The advisory opinion was requested by a pharmaceutical company that manufactures and markets medications approved by the FDA in 2019 to treat a rare and serious cardiac disease that the opinion did not identify (Requestor). The OIG’s interpretation of “induce” is likely to be tested in one or more pending cases in federal court. The OIG appears to take the position that copay assistance “induces” a beneficiary to purchase a medication when the assistance removes a financial barrier, even if the medication is one that the beneficiary indisputably needs and would have purchased if he or she had the financial means to do so.

The key to the OIG’s legal analysis is its broad interpretation of the term “induce” as used in the Anti-Kickback Statute. In AO 20-05, an unusually lengthy opinion, the OIG sets forth in detail its concerns regarding the provision of financial assistance by pharmaceutical companies to Part D beneficiaries who cannot afford their out-of-pocket copay and other expenses. The OIG opined that the proposed program was “highly suspect” under the Federal Anti-Kickback Statute and was likely to induce patients to purchase the company’s products reimbursed under Part D.

On September 23, 2020, the Office of Inspector General of the United States Department of Health and Human Services (OIG) publicly released Advisory Opinion 20-05 (AO 20-05), a significant, adverse opinion rejecting a proposal by a pharmaceutical manufacturer to provide copay assistance to Medicare Part D beneficiaries who were prescribed medications that the company manufactures.

Copay assistance programs blocking ibx