The Office of Inspector General (OIG) within the U.S. Department of Health and Human Services recently issued two reports reminding providers and suppliers of the importance of carefully vetting their business arrangements before signing on the dotted lines.
The first negative report came in the form of a Special Advisory Bulletin issued this past September when the OIG advised consumers and industry stakeholders that pharmaceutical manufacturers’ “coupons constitute remuneration offered to consumers to induce the purchase of specific items,” and “[w]hen the item in question is one for which payment may be made, in whole or in part, under a Federal health care program (including Medicare Part D), the anti-kickback statute is implicated.”
The government frowns upon manufacturers’ drug coupons. Its position is that the availability of coupons may influence physicians and beneficiaries to select the expensive brand-name drug when a less-expensive and equally effective generic or other alternative is available.
The pharmaceutical industry sought to redress the government’s concern with co-payment coupons by including a statement on the coupon that it may not be used by beneficiaries of Federal health care programs. This Special Advisory Bulletin, issued concurrently with the OIG, Office of Evaluation and Inspections report, noted, however, deficiencies in the measures the industry was taking to prevent coupons from being used by beneficiaries of Federal health care programs.
Moreover, many pharmacy suppliers may not be aware that accepting manufacturer coupons for co-payments owed by Federal health care program beneficiaries may subject them to sanctions under the antikickback statute, the beneficiary inducement civil monetary penalty law as well as the False Claims Act.
The second negative report from the OIG came in the form of an Advisory Opinion on August 7, 2014, in which a specialty pharmacy (dispensing specialty drugs for complex conditions such as HIV/AIDS, multiple sclerosis, and hemophilia) proposed to pay local retail pharmacies a fee for support services they would provide in connection with patient referrals to the specialty pharmacy. Under the proposed arrangement, support services included, among other things, accepting new specialty drug scripts, gathering patient information, recording patient specific medication history and use, counseling patient on medications, providing on-going assessment for subsequent refills and transmitting change of information to the specialty pharmacy. In return, the specialty pharmacy proposed to compensate the retail pharmacy a fair market value on a per fill basis (upon receipt of the initial script and subsequent refill requests).
The OIG nixed this arrangement, stating that it would implicate the antikickback statute because the specialty pharmacy would pay the retail pharmacy a fee for the services each time the services result in a referral to the specialty pharmacy to dispense a drug, including those services payable by Federal health care programs. As such, opined the OIG, the amount of fees that the retail pharmacy would receive would be directly tied to the number of patients with Specialty Drug prescriptions that the retail pharmacy would refer to the specialty pharmacy.
“While we recognize,” added the OIG, “that the Support Services to be provided by the Local Pharmacy would include certain patient care coordination services that could benefit patients, the Local Pharmacy would receive a compensation … only when the Support Services result in referrals of patients to the [specialty pharmacy] to fill prescriptions for Specialty Drugs.” As such, the OIG concluded, there is a “significant risk” that the fees paid by the specialty pharmacy would represent compensation for referral of patients, including Federal health care patients, rather than “solely compensation for bona fide, commercially reasonable services.”
For more information on the antikickback statute, OIG’s Advisory Opinion, the Special Bulletin or other legal questions, please contact our office.