By Clay Brewer, Class of 2020; Caitlyn W. Page, Partner at Waller

An advisory opinion issued recently by the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) provides some insight into the growing relationship between access to technology and access to patient care.

The OIG issued Advisory Opinion No. 19-02 permitting a pharmaceutical manufacturer’s proposal to loan limited capability smartphones to certain financially needy patients in order to assist these patients and their care providers track medication adherence data. In issuing this advisory the OIG provided valuable insight into how it interprets the “promotes access to care” exception to the Beneficiary Inducement Civil Monetary Penalty Statute (the “Beneficiary Inducement CMP”).

According to the requestor, the patient population for an undisclosed drug experiences a high amount of medication nonadherence or partial adherence, which results in higher utilization of healthcare services and increased costs to the healthcare system. In response to this issue, the drug’s manufacturer created a device that detects a signal sent by the drug upon ingestion, which in turn transmits the ingestion time to an app developed by the manufacturer through Bluetooth. However, because some patients do not have a smartphone, they are unable to use the app. As a result, the manufacturer proposed issuing a limited capability smartphone along with the drug to patients who do not have a smartphone and who have a household income below a specified percentage of the federal poverty level. Aside from the preloaded app, all other features of the smartphone would be disabled except the patient would still be able to make domestic telephone calls. The smartphones would be issued by a specialty pharmacy under contract with the manufacturer and each patient would only be permitted to such use the phone for a maximum of two 12-week administrations while receiving the medication.

The OIG concluded that the Beneficiary Inducements CMP would be implicated by this proposal because patients would be receiving the ability to make domestic phone calls, which constitutes remuneration. Additionally, because the patient’s prescribing practitioner would complete the paperwork for the patient to obtain the smartphone, the patient would likely have the impression that he or she must continue receiving care from a particular provider in order to maintain use of the smartphone. The patient may also feel obligated to obtain the drug from the specialty pharmacy issuing the smartphones even if the drug is available at other pharmacies.  The OIG, however, found that the proposal would fall under the “promotes access to care” exception to the Beneficiary Inducements CMP for a number of reasons, most notably because the OIG concluded that there is unlikely to be any possibility of disrupting clinical decision making since the patient only receives a smartphone if he or she falls below a certain income and does not currently have a smartphone device to download the app.

The OIG also concluded the proposal poses a low risk of imposing additional costs upon federal healthcare programs because:

• there would be no incentive to issue a smartphone to an individual who already has one;
• there is no advertising of the proposal which would cause individuals to seek treatment for the purposes of receiving a smartphone; and,
• the smartphone’s limited capabilities and a maximum of two 12-week time periods would limit a patient’s effort to retain the smartphone.

Lastly, the OIG determined that the federal Anti-Kickback Statute could be implicated by this proposal if the requisite intent were present; however, it would not pursue administrative sanctions against the manufacturer because the proposed program contained a number of safeguards, including the fact that the loaner smartphone would be available only on a temporary basis, would only be used by individuals who otherwise would not be able to use the medication, and there would be no advertising of the smartphone so individual patients would not go to a certain provider seeking the medication for the purposes of receiving a smartphone.

While the OIG expressly stated that this opinion is narrowed to the specific facts that the Requestor presented and should not be relied upon for other possible initiatives, this advisory opinion provides useful guidance regarding the OIG’s view on the intersection of technology and the Anti-Kickback Statute and Beneficiary Inducements CMP.