The Department of Health and Human Services Office of Inspector General (OIG) recently issued two advisory opinions related to proposed arrangements offering financial assistance to individuals who receive gene therapy treatments. These arrangements were specifically targeted to patients who may suffer from infertility as a result of the treatments' required chemotherapy-based fully myeloablative conditioning (Conditioning).
While proposed arrangements for travel support (as discussed below and in a June 14, 2024 advisory opinion) appear to receive approval from OIG, other proposed financialsupports for infertility services have received unfavorable opinions primarily because of a lack of data available to OIG regarding whether the proposed assistance would improve the ability of patients to access the gene treatment therapies.
These unfavorable decisions effectively chill arrangements to provide additional financial support to individuals who are enrolled in federal and state health care programs and require gene therapy treatments, though OIG has indicated that it may issue favorable decisions in the future if it receives additional data.
The disclosed facts and relevant analysis in each advisory opinion are similar and are discussed separately below.
Advisory Opinion 24-06
On July 18, 2024, OIG issued an unfavorable advisory opinion in response to a pharmaceutical company's request for approval to provide up to $70,000 in financial support to patients receiving a gene therapy treatment product. The financial support would cover fertility services, including patient counseling, fertility drugs, collection and storage of oocytes or sperm, genetic testing, intrauterine insemination, and applicable in-vitro fertilization procedures.
The gene therapy treatment product was previously approved by the Food and Drug Administration (FDA) for the treatment of patients 12 years and older with certain undisclosed genetic blood disorders. To be eligible for treatment, patients must undergo consultations with a physician at a hospital treatment center approved by the pharmaceutical company. The use of the gene therapy treatment product for these disorders also requires Conditioning, a process by which existing stem cells are destroyed to accommodate the modified cells.
OIG refused to approve the proposed arrangement under either the federal Anti-Kickback Statute (AKS) or the civil monetary penalty provisions prohibiting inducements to beneficiaries (the Beneficiary Inducements CMP). However, in both instances, OIG indicated that more information may lead to a different result in the future.
With regard to the unfavorable result under the AKS, OIG pointed to the following aspects of the proposed arrangement: (1) Offering prospective immunity under fraud and abuse laws is difficult because "much is yet unknown about [cell and gene therapy treatments] and optimal arrangements for ensuring appropriate access to them;" (2) the arrangement would be remuneration to patients that may induce them to purchase the gene therapy treatment product; and (3) the arrangement would be remuneration to the company-approved hospital treatment centers and/or the treating physicians, because the arrangement creates an opportunity to earn fees related to treatment with the product and could induce the treatment centers to recommend the product and physicians to order the product, as opposed to competitor drugs or other clinically appropriate treatments to which no safe harbor would apply.
Importantly, OIG noted that its conclusion "is not a determination by OIG that the proposed arrangement would violate the Federal anti-kickback statute; it simply means that, in an exercise of its enforcement discretion, OIG declines to offer prospective immunity [through issuance of] a favorable advisory opinion." OIG also determined that the financial support could constitute remuneration likely to influence patients, which would run afoul of the Beneficiary Inducements CMP. OIG added that, while no exception is currently available to protect the arrangement, it is possible that additional data may become available in the future that could allow the arrangement to qualify under the "Promotes Access to Care Exception." This exception applies to certain items or services that "improve a beneficiary's ability to obtain items and services payable by Medicare or Medicaid, and pose a low risk of harm to Medicare and Medicaid beneficiaries and the Medicare and Medicaid programs" by meeting specified criteria.
Advisory Opinion 24-05
On July 17, 2024, OIG issued a partially favorable advisory opinion to a biotechnology company that provides two FDA-approved gene therapy treatment drugs for certain severe genetic diseases. This advisory opinion held that the proposed arrangement was favorable with respect to travel assistance and unfavorable in relation to infertility services assistance.
Treatment with the gene therapy treatment drugs involves multiple stages, including, but not limited to, mandatory consultations with an approved hospital treatment center and Conditioning. The FDA-approved labels for the drugs require that patients stay in the treatment center for approximately three to six weeks for one drug, or up to two months for the other drug.
According to the biotech company, the drugs are available at a limited number of treatment centers that have the expertise to treat patients and administer gene therapies. The company evaluates potential treatment centers based on certain criteria, including, but not limited to, quality controls to manage inventory and to prevent exposure to communicable disease agents, and policies and procedures for patient screening, testing, stem cell collection, and management of reactions and adverse events.
Under the proposed arrangement, patients would receive assistance for qualifying travel, lodging, and meals as well as assistance for specified fertility preservation services. The travel support would require individuals to meet standards pertaining to specified income and distance restrictions. The travel must also not be covered by the individual's insurer. The fertility services support would offer up to $22,500 to cover costs of certain fertility preservation procedures and storage.
OIG split its analysis of the proposed agreement into two parts to address each aspect of the arrangement. With respect to travel support, OIG concluded that the risk of fraud and abuse is "sufficiently low under the AKS to issue a favorable advisory opinion relative to the travel support." This was based on OIG's finding that (1) the travel support removes a barrier to accessing medically necessary care from the treatment centers, (2) the travel support facilitates compliance with the drug label instructions for the patient to remain at a treatment center for the required period of time, (3) each of the drugs is a one-time treatment, and therefore unlikely to lead to additional referrals, and (4) the travel support includes safeguards that reduce the risk of fraud and abuse.
OIG also determined that the travel support would generate prohibited remuneration under the Beneficiary Inducements CMP, but that such support qualifies for the "Promotes Access to Care Exception".
As with Advisory Opinion 24-06, OIG refused to issue a favorable determination for the part of the proposed arrangement that provided assistance with fertility services. OIG found that portion of the arrangement would trigger the AKS in that it (1) constitutes remuneration to patients that may induce them to purchase drugs, and (2) would constitute remuneration to the treatment centers and the treating physicians in the form of the opportunity to earn fees related to treatment with the drugs. OIG noted that no safe harbor would apply to this portion of the arrangement and that OIG currently lacks data to evaluate the factors OIG traditionally considers when assessing the risk of fraud and abuse under the AKS. Just as it did in Advisory Opinion 24-06, OIG confirmed that its conclusion is not a determination that the fertility support assistance would violate the AKS, but only that OIG declined to offer prospective immunity through a favorable advisory opinion.
As for the Beneficiary Inducements CMP, OIG held that the assistance would be remuneration likely to influence patients, and that the company should know that patients would likely be influenced to select a physician at a treatment center over other providers outside the proposed arrangement. OIG also concluded that, while no exception is available to protect the arrangement, additional data in the future may allow the arrangement to qualify for the "Promotes Access to Care Exception."
Reed Smith will continue to follow developments in health care fraud and abuse enforcement. For more information on this advisory opinion or the impact of the OIG's guidance on your business, please contact the author or a member of the Reed Smith health care team.
This article is presented for informational purposes only and is not intended to constitute legal advice.