OIG Approves Free Drug Program Limited to Inpatients | Bass, Berry & Sims PLC

On November 16, the Office of the Inspector General of the US Department of Health and Human Services (OIG) released Advisory Opinion 21-16, approving an agreement under which a pharmaceutical manufacturer provides free trial units of a long-acting antipsychotic drug to certain hospitals for inpatient use (Arrangement). With this favorable review, the OIG offers insight into how it distinguishes beneficial free drug programs that manufacturers provide to hospitals exclusively for hospital use from potentially problematic “priming” arrangements that could direct patients to them. products from manufacturers.

The arrangement


The applicant pharmaceutical manufacturer (Applicant) manufactures a long-acting injectable (LAI) antipsychotic drug (Drug) which the United States Food and Drug Administration has approved for the treatment of adults with certain disorders (Disorders). Various peer-reviewed articles indicate that patients with these disorders often do not adhere to their prescribed treatment regimens, which can lead to worse outcomes, including increased hospitalization rates and longer hospital stays.

The applicant also cited various peer-reviewed studies supporting the use of LAIs for patients with the disorders, including a study which demonstrated that after discharge from hospital, patients with the disorders treated with LAI had a significantly lower likelihood of rehospitalization after 60 days than those treated with oral antipsychotic drugs, which must be taken daily.

Healthcare providers can inject the drug in a hospital or outpatient setting. When administered in a hospital setting, the drug is generally not separately reimbursable by a federal health care program. Drug labeling requires that patients receive concomitant therapy with their daily oral antipsychotic drugs for 14 days after receiving an initial injection of the drug.

Free trial units

Under the arrangement, the applicant allows hospitals that do not accept prescription drug samples to request up to 60 free units of the drug per year, per prescriber, to be used for inpatients diagnosed with trouble. Hospitals can receive up to two free units per eligible patient, per year, up to a maximum of 360 free units of the drug per year.

Participating hospitals must agree to abide by various Applicant Terms and Conditions, including each of the following:

  • Neither the participating hospital nor the administering practitioner can bill a patient or third-party payer for the free drug or any administration service.
  • The participating hospital and its pharmacy must separate the free drugs and track the units provided to each patient under the arrangement.
  • Prescribing decisions must be in the best interests of patients.

For a patient to be eligible to receive the Free Drug, the patient must have been diagnosed with the Disorder and the practitioner must have prescribed the Drug after independently determining that the Drug is clinically appropriate and likely to produce a positive result. processing. Neither the participating hospital nor the prescribing practitioner is required to use or continue to use the Drug as a condition of participation.

The Applicant has certified that patients are not required to continue using the drug after discharge and that there are no known clinical barriers that would prevent patients from switching from the drug to another LAI or to an oral antipsychotic drug.

BIG analysis

The OIG noted that the Arrangement involved federal anti-return law because the free drug units are compensation the claimant offers to referral sources and no safe harbor protects the Arrangement. However, the OIG concluded that the Arrangement poses a sufficiently low risk of fraud and abuse for the following reasons:

  • Low risk of direction: The OIG noted that the average length of hospital stay for patients with the disorders ranges from 7.6 to 10.5 days. Since the drug’s labeling requires patients to receive concomitant treatment with their daily oral antipsychotics – which are not provided free of charge under the arrangement – participating hospitals and prescribing physicians would, in many cases, not withdraw. no financial benefit from prescribing the drug. Additionally, patients would not face any known clinical barriers to switching from the drug to another LAI or oral antipsychotic after discharge, when the drug would be separately reimbursable by the federal government.
  • Low risk of overuse: The arrangement requires prescribers to independently determine that the drug is clinically appropriate and that immediate on-site treatment increases the likelihood of a positive clinical outcome and does not encourage prescribers to prescribe the drug rather than therapeutic alternatives.
  • Federal health care program costs are unlikely to increase inappropriately: Peer-reviewed studies indicate that the drug reduces the rate of drug non-adherence and the risk of adverse outcomes, including hospitalizations, which could lower the overall costs of federal health programs over time.
  • Other guarantees: The OIG cited a number of other Arrangement safeguards that serve to mitigate the risks of fraud and abuse, including the cap on the number of units of free medicine that hospitals can receive, the requirement that prescribers act in accordance with professional standards and best interests, and that neither participating hospitals nor prescribers are obligated to use or continue to use the Drug as a condition for receiving free units.

Take-out meals for hospitals

The OIG has issued favorable advisory opinions on a number of agreements under which drug manufacturers provide free drugs directly to patients; however, each of these opinions was for ambulatory medication. More recently, in Advisory Opinion 18-14, OIG took a stand against a pharmaceutical company’s proposal to provide a free product for hospitals to use exclusively to treat inpatients diagnosed with a particular disease. Although the arrangement described in Advisory Opinion 21-16 may, at first glance, appear to share many of the same characteristics as the arrangement detailed in Advisory Opinion 18-14, the two arrangements contain critical differences.

More importantly, the agreement approved by the OIG in Advisory Opinion 21-16 does not release participating hospitals from a significant financial obligation; does not function as a problematic “seed” arrangement, in which a manufacturer offers free drugs with the goal of allowing the patient to obtain subsequent supplies that would be billed to federal health programs; and does not direct patients to the drug.

Hospitals wishing to participate in free inpatient drug programs may turn to the benefits described in Advisory Opinion 21-16 when assessing the risks associated with such arrangements. Finally, while the OIG’s perspective is certainly important, any arrangement whereby a manufacturer provides free drugs to a referral source must also be assessed for compliance with state anti-recoil provisions. applicable.

Back To Top