HHS-OIG Issues Favorable Opinion on Free Companion Diagnostic Test Program for Drug Eligibility

The U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG) recently issued Advisory Opinion No. 25-07, a favorable opinion concluding that a pharmaceutical manufacturer’s program offering a free companion diagnostic laboratory test to eligible patients presents a low risk under the federal Anti-Kickback Statute (AKS) and does not generate prohibited remuneration under the Beneficiary Inducements Civil Monetary Penalty (CMP) law, provided certain safeguards are met.

Background 

The pharmaceutical manufacturer requesting the advisory opinion (the Requestor) developed a drug approved by the U.S. Food and Drug Administration (FDA) for the maintenance treatment of certain conditions in patients with a specific molecular deficiency. The drug’s effectiveness is limited to patients who test positive for this deficiency, which is determined by an FDA-approved companion diagnostic test performed by an independent laboratory (Lab). The test is typically covered by federal health care programs and private insurance, but patients may be responsible for cost sharing

Under the program (the Arrangement), the Requestor offers the companion diagnostic test at no cost to eligible patients, including federal health care program beneficiaries. Eligibility is limited to patients who: (i) have a negative result from a prior genetic test for a relevant mutation; (ii) have a previously collected tumor tissue sample suitable for testing; (iii) require the test for an FDA-approved indication; and (iv) have not previously received the test. Providers must attest to these criteria, confirm clinical appropriateness, forgo reimbursement for the test or related services, and obtain necessary patient consent.

The Requestor pays the Lab a fixed fee per test under a written agreement prohibiting the Lab from billing any patient, payor, or third party for tests performed under the Arrangement. The Requestor does not provide remuneration to providers or subsidize other medical services. The Lab provides only de-identified, aggregated data to the Requestor for program verification and auditing purposes, with strict controls to prevent use of data for marketing or sales targeting.

Marketing and Communications

The Requestor’s field personnel are limited to passive, non-promotional disease-awareness activities, such as leaving behind unbranded pamphlets about the Arrangement. Sales representatives are prohibited from discussing the drug in connection with the Arrangement, and all communications regarding the Arrangement are controlled to avoid promotion of the drug or the Lab’s other services. The Lab is contractually restricted from promoting the Arrangement or its other products to providers or patients.

HHS-OIG’s Findings

HHS-OIG found that the Arrangement implicates the AKS because the free test constitutes remuneration that could induce patients to purchase, or providers to prescribe, the manufacturer’s drug. Providers may also benefit by offering a no-cost service that could lead to additional billable visits. However, HHS-OIG determined that the risk of fraud and abuse is sufficiently low due to several factors:

• The test is required to determine eligibility for the drug and does not independently drive utilization.
• Providers are not incentivized to prescribe the drug, and the test may indicate that the drug is not appropriate for a given patient.
• The program includes robust safeguards to prevent use of the Arrangement as a marketing tool, including strict data controls and limitations on provider and patient targeting.
• The Lab and Requestor are contractually prohibited from using the Arrangement to promote other products or services.

With respect to the Beneficiary Inducements CMP, HHS-OIG concluded that the Arrangement satisfies the “Promotes Access to Care Exception.” The free test improves beneficiaries’ ability to access medically necessary items and services, poses a low risk of harm, is unlikely to interfere with clinical decision-making, and does not raise patient safety or quality-of-care concerns.

Key Takeaways 

Advisory Opinion No. 25-07 affirms that, while the free companion diagnostic test program could potentially implicate the AKS and Beneficiary Inducements CMP, the Arrangement’s design and safeguards sufficiently mitigate risk. HHS-OIG will not impose administrative sanctions under the AKS or exclusion authority, and the Arrangement does not generate prohibited remuneration under the Beneficiary Inducements CMP, provided the facts and conditions described in the opinion are met.

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