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OIG Agrees To Free Drug Treatment Under Supervision Of The FDA

The Office of the Inspector General (OIG) of the HHS (Health and Human Services) in the United States has expressed a favorable opinion in its communique on 18 April on the arrangement by which a pharmaceutical company offers free medicine to patients that satisfy certain criteria.  

OIG Agrees To Free Drug Treatment Under Supervision Of The FDA

These medicines are those that have been made from the patient’s own cells and are to be single-dose and potentially curable. Such drugs are subject to the Risk Evaluation and Mitigation Strategy (REMS)  of the U.S. Food and Drug Administration (FDA). They are also required to be administered only by a Healthcare Facility certified by the drug manufacturer and prescribed by a doctor specifically trained to meet the requirement of the REMS. 

A specific criterion of this arrangement is that specific financial stipulations including no insurance claims would qualify for the free drugs. 

The OIG is confident there are low chances of fraud under federal AKS (Anti-kickback Statute) in this arrangement because the drugs are FDA approved and so minimize a situation where a drug manufacturer offers the first lot free but maintain a much higher price when other variants are paid for by Federal Healthcare programs.

The OIG is further confident as these free drugs are single-dose only for a specific cure and minimize the possibility that this drug is a seeding arrangement through which future referrals of drugs may be required. There is also a low risk of Physicians overutilizing this drug for professional fees as there is a check by the FDA to administer this drug only after past therapies and treatments have proved ineffective.

The OIG is further confident that this arrangement poses a low risk of fraud, waste or abuse as each individual arrangement is being carefully analysed by the FDA.  The OIG  is also confident that this arrangement for which they have secured permission is unlikely to violate the statute against beneficiary inducement under the civil Monetary Penalty Statute.  This is because this arrangement is unlikely induce beneficiaries to select a particular Drug Manufacturer , practitioner or supplier because the arrangement is available regardless of the facilitators or Prescribing Doctors. The eligibility of doctors prescribing the Drug is determined only by the FDA’s REMs Criteria and not the remuneration offered under this arrangement.  Opinion 21-01 relies upon earlier opinions 20-05, 18-14, and 15-11.  The FDA has stipulated that the REMS requirement of the free drug must also include ETASU (Elements to ensure Safe Use). The OIG is confident there will be no malpractices that can violate the CMP (Civil Monetary Penalty) law.

This program drug is an antineoplastic approved by the FDA.

To be eligible for receiving this one-dose drug, the patients must be new and must have an on-label diagnosis along with a prescription for the drug. The patient must have a maximum income of US 75000 with 25,000 Dollars for each family member. The requestor then markets the drug that is used to treat rare conditions. 

It has been observed, however, that premature termination of treatment can have serious consequences to patients. An investigation has also shown that hospitals frequently do not have ready stocks of such free drugs mainly due to inventory problems caused by long storage. Understandably, hospitals are also reluctant to administer these drugs in an inpatient setting because of insufficient payor reimbursement. 

As more biologics enter the market, certain aspects of this opinion of the OIG can serve to provide a roadmap for pharmaceutical companies to manufacture life-saving drugs to patients who could normally not afford them.             

The OIG has taken a good step by giving a positive opinion whereas they had said no in their opinion of 18-14 was to say no to free drug administration. With the FDA watching, it is expected this privilege will not be misused by health care organizations and that it will save lives as it was intended to.

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