And Now for Something Completely Different: OIG Issues Noteworthy Advisory Opinions Regarding Free Trial Program and Disease State Questionnaire Kiosks

February 26, 2008

Advisory Opinion No. 08-04 (Free Trial Program)

Last week, the Office of Inspector General (“OIG”) of the Department of Health and Human Services posted an advisory opinion addressing a free drug trial program for hemophilia A patients (“Proposed Arrangement”).  This was the first opinion outside of the patient assistance program context in which the OIG has evaluated the status of a free drug program under the federal healthcare program antikickback statute.  As discussed below, the OIG concluded that, while the Proposed Arrangement could potentially generate prohibited remuneration under the antikickback statute, the OIG would not impose administrative sanctions on the requestor in connection with the Proposed Arrangement.

The opinion was requested by a manufacturer of a recombinant antihemophilic factor VIII product indicated for the control and prevention of hemorrhagic episodes and for surgical and short-term routine prophylaxis in patients with hemophilia A.  The product is reimbursed under Medicare Part B using the Average Sales Price (“ASP”) methodology.  According to the OIG, generally there are no barriers to switching between recombinant antihemophilic factor VIII products or from recombinant to plasma-derived products.

Under the Proposed Arrangement, patients would be given one complimentary trial supply of the medication, which would last from 1 to 10 weeks, depending on the patient’s weight, severity of illness, level of activity, and other factors.  A limited number of enrollment forms would be provided to hemophilia treatment centers and hemophilia/oncology practices.  Each patient would only be permitted to enroll in the program one time, and no patient currently on the requestor’s product would be eligible to participate in the program.  The prescribing physician would identify patients who would benefit from the product, fill out enrollment forms for such patients, and write prescriptions for the product for those patients.  The patient would then send the completed forms and the prescription to the administrator of the program (which is also a licensed pharmacy), which would fill the prescription and send the product directly to the patient.  The physicians would never take possession of the product and would not be compensated directly or indirectly for their participation in the program.  No third party payors (including federal healthcare programs such as Medicare) would be billed for product dispensed under the program.  According to the opinion, the requestor certified that the program would comply with the Prescription Drug Marketing Act of 1987 (“PDMA”).    

The OIG’s analysis discussed then discounted two potential antikickback concerns.  First, the opinion concluded that the Proposed Arrangement did not provide any direct or indirect monetary or economic remuneration to the physicians.  This is because the product would be dispensed directly to the patient, which would preclude unscrupulous physicians from reselling or billing for a sample, and, in addition, that the physicians would be required to sign a statement acknowledging that the product is complimentary and cannot be resold or billed to any third party payors.

Second, the opinion concluded that the risk of a one-time trial supply of the product inducing patients to self-refer to the product was low.  This was based on four considerations: 

(1) the Proposed Arrangement involved no cost to federal healthcare programs;

(2) the risk of steering patients to the product by starting them on the product was low because patients who choose to continue to use the product would still be responsible for significant cost-sharing amounts after the one-time free trial was completed, and there would be no clinical barriers to switching to another product after using the free product;

(3) the Proposed Arrangement was unlikely to result in overutilization of the product; and

(4) the Proposed Arrangement included additional safeguards, such as compliance with the PDMA, distribution of the product directly to patients, distribution of a limited number of enrollment forms each year to each physician, and the fact that physicians and the program administrator would be required to sign statements acknowledging that the product is complimentary and that it may not be resold or billed to any third party payors.

Although this opinion provides some comfort to drug manufacturers who conduct free trial voucher or sampling programs, the OIG was careful to distinguish the Proposed Arrangement from “problematic” programs that offer free goods to “seed” the marketplace, and also to caution that “we might have reached a different conclusion on different facts or with a non-PDMA compliant sampling program.” 

Advisory Opinion No. 08-05 (Disease State Questionnaire Kiosks)

In addition to the Free Trial Program Advisory Opinion, late last week the OIG issued an advisory opinion regarding electronic kiosks located in physician offices that offer patients free disease state screening questionnaires (“Proposed Arrangement”). A determination on the Proposed Arrangement was requested by a manufacturer of pharmaceuticals for a number of diseases and conditions, including four “Disease States.”


Under the Proposed Arrangement, electronic kiosks that offer interactive questionnaires about the four Disease States would be placed in the waiting rooms of certain physicians.  The questionnaires would consist of several questions on each of the four Disease States that the patients would be able to answer using a keyboard.  Once the patient completed the questionnaire, the patient could generate a printout that would contain the screening questions and the patient’s responses, and choose to share the printout with his or her physician.  Neither the interactive questionnaires nor the kiosk itself would mention any drug names. Participating physicians would neither pay nor receive payment from the manufacturer for hosting the kiosks.

The OIG analysis discusses two possible kickback scenarios: (1) a potential kickback from the manufacturer to the patient to induce them to self-refer to the manufacturer’s drugs; and (2) a potential kickback from the manufacturer to the participating physicians to induce them to prescribe the manufacturer’s drugs.  The opinion first concludes that the questionnaires would not offer patients incentives for using the kiosks, such as coupons or offers of free items.  Accordingly, the Proposed Arrangement would not provide anything of value and therefore would not implicate the anti-kickback statute.  Second, the opinion concludes that the Proposed Arrangement would not generate prohibited remuneration under the anti-kickback statute for the participating physicians.  The participating physicians would not receive payment for the space rental or utilities fees or other compensation in connection with the Proposed Arrangement.  In addition, the opinion concludes that the kiosks would not enhance the attractiveness of the participating physicians’ offices to prospective patients such that they would likely select a participating physician based on whether they offered the kiosks.  The opinion notes that the kiosks “amount to little more than high-tech interactive brochures.” 

By Michelle L. Butler & Noelle C. Sitthikul

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