At the end of last year, the US Department of Health and Human Services Office of Inspector General (OIG) issued an Advisory Opinion (AO 23-11, the Opinion) in which OIG approved an arrangement where a medical device manufacturer would provide up to $2,000 in subsidies to Medicare beneficiaries for cost sharing obligations as part of the beneficiary’s participation in a clinical trial.
On the surface, OIG permitting such an arrangement appears to be a win for stakeholders in the pharmaceutical and medical device space, reducing one of many barriers associated with conducting clinical trials. The Opinion, however, should actually give those stakeholders pause before rushing to design similar programs to alleviate and reduce barriers to recruiting subjects to participate in clinical trials and maintaining their enrollment.
The Clinical Trial and the Arrangement
The requestor of the Opinion is a manufacturer of a medical device designed to be surgically implanted into patients experiencing heart failure in order to modulate heart muscle contractions. The device is currently approved by the Food and Drug Administration (FDA) for only a limited patient population that meet certain criteria. The requestor is a sponsor of a clinical trial that would ultimately result in the device being approved for use in an expanded patient population with more severe heart failure. For this population, the device is only available for clinical use pursuant to a Category B Investigational Device Exemption (IDE).
The Centers for Medicare & Medicaid Services (CMS) approved the requestor’s clinical trial and, therefore, Medicare will cover the device and routine care items and services associated with the trial. Under the proposed arrangement, the requestor would pay for the patients’ cost-sharing obligations that they would otherwise have to pay to the clinical sites and investigators, up to $2,000 for each patient. In short, Medicare beneficiaries that are selected for the trial would not have any out-of-pocket costs they otherwise would have had to pay.
OIG ultimately approved of the proposed arrangement, stating that it would not seek administrative sanctions against the requestor even though the arrangement implicated the federal Anti-Kickback Statute (AKS) and the Beneficiary Inducements Law.
Implications for Pharmaceutical and Medical Device Manufacturers
The Opinion’s favorable finding on the arrangement seems, at first, to be a win for pharmaceutical and medical device stakeholders. This particular proposal, according to the requestor, would make it more likely that patients would stay for the duration of the clinical trial and open the trial to a more socioeconomically diverse patient pool.
Arrangements that take down these types of barriers for clinical trials while avoiding enforcement scrutiny under healthcare fraud and abuse laws like the AKS would undoubtedly be beneficial to companies working to get drugs and/or medical devices approved for broad clinical use. The Opinion recognizes this benefit to manufacturers, noting that the arrangement would be a “reasonable means” of getting patients enrolled in the study when costs would otherwise prevent them from participating.
OIG’s underlying analysis of its ultimate conclusion, however, should give stakeholders pause. While it is well-known that advisory opinions are fact specific and limited to the factual situation presented by a particular requestor, this Opinion’s reasoning makes clear that it is not a permission slip for companies to engage in similar arrangements for any and every product or device.
OIG specifically noted that the arrangements’ safeguards, including that the requestor would not advertise the subsidies to patients and that CMS had already approved the trial as a Category B IDE study, made the arrangement unlikely to lead to overutilization and/or abuse. OIG also explicitly noted that the inherent nature of the device at issue, a one-time surgically implanted treatment, would not “prompt future utilization” by patients in the clinical trial or for other devices manufactured by the requestor. This finding was a not-so-subtle hint that a similar arrangement for a involving a multiple use product (e.g., a prescription drug) would likely not get such favorable treatment.
Key Takeaways
Stakeholders in the pharmaceutical and medical device space encounter many barriers to initiating and completing clinical trials. Efforts to remove those barriers, while noble, come with risk and can easily lead to enforcement scrutiny under fraud and abuse laws. This Opinion does not change that general principle. Pharmaceutical and medical device stakeholders should always scrutinize whether an arrangement with clinical trial participants is compliant with laws like the AKS and Beneficiary Inducements Law before implementing such a program.