OIG Allows Pharmaceutical Manufacturer to Create Free Physician Assistance Program

OIG issued Advisory Opinion 09-08 allowing Requestor–“a pharmaceutical and healthcare company that develops, manufactures, and markets pharmaceutical products–to develop a Program “that will make available at no charge certain of its drug products to indigent patients without prescription drug coverage.” The OIG determined that the Program falls under the umbrella of a Bulk Replacement Model, in which healthcare facilities can apply for pharmaceuticals in bulk rather than individually, maximizing efficiency and practicality.

The OIG stated that its central concern with this model is “whether the Program may be a vehicle through which Requestor offers or pays remuneration to Participating Hospitals either: (1) to induce Participating Hospitals to purchase or order (or arrange for, or recommend, the purchasing or ordering of) the Requestor’s products that are payable by a Federal health care program; or (2) to influence the prescribing patterns of physicians at Participating Hospitals with respect to the Requestor’s products that are payable by a Federal health care program.” For the following reasons, the OIG determined that the risk of violating the anti-kickback statute and imposing civil monetary penalties (CMP) are low or non-existent:

1. because the Requestor will be admitting hospitals based on the hospital’s size and disproportionate share (DSH) percentage rankings, the Requestor can ensure that the hospitals with the greatest number of indigent patients will be served with the Program;
2. because the Program involves outpatient drugs and the Requestor will ship the drugs out each quarter based on the drugs dispensed during the previous quarter, the Participating Hospitals will not obtain excess drugs;
3. the Participating Hospitals will not receive any fees for participating in the Program;
4. the physicians at the Participating Hospitals will not receive any fees for prescribing Program Drugs;
5. the Program’s transparency where “the terms [are] documented in a written, signed agreement between Requestor and each Participating Hospital that covers all of the Program Drugs to be provided;”
6. those who receive the Program Drugs do not have prescription drug coverage and are among the financially needy; and 7. because Requestor is not a provider, practitioner, or supplier, CMP is not implicated.

Thus, for the foregoing reasons, the Program would not receive OIG scrutiny.

For more information, please call Adrienne Dresevic, Esq. or Carey F. Kalmowitz, Esq. at (248) 996-8510 or visit The HLP website.