/>iOn July 2, 2025, the Department of Health and Human Services Office of Inspector General (OIG) issued Advisory Opinion 25-07 (AO 25-07), a favorable advisory opinion involving sponsored tests.
Sponsored tests are medical diagnostic tests or laboratory services whose cost is directly or indirectly paid for, in whole or in part, by a third party (often a pharmaceutical manufacturer or medical device company or related company), rather than by the patient, their insurance, or the health care provider performing the test. Typically, companies agree to pay for sponsored tests because they are necessary for a patient to access or use the company’s therapy but pose high out of pocket costs on the patient. Sponsored tests are frequently used to help match a patient to a specific drug or therapy available from the pharmaceutical manufacturer or medical device company, including true companion diagnostics, or to monitor therapeutic efficacy or to identify dangerous side effects of a prescribed therapy.
The OIG previously issued two opinions, AO 24-12 and AO 22-06, that approved sponsored test arrangements in which pharmaceutical manufacturers offered free genetic testing and genetic counseling services to patients suspected of having rare conditions for which the manufacturers produced approved medications. Under the facts in these opinions, the genetic test results alone did not directly determine whether the manufacturer's drug would be prescribed.
AO 25-07 takes the facts a step further. In AO 25-07, the OIG approved a sponsored test program proposed by a pharmaceutical manufacturer where the manufacturer would offer a specific companion laboratory test for free to eligible patients where the test is a medically necessary prerequisite for a provider to safely and effectively prescribe a prescription drug made by the pharmaceutical manufacturer. The proposed free laboratory test is generally covered by most insurance plans, including federal health care programs, and current Medicare cost-sharing for the test is $606, which may be cost-prohibitive for some beneficiaries. Without the results of this test, the manufacturer’s drug, described in the opinion as an enzyme inhibitor, could not be prescribed, because it would be contraindicated if the patient’s tumor did not test positive for the specific deficiency for which the test screens.
Under the proposed program in AO 25-07, the manufacturer would not directly pay health care providers or patients for the lab test; rather, the manufacturer proposed to cover the cost of the test through a third-party laboratory, which would be prohibited from billing patients or payors for the test. Eligibility for the sponsored test would be based on clinical criteria and medical necessity tied to the need for the specific drug that the patient’s provider would like to prescribe, assuming the patient’s tumor is the type for which the drug is indicated. Use of the test to screen for the specific deficiency at issue in the arrangement would be consistent with FDA labeling for the test.
The OIG determined that the proposed arrangement did involve remuneration (i.e., the sponsored test) that could induce patients and their providers to purchase the manufacturer’s drug. The OIG noted that the free test has value to patients because they would not have to pay the associated cost-sharing for the test, and it has value to providers by enabling them to offer a service at no cost to the provider or their patients that may create an opportunity for other billable services, including a follow-up visit to review test results. The OIG further noted that no safe harbor was available to protect the arrangement.
Nevertheless, the OIG concluded that the risk of fraud and abuse presented by the proposed arrangement was sufficiently low to warrant a favorable opinion despite the manufacturer directly funding a test that facilitates the prescription of its drug. Key to the OIG's conclusion that the sponsored lab test was not an inducement to generate referrals for federal health care program business was the fact that the arrangement was unlikely to result in overutilization or improper utilization, skew decision-making, or result in unfair competition. In this regard, the OIG reasoned that providers may already be considering the drug for their patients once they know the patient has the specific condition the drug is designed to treat, and the test at issue determines whether the drug is an appropriate treatment for the particular patient. According to AO 25-07, only approximately half of patients with the condition the drug treats will test positive and be eligible for the drug, and a negative test may result in the patient being prescribed a competitor’s drug (which, interestingly, also can be prescribed for patients who test positive, thus eliminating the need for similar testing, a fact the OIG does not dwell on in the opinion). The OIG found that the risk of skewed decision-making or steering was mitigated by the fact that the manufacturer’s field personnel do not discuss the drug when talking about the sponsored test program and that providers do not receive any remuneration from the manufacturer in connection with the sponsored test program.
While the manufacturer does engage in passive, non-promotional disease-awareness activities to raise awareness about the specific deficiency the test screens for and available testing, the OIG relied on assurances from the manufacturer that the sponsored test program is not used to market the drug to steer providers to either the manufacturer or the lab. Specifically, the OIG noted several key safeguards in the proposed sponsored test program:
- Manufacturer sales representatives do not distribute materials in a manner that takes into account a provider’s usage of the sponsored test program or the provider’s history prescribing the manufacturer’s products, including the drug at issue;
- The manufacturer has implemented limitations on the exchange of data relating to the sponsored test program that constrain the potential for the manufacturer to use the program to target specific providers or patients for further testing or to encourage prescribing or purchasing the drug, including the following:
- The lab does not provide the manufacturer with any individually identifiable health information regarding patients who receive a test or any data that would enable the manufacturer to identify providers who order tests through the program;
- The manufacturer does not allow its field personnel to access any data received from the lab; and
- The manufacturer does not use data from the lab for sales and marketing activities, including sales targeting or incentives.
- The terms of the contract between the manufacturer and the lab prohibit the lab from promoting the sponsored test program to providers or patients.
- The manufacturer certified that it does not proactively provide information about the sponsored test program directly to providers or patients.
Advisory Opinion 25-07 offers a potential pathway for supporting patient access to drug therapies through the sponsorship of companion diagnostic tests and highlights the importance of structuring such programs with clear clinical justification for the medical necessity. As with OIG’s prior AOs on sponsored testing, AO 25-07 also affirms the importance that neither the lab nor the sponsoring manufacturer be permitted to use the program to market their services to potential patients. While AO 25-07, like all OIG advisory opinions, is specific to the requesting party, it provides invaluable guidance for the industry and appears to signal a continuation of OIG’s enlightened approach toward endorsing well-constructed arrangements that promote patient access to new therapies.
