An evolving ‘nexus’: OIG approves sponsored testing program involving companion diagnostic

The ‘nexus’ continuum

AO 25-07 is the third in a line of OIG opinions, punctuated by the Ultragenyx and QOL settlements, that addresses pharmaceutical industry-sponsored genetic testing programs under the Anti-Kickback Statute (AKS).

These programs, according to OIG, result in remuneration from the sponsor to patients—the free test—and to their physicians—“by enabling them to offer a service, at no cost to them or their [patients], that may create an opportunity for [them] to bill for other services.” (OIG has occasionally identified a third remuneration stream, from the sponsor to the testing laboratory, which OIG says could be referral sources for the sponsor’s drug.) And because no AKS safe harbors apply to such forms of remuneration, OIG evaluated each arrangement’s facts and circumstances to determine whether it posed a risk of fraud and abuse.

Among those facts and circumstances, OIG considered the perceived “nexus” between the relevant test and the prescribing or ordering of the sponsor’s drug, with OIG viewing an “attenuated” nexus—at least initially—as an important mitigating factor.

Its latest opinion, however, which involved an FDA-approved companion diagnostic test for the sponsor’s drug, suggests a softening of the “nexus” requirement.

Considering the probabilities

In AO 22-06 and AO 24-12, OIG framed the “nexus” factor in light of two clinical probabilities—the probability that the test would diagnose a relevant condition (whether that be a disease, biomarker, or otherwise) and the probability that the diagnosis would lead to prescribing the sponsor’s drug. OIG favorably cited the “attenuation” in the nexus between the test results and a decision to prescribe the sponsor’s drug as a reason for finding the programs presented a low risk of fraud and abuse. In other words, the lower these probabilities, the looser the nexus. This reasoning left open the question of how OIG would view a sponsored testing arrangement with a closer nexus between the test results and the prescribing decision.

In AO 25-07, the test was an FDA-approved companion diagnostic required by the sponsor’s drug’s labeling. FDA-approved companion diagnostics are developed, in part, to “identify patients who are most likely to benefit from a particular therapeutic product” and can play a decisive role in a provider’s decision to prescribe a product—in this case, the sponsor’s drug.

In other words, the probability that a positive result would lead to the prescribing of the sponsor’s drug was higher in AO 25-07 than it was AO 22-06 and AO 24-12. Despite this close nexus between the test and the prescribing decision, OIG found a low risk of fraud and abuse in part because, while the test was required to prescribe the product, the test was “just as likely to show the [product was] not indicated for a particular patient.” As such, OIG found the arrangement unlikely to result in overutilization or inappropriate utilization, skew clinical decision-making, or result in unfair competition.

A very limited role for field personnel

While the nexus continuum has drifted one way, the permitted scope of field sales involvement seemingly may be drifting the other towards greater restrictions. AO 25-07 reflects in detail OIG’s ongoing sensitivity to any material role for sales personnel, and even certain non-sales personnel, in making customers aware of sponsored testing arrangements.

OIG has consistently stressed the limited role for sales personnel in sponsored testing arrangements. In AO 22-06, for instance, OIG was comfortable with sales representatives distributing materials about the arrangement and a limited number of specimen collection kits “to cardiologists whom [the sponsor had] identified as being likely to diagnose and treat patients” with the disease because representatives did not distribute these materials based on providers’ use of the arrangement or history of prescribing the sponsor’s products.

These familiar themes continued in AO 25-07 but in particular detail and arguably more restrictive fashion. In undertaking “certain passive, non-promotional disease awareness activities in connection with the” testing arrangement, the sponsor’s personnel and the lab were subject to the following restrictions:

• Sales personnel could only leave behind a pamphlet with pre-approved information about the test and without mention of the sponsor’s drug. Sales personnel could not discuss the arrangement with providers, even reactively.
• Non-sales personnel “with expertise in diagnostic testing” could likewise leave behind only a non-promotional, pre-approved pamphlet with testing information, although they could answer unsolicited questions from providers about the arrangement.
• The sponsor could contract “with online search vendors to return results related to the [arrangement] when individuals [searched] for disease state-related information,” but not when they searched for the sponsor’s drug.

That OIG so extensively spelled out these limitations suggests that it remains highly focused on the role of sales and certain non-sales personnel in sponsored testing arrangements, at a minimum. Although OIG is not explicit on this point, AO 25-07 may suggest that these limitations take on elevated importance where there is a close nexus between the test and the sponsor’s drug. As a practical matter, they may leave little room for a sponsor to engage with providers on the details of a sponsored testing arrangement, except perhaps through indirect, reactive means.

We encourage manufacturers to explore our earlier detailed analysis here and to continue carefully considering, designing, and implementing sponsored testing programs.

Authored by Ron Wisor, Eliza Andonova, Laura Hunter, and Mike Dohmann.