On Thursday, February 23, the Workplace of the Inspector Common for the Division of Well being and Human Providers (“OIG”) issued its first Advisory Opinion (“AO”) of the brand new 12 months – OIG AO No. 23-01 – allowing a drug producer to supply monetary help for transportation, lodging, meals, and different out-of-pocket bills to eligible sufferers receiving the producer’s drug (the “Association”). Total, OIG concluded that: (1) the chance of fraud and abuse offered by the producer’s Association was sufficiently low beneath the Federal anti-kickback statute; and (2) the remuneration provided beneath the Association was not prone to affect a beneficiary to order the producer’s drug (the “Drug”) from a selected supplier and due to this fact didn’t represent grounds for the imposition of sanctions beneath the Beneficiary Inducements CMP. In the end, the crux of this choice got here right down to the distinctive manufacturing and distribution of the Drug, which (i) is the one out there doubtlessly healing remedy for an ultra-rare dysfunction; (ii) pursuant to its FDA approval, can solely be manufactured at a single facility, positioned on the campus of a remedy heart (the “Remedy Heart”); (iii) can solely be administered inside 3 hours after being manufactured; and thus, can solely be administered on the single Remedy Heart web site.
The requestor (“Requestor”) in AO 23-01 manufactures a regenerative tissue-based remedy that’s indicated for immune reconstitution in pediatric sufferers with an ultra-rare major immunodeficiency dysfunction (the “Situation”). The Situation is characterised by the absence of a thymus at start, which is an organ that performs a necessary function within the improvement of T cells, a sort of infection-fighting white blood cell. New child screening for extreme mixed immunodeficiency, a screening that’s required nationwide, can determine doable causes of the Situation, which may then be confirmed by additional testing. The Situation is taken into account ultra-rare in that it impacts roughly 17 to 24 out of each 4 million kids born annually in america. For these affected sufferers, supportive care includes extended inpatient hospitalizations, frequent outpatient visits, dwelling well being care, vital diagnostic and monitoring testing, each remedy and prophylactic drugs, and diagnostic and surgical procedures. Thus, people with the Situation could also be characterised as having excessive well being care utilization which, within the first 3 years of life, could have a mean whole financial burden between $5.5 million to $11.7 million.
Requestor’s drug (the “Drug”) is a one-time, doubtlessly healing remedy and the one remedy out there to rebuild the immune system of a affected person recognized with the Situation. To make the Drug, Requestor first obtains donor thymus tissue from donors who’re 9 months of age or youthful and present process cardiac surgical procedure. The Requestor subsequent aseptically processes and cultures the thymus tissue for 12 to 21 days, and the Drug is then administered through implantation within the thigh muscle of pediatric sufferers with the Situation. Relying on the affected person’s situation (as decided by Remedy Heart physicians and the affected person’s prescribing physician), a affected person receiving the Drug sometimes arrives 5 to 11 days earlier than implantation for testing, scientific evaluations, and immunosuppressive remedy; absent any problems, sufferers sometimes stay inpatient on the Remedy Heart for two to 7 days following implantation.
There are a number of notable limitations on the administration of the Drug, together with the place and who could administer it and the timeline inside which it should be administered following manufacture. First, the Biologics License Utility approval letter from the U.S. Meals and Drug Administration (“FDA”) permitted solely a single manufacturing facility, which is positioned on the campus of the “Remedy Heart.” Second, the Drug should be administered inside 3 hours after manufacturing, and due to this fact should be implanted in shut proximity to the location of producing. Requestor doesn’t have and would want FDA approval to move the Drug to different remedy amenities apart from the Remedy Heart. Thus, the Drug will be administered solely on the Remedy Heart by a certified surgeon.
Underneath the Association, eligible sufferers could obtain: “(i) round-trip medical flights for the affected person recognized with the Situation and as much as two caregivers who accompany the affected person on the flights; (ii) floor ambulance journey to and from the airport; (iii) modest lodging in a single resort room with a non-public toilet as much as $150 per evening, if charitable housing just isn’t out there; and (iv) protection for out-of-pocket bills up $50 per day for one caregiver (or $100 per day for 2 caregivers) to cowl floor transportation and meals whereas staying close to the Remedy Heart.” The rationale for offering medical flights versus different types of journey is as a result of high-risk of an infection that’s current with all sufferers with the Situation. Such flights are costly and are sometimes not lined by insurance coverage, and thus could inhibit sufferers from in any other case in search of remedy with the Drug or trigger sufferers to danger their security in touring to the Remedy Heart. That being stated, Medicaid and a few industrial plans generally cowl non-emergency medical flights, and a few plans cowl some lodging and different out-of-pocket bills. Moreover, eligible sufferers usually are not required to take a medical flight and Requestor doesn’t management flight vendor choices; moderately, choices about mode of transportation are made together with the affected person’s caregiver(s) and treating doctor.
After the healthcare supplier confirms prognosis and medical necessity to Requestor, the Requestor’s “hub.” makes an eligibility willpower no matter insurance coverage protection. As a way to be eligible for help beneath the Association, a affected person should: “(i) have been recognized with the Situation; (ii) reside in america or a Western Hemisphere United States territory throughout the service space of the medical flight distributors and be greater than a 2-hour drive from the Remedy Heart, and (iii) fulfill gross annual family earnings limits to display monetary want.” Moreover, to acquire monetary help for medical flights and floor ambulance transportation, sufferers should both haven’t any insurance coverage protection or “inadequate” insurance coverage protection for these companies. Along with eligibility necessities, Requestor has applied different safeguards similar to: (1) certification that it’s going to not shift prices of the Association to Federal well being care applications and has priced the drug independently of the price of the Association; (2) not promoting the supply of help beneath the Association; and (3) requiring sufferers and their caregivers, flight distributors, and floor transportation distributors to agree to not request reimbursement from Federal well being care applications for any prices lined by Requestor.
Federal Anti-Kickback Statute Evaluation
OIG acknowledged that the Association would set off the Federal anti-kickback statute as a result of (1) the transportation, lodging, and meal bills help constitutes remuneration to sufferers, which will induce them to buy the Drug and to obtain different federally reimbursable gadgets and companies offered on the Remedy Heart; and (2) this help additionally might represent remuneration to the Remedy Heart and the treating surgeon within the type of the chance to earn charges associated to administering the Drug. Nonetheless, OIG concluded that the chance right here to be minimal for six causes.
First, OIG decided that the Association facilitates protected entry to the Drug for a affected person inhabitants that can’t journey lengthy distances safely by automotive or through industrial airways and that lack the monetary assets to journey in a protected method. In so reasoning, OIG reiterated the distinctive manufacturing and distribution limitations of the Drug (i.e., that FDA has permitted just one manufacturing web site on the campus of the Remedy Heart, the brief shelf lifetime of the Drug, leading to the truth that it will possibly solely be administered on the Remedy Heart). Moreover, as a result of sufferers with the Situation are at excessive danger of an infection and are restricted in capability to journey beneath ordinary circumstances, the excessive out-of-pocket prices related to touring to the Remedy Heart might both (i) inhibit sufferers from receiving the drug; or (ii) trigger them to take technique of transportation which are unsafe given their lack of a functioning immune system.
Second, OIG discovered the Association to vary from so-called “seeding applications” as a result of this one-time, doubtlessly healing remedy wouldn’t require extra gadgets or companies from the Requestor.
Third, OIG calculated there to be a low danger of interference with scientific decision-making, overutilization, or inappropriate utilization. OIG famous (1) given the infrequence of the Situation and that the Drug is produced from donor thymus tissue and topic to time constraints in manufacturing, the Drug just isn’t a mass-produced drug topic to dangers of inappropriate utilization; (2) it’s unlikely that the prescriber would obtain any monetary profit from the implant of the Drug as a result of it’s only manufactured on the Remedy Heart, eligible sufferers are solely those that reside not less than 2 hours away from the Remedy Heart, and the Drug is implanted by a surgeon; and (3) the Situation impacts so few kids annually that it could be exceedingly uncommon that a physician who practices on the Remedy Heart would even be the doctor who diagnoses the affected person and prescribes the Drug.
Fourth, OIG discovered that the Association is unlikely to extend prices inappropriately to Federal well being care applications. If something, provided that the Association helps facilitate entry to the Drug and the potential healing remedy, it might as a substitute offset the excessive well being care prices that sufferers may in any other case incur for his or her supportive care. Regardless, OIG famous that the Drug is the one doubtlessly healing remedy possibility for the Situation, so many sufferers with the Situation could attempt to entry the Drug even within the absence of the Association.
Fifth, OIG acknowledged the restrictions constructed into eligibility for help beneath the Association. For instance, the affected person will need to have both no insurance coverage protection or inadequate insurance coverage protection with the intention to obtain help with medical flights and floor transportation. Moreover, every factor of help is offered provided that there is no such thing as a different protection possibility, which helps to make sure that Requestor doesn’t present a reproduction profit.
Lastly, OIG concluded that any remuneration offered to sufferers beneath the Association and any consequent alternative for the Remedy Heart to earn charges associated to implanting the Drug is sufficiently low danger beneath the Federal anti-kickback statute. In so doing, OIG emphasised that this conclusion is predicated notably on “the Drug’s present FDA-approval standing [which] requires that every one sufferers prescribed the Drug  acquire it from the Remedy Heart, whatever the Association.”
Beneficiary Inducements CMP Evaluation
Subsequent, OIG acknowledged that the supply of remuneration beneath the Association doubtlessly implicates the Beneficiary Inducements CMP as a result of the Remedy Heart is a supplier and remuneration provided by a pharmaceutical producer to a beneficiary that the producer is aware of or ought to know is prone to affect the beneficiary to pick a selected supplier would implicate the Beneficiary Inducements CMP. Nonetheless, OIG finally concluded that the remuneration provided beneath the Association just isn’t prone to affect a beneficiary to order the Drug from the Remedy Heart. In so doing, OIG famous: (i) the 3-hour shelf lifetime of the Drug; (ii) the truth that the one FDA-approved manufacturing facility is on the campus of the Remedy Heart; and (iii) Requestor doesn’t have the mandatory FDA approval to ship the Drug offsite, making the Remedy Heart the one facility the place the Drug will be surgically implanted. Given these limitations on the manufacturing and distribution of the Drug, OIG held that these elements usually tend to affect a affected person to pick the Remedy Heart moderately than the remuneration provided beneath the Association.
Takeaways and Comparisons to Comparable OIG AOs:
Given the distinctive circumstances of the manufacturing and distribution of the Drug and the truth that this Situation impacts such a small share of the inhabitants, it appears unsurprising that OIG would approve the Requestor’s plan. In earlier Advisory Opinions involving affected person help for transportation, lodging, and meals – together with AO 21-08, AO 20-02, and AO 20-09 – OIG has handled such preparations favorably the place the drug was a one-time, doubtlessly healing remedy and/or helped to facilitate elevated entry to care primarily based on the constraints of the drug’s FDA approval.
So, on one hand, the circumstances offered right here look like a neater case than that of earlier opinions as a result of there is just one web site the place sufferers can entry remedy. However, whereas earlier opinions did embody potential help with airline journey, OIG didn’t weigh-in on the supply of help for very costly medical flights. Provided that OIG discusses these medical flights in such element in AO 23-01, this might have been the important thing motivating issue for the producer submitting their request for an Advisory Opinion and may present a rubric for OIG’s pondering on the costlier facets of affected person assistant for transportation, lodging and meals.
As a ultimate be aware, although the Requestor in AO 23-01 had myriad sympathetic details in its favor, the producer nonetheless proposed safeguards to mitigate potential dangers beneath the related federal statutes. Much like earlier OIG-approved preparations, the producer restricted the eligible pool of sufferers to those that lived greater than 2 hours means, which, on this context, diminished the chance of overlap between the prescribing physician and the surgeon performing the implantation. Extra conventional safeguards included not promoting the Association, and requiring sufferers and distributors to conform to not request reimbursement beneath Federal well being care applications. Going ahead, producers interested by instituting comparable affected person help applications for accessing remedy ought to think about the details and programmatic limitations relied upon by OIG to make a good Advisory Opinion.
Cortney Inman additionally contributed to this text.
 Moreover, Requestor has evaluated 10 medical flight distributors to find out whether or not they: (i) serve pediatric and medically fragile sufferers; (ii) present non-charity flights and invoice insurance coverage if insurance coverage reimbursement is offered; (iii) has a nationwide footprint and may fly sufferers who dwell throughout america to and from the Remedy Heart; (iv) can fly sufferers with the Situation and as much as two caregivers safely; (v) has versatile scheduling to permit speedy deployment of flights when the Drug turns into out there for the affected person; and (vi) has planes with isolation choices for sufferers. Out of the ten distributors evaluated, solely two distributors meet these goal standards and are keen to move sufferers beneath the Association.
 A affected person could also be decided to have “inadequate” protection if: (i) absent Requestor paying for the medical flights and floor ambulance transportation to and from the airport in full, the out-of-pocket prices to the affected person for the flights and floor transportation could be equal to or exceed 3% of the affected person’s gross annual family earnings; or (ii) the flight vendor is unable to hunt reimbursement from the affected person’s state Medicaid program. If a affected person’s protection is deemed “inadequate”, then Requestor pays the total price of the transportation and the affected person’s insurance coverage just isn’t billed.
Copyright © 2023, Sheppard Mullin Richter & Hampton LLP.Nationwide Legislation Evaluation, Quantity XIII, Quantity 66