On September 19, HHS released additional guidance on the “refill reminder exception” in HIPAA, which allows — in some circumstances — paid communications regarding a drug or biologic currently prescribed to a patient.
In January 2013, HHS finalized new restrictions on marketing as part of the final omnibus rule implementing changes to HIPAA under the HITECH Act. The new rules modified how and when covered entities and business associates may receive financial remuneration from a third party for making communications about a drug or biologic currently prescribed to an individual (i.e., “the refill reminder exception” to the marketing prohibition). We previously discussed the new restrictions here. In short, the new rules prohibit any financial remuneration above and beyond what is reasonable. HHS indicated that reasonable remuneration would include the costs of labor, supplies, and postage to make the communication. These restrictions appeared to prohibit a covered entity or business associate from generating a profit to make these subsidized communications.
As we discussed earlier, these new restrictions were challenged in a lawsuit filed earlier this month by Adheris, Inc.. Since the filing of the complaint, HHS announced that it would promulgate additional guidance on the refill reminder exception.
The new guidance describes both the scope of communications that fall within the exception and what third party payments are considered “reasonable” under the statute and regulations for making such communications.
What communications are included in the exception?
HHS explains that the following communications are permitted under the exception:
- Refill reminders.
- Communications about generic equivalents of a drug being prescribed.
- Communications about a recently lapsed prescription (one that has lapsed within the last 90 calendar days).
- Adherence communications encouraging individuals to take prescribed medicines as directed.
- Where an individual is prescribed a self-administered drug, communications regarding all aspects of a drug delivery system.
This does not include communications about new formulations of a currently prescribed medicine or adjunctive medications (a drug used in conjunction with a currently prescribed drug to help treat a patient’s underlying condition), nor does it include communications encouraging an individual to switch from a prescribed medicine to an alternative medicine.
When is financial remuneration “reasonable?”
Significantly, HHS explains that “reasonable” financial remuneration includes “payments to a business associate assisting a covered entity in carrying out a refill reminder or medication adherence program, or to make other excepted communications, up to the fair market value of the business associate’s services. The payments may be made by a third party whose product is being described directly to the business associate or through the covered entity to the business associate.” (emphasis added).
While HHS does not describe what it means by “fair market value,” presumably the new guidance will allow business associates to generate a profit for these services. This was at issue in the lawsuit filed by Adheris, which alleged that the new restrictions would cause irreparable harm to its business.
However, it seems that payments for covered entities to make these communications may cover only direct and indirect costs. HHS explains that a pharmacy may receive compensation from a pharmaceutical manufacturer or other third party whose product is being described that cover the reasonable direct and indirect costs related to the refill reminder or medication adherence program, or other excepted communications, including labor, materials, and supplies, as well as capital and overhead costs. Thus, it appears that business associates may make a profit to make these communications, while pharmacies may not. Nevertheless, HHS confirms that overhead and other indirect costs may be considered in the costs of making the communication.
HHS also announced that it will not enforce the restrictions on remunerated refill reminders and other communications about drugs and biologics for a period of 45 days following the September 23, 2013, compliance date, or until November 7, 2013.