PorzioLS InfoCenter Update: OIG Issues Advisory Opinion Regarding Provision of Free Drug

April 13, 2021

On March 23, 2021, the Office of Inspector General (OIG) responded to a request for an advisory opinion (OIG Advisory Opinion No. 21-01) regarding an arrangement where a company provides a free drug at designated treatment centers by center physicians to patients for whom Requestor’s drug is prescribed as a treatment of last resort (e.g., patients who have undergone two or more lines of systemic therapy) or for those who did not respond to initial treatment with other therapies.

As part of the arrangement, the company currently offers the drug at no charge to all eligible patients, who, among other requirements, must show evidence of either no health insurance, no insurance coverage or that they cannot afford the drug. Patients must also meet specific income guidelines to be eligible. Although the drug may only be administered at certified health care facilities that meet certain drug safety requirements (a “Center”) and prescribed only by a physician trained to administer the drug under the FDA-imposed Risk Evaluation and Mitigation Strategy (REMS) (a “Center Physician”), all eligible patients may receive the free drug regardless of the specific Center or Center Physician the eligible patient selects. The provision of such drug must also not be contingent on future orders of the drug by a Center Physician and the Center Physician must indicate that the prescription of the free drug is for an on label use.

The OIG concludes that, based upon the certified facts by the company: (i) the arrangement does not implicate the civil monetary penalty provision, which prohibits inducements to beneficiaries, 42 U.S.C. § 1320a–7a(a)(5) (Beneficiary Inducement CMP Provision); and (ii) although the arrangement could potentially generate prohibited remuneration under the federal Anti-Kickback Statute if the requisite intent to induce or reward referrals of federal health care program business is present, the OIG will not impose administrative sanctions on the Requestor in connection with the arrangement.

According to OIG, the arrangement does not implicate the Beneficiary Inducement Provision because the remuneration provided under the arrangement is not likely to influence a program beneficiary to select drug treatment at a particular Center or by a Center Physician.

In addition, OIG concludes that the arrangement presents a low risk of fraud and abuse under the federal Anti-Kickback Statute because: the arrangement is not contingent on any future orders of the drug as it is usually only administered once; it is available to patients for both of its FDA approved indications, thereby distinguishing it from more suspect arrangements where the possibility of maintaining high prices for other drug indications exists; and the free drug will be provided to all patients who meet eligibility guidelines whether or not recipient is an inpatient or outpatient; and is a treatment that is potentially curative and generally administered only once.

While the advisory opinion sheds light on OIG's stance on the subject, the opinion expressly cites multiple limitations including that:

  • This advisory opinion is issued only to the requestor of the opinion, and that it has no application to, and cannot be relied upon by, any other individual or entity;
  • This advisory opinion is limited in scope to the Arrangement and has no
    applicability to other arrangements, even those that appear similar in nature or scope; and
  • No opinion is expressed in the opinion regarding the liability of any party under the False Claims Act or other legal authorities for any improper billing, claims submission, cost reporting, or related conduct.


For more information on OIG enforcement, please see the Government Prosecutions section of the Enforcement Actions Database.

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