United States: OIG Approves Manufacturer Loaning Smartphones As Appropriate Patient Assistance To Support Digital Medicine

On January 29, the Health and Human Service Office of Inspector General (OIG) released new guidance that sheds further light on the types of patient assistance that may be provided under the "Promotes Access to Care" exception to the beneficiary inducements civil monetary penalties (CMP) statute and the anti-kickback statute (AKS). In Advisory Opinion 19-02, the OIG found acceptable a pharmaceutical company's loan of a smartphone to low-income patients when used to support an innovative digital medicine therapy. This favorable opinion demonstrates a willingness of the OIG to provide greater flexibility to those companies seeking to support low-income patients with technologies that promote patient care and coordination, a goal that the administration recently expressed in its Request for Information on the AKS and the beneficiary inducements CMP published in August 2018. However, program safeguards designed to reduce the value of the technology outside of the support to be provided to eligible patients remain an important component of reduced compliance risk. Of note in Advisory Opinion 19-02:

  • The smartphone would be very limited in its functionality (i.e., it would be intended to support only the digital medicine platform and would not have a camera, web browser or the ability to download apps).
  • The smartphone would include a voice and data plan to enable patient support and data flow to their physicians.
  • There would be a time limitation on the loan of the smartphone: no more than two 12-week terms.

The Advisory Opinion also provides helpful context for drug and device companies considering patient assistance programs. It clarifies how and when the OIG will apply the beneficiary inducements CMP to these entities, and it reiterates that when conducting its AKS analysis, the OIG will consider compliance with exceptions to the beneficiary inducements CMP. This lines up with previous OIG advisory opinions.1

A more detailed analysis of the Advisory Opinion and the OIG's "Promotes Access to Care" analytical framework can be found below.

The Proposed Arrangement

The requestor is a pharmaceutical manufacturer that makes a product approved by the Food and Drug Administration and used in the treatment of patients with mental illness.2 The OIG noted that medication nonadherence and partial adherence are a particular problem for the drug's patient population and that a lack of adherence to medication results in higher health care utilization and increased costs to the health care system. The product is a combined drug/ingestion sensor that monitors a patient's utilization of the drug by sending a signal to the patient's smartphone via an app. Patients also have the ability to add more information to the app (e.g., quality of rest and mood). With the patient's consent, the patient's physicians and caregivers can access this information through web-based portals. Use of the product requires a smartphone capable of running the app.

Under the proposed arrangement, the requestor would lend a refurbished, older-model iPhone or compatible Android device to patients who meet the following criteria:

  • Possession of a prescription for the product for on-label use.
  • Meeting any applicable prior authorization required by the patient's health insurance coverage.
  • Having an annual income below a specific percentage of the federal poverty level.
  • Not already possessing a device capable of running the app.
  • Being a United States citizen or legal permanent resident.

The requestor would not advertise the proposed arrangement to patients; health care providers would screen potential applicants, based on guidance from the requestor. The OIG noted that the proposed arrangement would be available through only a specific specialty pharmacy, as would the product during an initial rollout period.

As noted above, the smartphone would have very limited capabilities. The loaner device would come preloaded with only the product app, the ability to make domestic telephone calls, and a voice and data plan to enable these functions. All other features would be disabled on the device, and the patient would be unable to download or use any other applications. Additionally, the requestor intends to loan the device for a limited period. Patients would have access to the device for only the duration of their therapy, which the requestor expects to last for 8 to 12 weeks. Patients would be eligible for one additional 12-week period with approval from their health care provider. If a patient does not return the device (or if the device is lost or stolen), the requestor would remotely disable it.

The OIG's Analysis of the Proposed Arrangement

The OIG analyzed the proposed arrangement under the beneficiary inducements CMP and the AKS. The OIG found that the smartphone would have independent value to the patient and was therefore remuneration that could implicate both the beneficiary inducements CMP and the AKS. However, under the CMP, the OIG found that, although loaning such a device could entail liability under the statute, the program contained sufficient safeguards to allow it to fit within the "Promotes Access to Care exception." Although compliance with an exception to the beneficiary inducements CMP alone does not guarantee that the arrangement will be protected from prosecution under the AKS, the OIG concluded that "the same analysis would apply" under both statutes and that, in light of the safeguards set forth in the program, it would not subject the requestor to administrative sanctions under the AKS in connection with the proposed arrangement.

CMP Analysis. Analysis under the beneficiary inducements CMP requires the OIG to evaluate whether certain remuneration would cause a beneficiary to use a particular "provider, practitioner, or supplier" under the statute. Because manufacturers and drugs do not fall within the definition of a "provider, practitioner, or supplier," the OIG's analysis is limited to whether the smartphone would cause a patient to select a particular prescriber or pharmacy. The OIG found that the proposed arrangement could influence a patient's choice of provider or pharmacy, especially given the role of the provider in enrolling the patient in the program and the fact that the program would be operated through a specific specialty pharmacy. Therefore, the proposed arrangement could entail liability under the beneficiary inducements CMP.

The OIG found, however, that the arrangement satisfied the "Promotes Access to Care" exception to the beneficiary inducements CMP, meeting each of the following elements:

Promotes access to care. Under this element, the OIG examined whether the arrangement "improve[s] a beneficiary's ability to obtain items and services payable by Medicare or Medicaid." The arrangement easily cleared this test; individuals without a device capable of running the app could not properly use the functions of the new digital medicine product. Therefore, the OIG found that providing a loaner device would increase access to care.

Low risk of harm to patients and federal health care programs. The OIG looked particularly at the three criteria established in the regulations codifying the "Promotes Access to Care" exception: (1) whether the remuneration is unlikely to interfere with, or skew, clinical decision making; (2) whether the remuneration is unlikely to increase costs to federal health care programs or beneficiaries through overutilization or inappropriate utilization; and (3) whether the remuneration raises patient safety or quality-of-care concerns.3 Looking at these criteria, the OIG found that the proposed arrangement would pose a low risk of harm to patients and federal health care programs.

Clinical Decision Making: The OIG found that the proposed arrangement would be unlikely to interfere with clinical decision making, due to both the limited value of the device and the limiting eligibility requirements.

Costs to Federal Health Care Programs and Beneficiaries: The OIG also found that the proposed arrangement would not likely increase costs to federal health care programs or beneficiaries. The OIG stated that the added benefit of the digital medicine product, more so than the remuneration of the loaner device, was likely to drive utilization. The OIG also noted that various safeguards in the proposed program design reduced the likelihood that the program would drive unnecessary utilization. Specifically, the OIG pointed to the fact that the requestor would not advertise the arrangement to patients and would provide the device for only a limited period. The OIG also suggested that the limited functionality of the loaner device addressed its concerns regarding inappropriate utilization, noting that its conclusion would likely be different if the device had "additional functionality (i.e., access to an Internet browser or a camera or the ability to add other apps) such that it could relieve a patient from the burden of purchasing a smartphone or paying for a smartphone contract."4

Patient Safety and Quality of Care Concerns: The OIG found that the proposed arrangement most likely increased patient safety and quality of care by enabling increased use of a product that tracks adherence and communicates back to the patient's physician.

AKS Analysis. The OIG noted that, although the requestor's liability under AKS applies directly to the impact of the proposed arrangement on patients' selection of the product—in contrast to the analysis under the beneficiary inducements CMP, which looked at impact on a patient's selection of a pharmacy or health care provider—they applied "the same analysis."5 The OIG stated that, in light of the various safeguards discussed above (i.e. the temporary nature of the program, the limiting eligibility criteria and the lack of patient advertising), the OIG would not enforce sanctions under the AKS based on the proposed arrangement.

Implications for Industry

Advisory Opinion 19-02 is one of the first to discuss the new "Promotes Access to Care" exception to the beneficiary inducements CMP, and the first guidance on its application to the provision of technological devices as part of a patient assistance program.

The Advisory Opinion indicates a willingness by the OIG to use the exception to approve potentially problematic patient assistance programs where they include extensive safeguards and mitigating factors. Here, the OIG focused on (1) the limited functionality of the device provided; (2) the limited duration of the program; (3) the limiting eligibility criteria (including having a prescription for the product, lacking a compatible smartphone and having an income below a certain threshold); and (4) the lack of patient-facing advertising.

Note, however, that the OIG approved the arrangement despite the fact that it features the provision of a smartphone with the ability to make local calls. This demonstrates the willingness of the OIG to use the "Promotes Access to Care" exception to endorse arrangements that it might not approve under the exception for the provision of free or discounted items or services to individuals with financial need, based on the OIG's prior comments in regulatory guidance.6

The Advisory Opinion also provides clearer evidence of the OIG's approach to patient assistance programs operated by drug and device manufacturers. First, it clarifies how the OIG applies the beneficiary inducements CMP to these programs. The Advisory Opinion states that, although the issue under the CMP is whether a program is likely to influence a patient's choice of a particular health care provider or pharmacy, where remuneration is likely to have this influence, drug and device manufacturers could still face liability. The Advisory Opinion also underscores that the OIG will consider careful compliance with exceptions to the beneficiary inducements CMP when conducting its AKS analysis, specifically stating that "the same analysis applies" in both contexts.

Footnotes

1 See, e.g., Adv. Op. 17-01. (Mar. 3, 2017).

2 In accordance with regulations governing the advisory opinion process, the OIG redacted the specific disorders treated by the drug. However, based on a citation included in the opinion, it appears the drug may be used to treat mental disorders, including schizophrenia.

3 See 42 C.F.R. § 1003.110; Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements, 81 Fed. Reg. 88,368, 88,390-98 (Dec. 7, 2016) (final rule).

4 Ad. Op. 19-02, at 7-8 (Jan. 29, 2019).

5 Id. at 8.

6 See, e.g., 81 Fed. Reg. at 88,404; Revisions to Safe Harbors Under the Anti-Kickback Statute, and Civil Monetary Penalty Rules Regarding Beneficiary Inducements and Gainsharing, 79 Fed. Reg. 59,717, 59,728 (Oct. 3, 2014) (proposed rule).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions