OIG green lights drug manufacturer-sponsored genetic testing program

On April 11, 2022, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) published Advisory Opinion No. 22-06, concluding that a pharmaceutical manufacturer’s sponsored genetic testing and counseling program posed a low risk of fraud and abuse, despite implicating the federal anti-kickback statute. This advisory opinion is a welcome development for pharmaceutical manufacturers, as it provides the first insight into how OIG might view sponsored-testing programs that have become more prevalent with the advent of personalized medicine and a growing number of targeted therapies. But the good news does not come without a significant caution, as OIG noted that if certain facts of the arrangement were different, OIG “would likely reach a different conclusion.”

As always, the advisory opinion applies only to the specific arrangement analyzed and does not bind the agency with respect to any other sponsored testing arrangement. Critically, OIG’s caveat underscores the need for manufacturers to carefully consider the facts and guardrails applicable to any sponsored testing program.

The products and the sponsored testing program

The Requestor manufactures a drug approved for the treatment of a rare and serious disorder, one form of which can affect the heart and can lead to heart failure and death. The disease caused by the disorder can be inherited or occur spontaneously. The drug is approved to treat both versions of the disease and comes in two forms. According to the Requestor, diagnosis of the disease requires a clinical assessment including diagnostic testing, but patients are often not properly diagnosed with the disease until years after onset, which may result in inadequate or incorrect treatment.

The majority of hereditary cases of the disease are caused by a specific gene mutation that can be identified with genetic testing. Approximately ten to twenty percent of patients with the mutation will develop the disease. Thus, while genetic testing cannot diagnose the disease, it can provide information to help: (1) identify which form of the disease a patient has, which can influence disease progression; (2) identify patients who might benefit from diagnostic testing for the disease; and (3) monitor asymptomatic patients at increased risk of developing the disease.

Under the sponsored testing program, the Requestor offers a free genetic test and counseling services to certain qualifying individuals. The genetic test is only for the specific mutations associated with the disease. To be eligible for participation in the program, an individual must: (1) be diagnosed with the disease; (2) be suspected by their physician of having the disease; or (3) have a family member with a confirmed diagnosis of the hereditary form of the disease.

Any physician may order the genetic test through the program for any eligible patient. The Requestor certified that it does not require or otherwise incentivize physicians who order a genetic test through the program to recommend, prescribe, or administer any products manufactured by the Requestor.

Blood samples are collected in the ordering physician’s office, a similar practice setting, or an associated laboratory. The Requestor does not provide payment for specimen collection, but it is possible that, in at least some circumstances, the specimen collection may be covered by a federal health care program or other payer.

Patients who receive a genetic test through the program may also obtain free counseling services if requested by the ordering physician. Some physicians who order a test through the program may choose to offer genetic counseling directly to their patients, which may be reimbursable in some circumstances, but is not paid for by the Requestor.

Requestor’s sales representatives distribute materials about the program and specimen collection kits to cardiologists whom the Requestor has identified as likely to diagnose and treat patients with the disease. The Requestor limits the number of specimen collection kits a sales representative may provide to any individual physician, although physicians may order additional specimen collection kits directly from the testing vendor.

The Requestor does not proactively provide information about the program to patients or potential patients. However, the Requestor’s patient support program may reactively provide information about the program to a patient prescribed the drug for the disease. Moreover, the Requestor does not receive any data from the testing or counseling vendors that includes any individually identifiable health information or the specific providers who ordered the tests. The Requestor does not use data from the testing program for sales and marketing purposes, including targeting or incentives.

OIG approves the proposed sponsored testing program but signals limitations to its approval

OIG indicated that the program implicates the federal anti-kickback statute because it results in remuneration to patients and their physicians. With respect to patients, the program offers free genetic testing and counseling services that OIG characterized as “inherently valuable.” With respect to physicians, the program offers an opportunity to offer a free service to patients and potentially bill for other ancillary services. However, OIG found that the program posed a low risk of fraud and abuse for several reasons.

First, given the eligibility requirements and other safeguards, OIG concluded that the program would not likely result in overutilization or improper utilization because the presence of gene mutations does not, standing alone, determine whether a patient has (or will develop) the disease and could benefit from the Requestor’s drug. In addition to this attenuated connection between the test and the treatment decisions, OIG relied on several other critical factors in reaching its conclusion:

  1. there is no data to support use of the drug in patients who have not been diagnosed with the disease;

  2. it is not medically appropriate for a physician to prescribe the drug to patients who have not been diagnosed with the disease;

  3. the Requestor does not promote the drug for patients who have not been diagnosed with the disease; and

  4. the Requestor does not manufacture, market, promote, or otherwise have a financial interest in any other items or services that are used to treat or diagnose the disease.

Significantly, OIG noted that it would likely reach a different conclusion if there were a more direct nexus between the free genetic test and ordering or purchasing the manufacturer’s products.

In addition to the key facts above, OIG noted that the program only covers a single genetic test that has limited utility as an aid for diagnosing the specific disease at issue. OIG opined that “depending on the circumstances, free genetic testing that covers a wider range of genetic mutations may present a higher risk of overutilization or inappropriate utilization.”

Second, OIG found that the program is unlikely to skew clinical decision making or raise concerns regarding patient safety or quality of care because the Requestor does not otherwise incentivize or require providers who order tests through the program to recommend, prescribe, or administer any products manufactured by the Requestor.

Third, OIG noted various safeguards that prevent the program from being used as a marketing or sales tool:

  • the Requestor certified that its sales representatives would not distribute materials or specimen collection kits in a manner that takes into account a physician’s usage of the program or history of prescribing the drug;

  • the Requestor limits the number of kits a sales representative may provide to any individual physician; and

  • there are significant limitations on the Requestor’s receipt and use of data related to the sponsored testing program, including:

    • not receiving any individually identifiable health information regarding patients or data that identifies providers who ordered the tests; and

    • not using the data from the testing or counseling vendors for sales targeting or incentives.

Questions remain for other testing programs

While OIG’s opinion recognizes the legitimacy of manufacturer-sponsored testing programs, as well as limited accompanying genetic counseling for patients, the extensive list of facts and guardrails that informed the agency’s analysis may serve to limit their scope.

Perhaps most notably, OIG signaled that it likely would have reached a different conclusion if the program had a stronger nexus to prescriptions for the manufacturer’s product, which could impact sponsored testing programs where the free test plays a more prominent role in rendering a definitive diagnosis. This viewpoint is puzzling, however, because in many cases a more definitive genetic test can rule out patients who are not appropriate candidates for a particular therapy, thus helping to avoid excess or improper utilization of the drug. Hopefully, OIG’s words of caution will not unduly restrict these kinds of beneficial testing programs.

In addition, OIG expressed skepticism about programs involving the provision of free genetic testing that covers a wider range of genetic mutations and programs that are used as a marketing tool or to target ordering physicians for follow-up sales messaging.

If you have any questions on this advisory opinion or manufacturer-sponsored testing programs, please contact any of the authors of this alert or the Hogan Lovells attorney with whom you work most closely.


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


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