Direct-to-Consumer Drug Program: New OIG Safeguards for Federal Program Enrollees

On January 27, 2026, the Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) issued a Special Advisory Bulletin addressing direct-to-consumer (“DTC”) prescription drug programs.  These DTC programs allow cash-paying patients, including those enrolled in Federal health care programs such as Medicare and Medicaid, to purchase prescription drugs directly from pharmaceutical manufacturers, often at lower prices than those available through traditional pharmacy benefit channels.

While OIG supports efforts to improve affordability and patient access, the Bulletin emphasizes that such arrangements must be carefully structured to avoid violating the Federal Anti-Kickback Statute (“AKS”).

Mitigating AKS Risks: The “Seeding” Concerns

OIG identified two primary risk areas associated with DTC models:

• “Seeding” Programs: Using initial discounts to induce a patient to initiate therapy with the expectation that a Federal health care program will be billed for that same drug in the future.
• Marketing Inducements: Offering discounted DTC drugs as a marketing tool to induce the purchase of other federally reimbursable items or services.

OIG’s Compliance Roadmap

To minimize these risks, OIG outlined several “low-risk” characteristics that manufacturers should adopt:

• The “Full Plan Year” Requirement: To prevent Medicare Part D enrollees from “program hopping” – using DTC pricing only during high-cost periods (such as the deductible phase or the “donut hole”) and then reverting to Federal benefits – manufacturers must make the DTC pricing available for at least one full plan year. This requirement ensures that the program is a genuine alternative rather than a mechanism for benefit manipulation.
• Financial Separation from Federal Programs: DTC transactions must be strictly cash-pay. No claims may be submitted to any Federal health care program.  Importantly, these payments do not count toward a Medicare Part D enrollee’s true out-of-pocket costs or total Part D spending.
• No Conditioning on Future Purchases: Manufacturers may not condition DTC pricing on the current or future purchase of any other items or services.
• Independent Third-Party Prescribers: A valid prescription must be issued by an independent, third-party prescriber unaffiliated with the manufacturer.

Key Caveats and Limitations

A critical limitation of the Bulletin is what it expressly does not address:

• Telehealth or Telemedicine Vendors: Despite the ubiquity of integrated DTC-telehealth models, OIG explicitly stated that this guidance does not cover telehealth arrangements. Manufacturers relying on telemedicine platforms for prescribing or drug delivery should remain vigilant.  Compliance with the Bulletin’s pricing guidelines alone does not insulate telehealth-linked programs from AKS scrutiny, particularly with respect to prescriber compensation or selection.
• Controlled Substances: Prescription drugs offered by manufacturers through DTC programs must not include controlled substances.

Overall, the Bulletin provides a narrowly tailored compliance roadmap for manufacturers and Federal healthcare program enrollees focused on pricing and cash-pay mechanics.  Because the AKS is a criminal statute, OIG reiterates that compliance ultimately depends on a case-by-case assessment of the relevant facts and circumstances, including the parties’ intent.