

  • The patient must be a United States resident;
  • The patient must have been prescribed the Drug by a physician, in accordance with the Drug label for an FDA-approved indication;
  • The patient must have (i) no health insurance, (ii) no insurance coverage for the Drug, (iii) received a denial of prior authorization and first-level appeal from their insurer, as determined by the administering healthcare facility, or (iv) a first-level appeal for coverage for the Drug that has been pending for at least 10 days; and
  • The patient must have an annual household income equal to or less than $75,000 for a single-person household and no more than an additional $25,000 per each additional household member.

Federal Anti-Kickback Statute

In concluding that although the arrangement would generate prohibited remuneration under the federal Anti-Kickback Statute if the requite intent were present, OIG would not impose administrative sanctions on Requestor, OIG relied on the following:

  • First, the Arrangement is distinguishable from other potentially problematic arrangements because the Drug is a potentially curative treatment, generally administered only once, and individually manufactured for the patient using the patient’s own cells. In addition, the free Drug is only available to patients who have been prescribed the Drug in accordance with the Drug label for an FDA-approved indication. Finally, the pharmaceutical manufacturer also certified that provision of the free Drug is not contingent on any future orders of the Drug by a physician.
  • Second, the Arrangement is available to patients for all of the Drug’s FDA-approved indications, making it distinct from a suspect arrangement where a manufacturer offers a free drug for one clinical indication to maintain a high price for all of the drug’s indications when paid for by federal healthcare programs.
  • Third, the pharmaceutical manufacturer provides the Drug to all eligible patients regardless of whether the Drug is administered in the inpatient or outpatient setting.
  • Fourth, there is limited risk that a physician would overutilize the Drug to earn a fee because: (i) the Drug is a one time, potentially curative treatment, and (ii) the free Drug is only available as a treatment of last resort.

Civil Monetary Penalties

OIG also evaluated whether the pharmaceutical manufacturer would know, or should know, that the remuneration it offers to beneficiaries is likely to influence their selection of a particular provider, practitioner, or supplier for the order or receipt of any item or service for which payment may be made, in whole or in part, by Medicare or a State healthcare program. OIG concluded that the remuneration offered by the pharmaceutical manufacturer under the Arrangement is not likely to influence a beneficiary to select a particular provider, practitioner, or supplier to administer the Drug, and therefore the beneficiary-inducement prohibition of the Civil Monetary Penalty Law is not implicated by the Arrangement. In reaching this conclusion, OIG reasoned that the pharmaceutical manufacturer does not make eligibility for the free Drug dependent on a beneficiary’s use of a particular provider, practitioner, or supplier.

As a reminder, the Advisory Opinion may not be relied upon by anyone other than the Requestor.  A copy of Advisory Opinion 21-01 is available here.

Reporter, Michelle Huntsman, Houston, +1 713 751 3211, mhuntsman@kslaw.com.

ALSO IN THE NEWS

OIG Posts New FAQ Regarding the Exercise of its Enforcement Authorities for Arrangements Directly Connected to COVID-19 – On March 24, 2021, OIG posted a new FAQ regarding the application of its administrative enforcement authorities, including the federal Anti-Kickback Statute and beneficiary inducement provision of the Civil Monetary Penalties Law, to the provision of free space to a retail pharmacy by an FQHC in a rural area for administration of COVID-19 vaccines to FQHC patients and the general public. OIG concludes that the scenario would pose a low risk of fraud and abuse under the federal Anti-Kickback Statute.  However, providers should note that OIG’s responses to these informal inquiries do not bind or obligate HHS, DOJ, or any other agency, and do not result in prospective immunity or protection from civil or criminal liability.  The new FAQ and OIG’s informal inquiries it has addressed to date are available here

Biden Administration Announces Extension of ACA Special Enrollment Period – CMS is extending the Affordable Care Act (ACA) special enrollment period by three months to August 15, 2021. Beginning on April 1, 2021, consumers enrolling in Marketplace coverage through Healthcare.gov will be able to receive increased tax credits to reduce their premiums due to the passage of the American Rescue Plan Act. Any person who claimed unemployment at any time during 2021 will be able to obtain additional savings when enrolling in new Marketplace coverage or updating their existing Marketplace application and enrollment. According to federal data, more than 200,000 individuals signed up for ACA policies during the first two weeks of enrollment season. The CMS fact sheet regarding the extension may be found here.

OIG Report: Hospitals Reported that COVID-19 Has Significantly Strained Healthcare Delivery – OIG published a report on March 23, 2021 regarding the results of a survey OIG conducted of hospital administrators nationwide regarding the impact of COVID-19 on hospitals.  Among other things, hospitals reported that COVID-19 has resulted in higher-than-normal turnover among medical staff, resulting in staffing shortages among nurses and certain specialists.  Hospitals also reported that COVID-19 has resulted in significant financial instability because of the costs incurred responding to it and the decline in revenue resulting from the suspension of elective procedures.  The surveyed hospitals also reported several ways that the government could help them address the problems caused by COVID-19, such as helping to fill the gaps in hospital staffing, and continuing to provide financial support through the Provider Relief Fund and the Medicare Accelerated and Advanced Payment Program.  A copy of the report is available here

King & Spalding Webinar Series:  The Growing Liability Issues Facing Florida Healthcare Facilities in 2021 – More than 10,000 residents and staff of Florida nursing homes have died from COVID-19. The Florida Legislature is considering limited immunity provisions, but Florida plaintiff lawyers are already working to leverage the weaknesses in any potential legislation. King & Spalding has been hosting a series of webinars to discuss what Florida healthcare facilities need to know about the current legal environment at both the state and national levels so they can take appropriate precautions and plan for the coming year. The third and final installment is Wednesday, March 31, 2021 from 12:00 pm ET to 1:00 pm ET and focuses on post-COVID-19 jury trials.  RSVP by emailing Angie Yeary at ayeary@kslaw.com.