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September 24, 2014

24 September 2014

OIG Issues Publications Emphasizing Kickback Risks of Manufacturer-Sponsored Coupons for Part D Drugs

On September 19, the Office of Inspector General of the U.S. Department of Health and Human Services (OIG) issued a controversial report entitled Manufacturer Safeguards May Not Prevent Copayment Coupon Use for Part D Drugs, along with a companion Special Advisory Bulletin. The Report describes an OIG survey of pharmaceutical manufacturers’ use of copayment coupons and analyzes the safeguards manufacturers implement to guard against the use of coupons for drugs paid for by Medicare Part D beneficiaries. Each of the manufacturers surveyed provided notices to beneficiaries and/or pharmacies stating that their coupon and co-payment programs are invalid for use by Federal healthcare program beneficiaries. Nevertheless, OIG takes the position that failure to implement effective safeguards for compliance with eligibility requirements and other terms and conditions may be taken by the agency as reflecting an intent to use coupons to induce federally funded purchase of drugs in violation of the Anti-Kickback Statute and other fraud and abuse laws. These publications reflect another example of OIG’s emphasis on transparency as a way to reduce what it considers a source of fraud and abuse. However, OIG offers no concrete suggestions about how such a system might operate or be operationalized. In the meantime, these developments highlight certain AKS (and attendant FCA) risks that Part D plan sponsors, manufacturers, and participating pharmacies face.

For more detail on these developments, please see Sidley’s Global Life Sciences U.S. Healthcare Update titled “OIG Issues Report on Manufacturer-Sponsored Coupons and Companion Special Advisory Bulletin,” which can be found here.

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