September 19, 2024 | By Mary Kohler in Law360
On July 15, Vertex Pharmaceuticals Inc. sued the U.S. Department of Health and Human Services' Office of Inspector General in the U.S. District Court for the District of Columbia.[1]
Last year, the company had asked the OIG to opine on providing fertility preservation services to Medicaid patients. When the OIG said no, Vertex accused it of wrongly interpreting the law, and taking too long to answer.
Vertex is the third industry plaintiff to argue that the OIG must read the Anti-Kickback Statute to require a corrupt intent. The case raises interesting criminal law questions. Sharp legal thinkers will watch it.
But on the ground, fertility preservation is a growing issue for rare disease therapies, and it has challenges beyond kickback risk. Reproductive rights and health equity can weigh heavily, especially in the current political environment. Oddly, the dispute says little about them.
The big question is how these issues are factoring into each side's unspoken analysis. And what should other companies be considering as events unfold?
The Fertility Problem
Two newly approved gene therapies offer a potential cure for sickle cell disease patients, but they can cause infertility. So, some patients face a difficult choice: seek treatment now or retain their ability to have a child. Many choose the latter.
To remove this barrier, the manufacturers offer fertility preservation for patients who meet income requirements. But a decade of enforcement has shown the government views some manufacturer support as kickbacks that increase prescriptions. And these programs are generous. Vertex's program caps support at $70,000. Competitor Bluebird Bio Inc. values its benefit at $22,000.
After Vertex sued, the OIG issued opinions to both companies.[2] It said the programs are not necessarily problematic, but the new concept has many unknowns. And because advisory opinions come with a big promise — Anti-Kickback Statute immunity — the OIG cannot yet decide favorably. It's an artful dodge, given that the agency typically says simply yes or no.
The Payment Problem
Fertility services can be expensive. Private insurance plans vary, and Medicaid coverage is limited to nonexistent. While a few state programs pay for counseling and some of the less costly treatments, none cover creating embryos through invitro fertilization, which can easily exceed $15,000 per cycle.
With price tags exceeding $2 million, sickle cell gene therapies face similar challenges. To manage these expensive yet potentially curative treatments, many insurers, including the Centers for Medicare & Medicaid Services, are developing innovative payment models.
The CMS model requires the manufacturers to cover some fertility preservation, including counseling, oocyte and sperm harvesting, and cryopreservation. But it forbids manufacturers from covering IVF. Further, if a manufacturer offers IVF separately, CMS says it cannot receive the model's promised Anti-Kickback Statute protection.
So, this dispute is not about fertility preservation, but rather IVF. And CMS' line seems odd, given that oocyte preservation is newer and less proven than freezing embryos. Also, IVF was probably built into these products' launch prices, and the amount CMS will pay under the model. So, the question becomes: Why?
IVF Controversy
While the OIG was evaluating these programs, the Alabama Supreme Court ruled in LePage v. Center for Reproductive Medicine on Feb. 16 that embryos are children under the state's Wrongful Death of a Minor Act.[3]
Since then, IVF has moved center stage in the election debate. Democrats showcased it during their recent convention. Former President Donald Trump responded, saying his administration would not only encourage IVF but also pay for it.
Beyond election positioning, healthcare professionals crave clarity after the U.S. Supreme Court's 2022 ruling in Dobbs v. Jackson Women's Health.[4]
In the court's Moyle v. U.S. opinion in June, Justice Ketanji Brown Jackson poignantly details the dilemma providers face when pregnant women present in a critical condition, and emergency room doctors don't know what steps are OK, and what may later be deemed criminal.[5]
This issue is absent from the OIG opinions and Vertex complaint. Perhaps it does not bear directly on the kickback analysis, but it cannot escape the attention of government attorneys reviewing these programs, or the companies as they embark on offering them.
Vulnerable Classes
Vertex points out that sickle cell disease primarily affects African Americans, and its dispute with the OIG concerns Medicaid patients with proven indigency. Vertex asks that if these patients cannot afford expensive IVF now, and insurance won't cover it later, what is the point of preserving anything?
However, the issue runs deeper than race and economic status.
Men and women experience fertility care in vastly different ways. Men must merely bank sperm, and they can bank a lot of it. Women, on the other hand, must take a variety of mood-altering injectable hormones, and undergo an invasive procedure under sedation to retrieve a handful of oocytes.
Years later, men can have multiple children through a simple, relatively inexpensive insemination procedure. Often it is covered by insurance. So, it is primarily women who will need the IVF to turn their oocytes into embryos, and they may need to finance multiple cycles to have a single child.
Further, Vertex says that response to its treatment decreases with age. Teens are among the best candidates.
By drawing the line at IVF, the government's policy choice may inadvertently signal to poor Black teenage girls that their best chance for curing their disease and having a child is to get pregnant ASAP. It's doubtful anyone intends this, but the incentive is there nonetheless.
A Reticent OIG
It's not difficult to see that the OIG is struggling with these programs. Despite a compelling situation, the sheer benefit amounts are eye-popping. Plus, these companies compete; and that can heighten the agency's concerns.
The vendors might also be a factor. Fertility care is becoming big business. Vendors who can operate a program at this scale likely have investors and digital health coordinators. Lately, that combination has been signaling generalized anxiety among regulators.
However, the OIG's opinion gives little analytic insight. So, we can only guess.
The OIG's "not yet" answer suggests that the agency wants to say yes. However, the Vertex complaint provides rare insight on the degree to which the OIG coordinates with the U.S. Department of Justice behind the scenes. And it's no wonder. The OIG's patient assistance experience includes early favorable opinions that it later needed to rescind when enforcement started brewing.
It's doubtful the OIG is keen to repeat that history.
But the agency's suggestion that nothing stops these companies from moving forward glosses over the reality that its unfavorable opinion is effectively a ban.
Perhaps Vertex could have withdrawn its request. But the company rightfully points out it can only proceed in the face of potential criminal charges. And after laying its plans bare to the government for more than a year, it would seem to be in a weakened position should the DOJ eventually come knocking.
And now that an unfavorable opinion has issued, flying in its face would seem like an open invitation for whistleblowers, who may see a chance to get past a motion to dismiss.
What's Next
These issues extend beyond this case, as many cell and gene therapies carry infertility risk. So, business leaders and their advisers must navigate the gray while litigators debate the Anti-Kickback Statute's intent requirements.
Importantly, the OIG's "not yes" is also not a "no." Even though it is difficult to know what concerns the OIG and DOJ most, the CMS model suggests some services short of IVF are OK. And the OIG's opinions speak only to federal patients.
Still, the social and political context underscore the need for caution. Staying on top of state law developments will be essential.
In addition, the vendors need watching.
There is a ray of light. On Sept. 18, the OIG announced it will develop new compliance guidance for pharmaceutical manufacturers.[6] No further details are available and such a document will take time to develop. But the agency wants suggestions and stakeholders should weigh in.
In the interim, there must be a way to thread this needle so that manufacturers can safely provide meaningful help to these legitimately needy patients. Without it, many are left guessing whether today's actions will later fall prey to an opportunistic relator or prosecutorial whim.
And isn't that the essence of Vertex's complaint?
Mary Kohler is founder and principal at Kohler Health Law PC.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] Vertex Pharmaceuticals Incorporated v. United States Department of Health and Human Services et al, Docket No. 1:24-cv-02046 (D.D.C. Jul 15, 2024).
[2] OIG Advisory Opinion No. 24-05 (Jul. 17, 2024) (favorable for travel support but unfavorable for fertility preservation); and OIG Advisory Opinion No. 24-06 (Jul. 18, 2024)(unfavorable for fertility support).
[3] LePage v. Center for Reproductive Medicine, P.C., SC-2022-0515, SC-2022-0579, Supreme Court of Alabama (Feb. 16, 2024).
[4] Dobbs v. Jackson Women's Health Organization, 597 U.S. 215 (2022).
[5] Moyle v. United States, 144 S.Ct. 540 (2024).
[6] HHS OIG Website, Compliance Guidance | Office of Inspector General | Government Oversight | U.S. Department of Health and Human Services (hhs.gov) (accessed Sep. 19, 2024).
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