OIG Issues Advisory Opinion Regarding Pharmaceutical Companies’ Proposed Arrangement to Provide Cost-Sharing Grants | King and Spalding

On October 5, 2022, the OIG issued Advisory Opinion 22-19 in response to a request from a not-for-profit corporation (Requester) to review a proposal that certain pharmaceutical companies (each, the manufacturer funds) subsidize: 1) the sharing of costs incurred by eligible D-enrolled parties when filling prescriptions for Part D oncology drugs from funding manufacturers, 2) additional funding, such as health insurance, including Medicare Part D premiums for certain Medicare beneficiaries, and certain programs to promote oncology screening and health equity, and 3) Applicant’s operating expenses (collectively, the arrangement offers). The OIG concluded that the proposed arrangement would present more than a minimal risk of fraud and abuse under the federal Anti-Kribery Act (AKS), but would not violate the Sanctions Act. pecuniary compensation (CMP) on incentives to beneficiaries.

The proposed arrangement

  1. Cost-Sharing Grants: The proposed arrangement would establish a different cost-sharing structure than that adopted by Congress under the Medicare Part D program, under which a Part D enrollee would receive plaintiff subsidies in the amount of: (i) $35 per month for brand name drugs and $10 per month for generic drugs; and (ii) 10% or 25% of the total coinsurance that would otherwise be payable for brand name drugs during the catastrophic phase of coverage. The relevant financing manufacturer would pay any remaining cost-sharing obligations that a Part D enrollee would otherwise have to pay for that financing manufacturer’s Part D oncology drugs.
  1. Additional funding: Funding Manufacturers would subsidize costs such as health insurance premiums and select programs such as oncology screening. Unlike cost-share grants, premium grants would be available to recipients whether or not they use a Part D oncology drug manufactured by a funding manufacturer.
  1. Operating costs: Funding The manufacturers would fund all of the Applicant’s operating costs, which the Applicant estimates could total approximately $20 million per year.

Legal analysis

The OIG concluded that the proposed arrangement, as a whole, would present more than minimal risk of fraud and abuse under the AKS. First, the OIG concluded that the proposed arrangement’s cost-sharing grants are designed to remove financial barriers for eligible Part D enrollees to purchase drugs from funding manufacturers. Although the requester has certified that it will make available a list of all covered products in a neutral manner and that it will not advertise or promote products in connection with the proposed arrangement, the OIG noted that prescribers would learn over time which products are subsidized under the proposed arrangement and might prefer these products to alternative options. The OIG has determined that cost-sharing grants are so designed to incentivize the purchase of drugs from funding manufacturers, which would effectively revamp and repeal the cost-sharing requirements put in place by Congress. and create the possibility of increased costs for federal health care programs.

The OIG also concluded that grants for additional funding and operating costs would involve the AKS, but declined to develop a full analysis of these features separately because these contributions would be tied to the cost-sharing grants, so that the proposed arrangement should be analyzed as a whole.

In addition, the OIG considered whether the proposed arrangement would violate the CMP by influencing Part D enrollees’ selection of a particular provider, practitioner, or vendor. First, the OIG noted that neither the applicant nor the funding makers are a provider, practitioner, or supplier. Next, the OIG concluded that because the cost-share subsidies would be available to any pharmacy willing to accept the subsidies regardless of a Part D registrant’s choice of provider, practitioner, Part D plan D or provider, the compensation that would be offered by the claimant would likely not influence a recipient’s selection of a particular provider, practitioner, or provider. The OIG found that the proposed arrangement would not be grounds for the imposition of sanctions under the CMP.

As usual, the OIG said Advisory Opinion 22-19 is limited in scope to the proposed arrangement and cannot be relied upon by anyone other than the requester. The OIG’s advisory opinion is available here.