OIG Issues Two Favorable Advisory Opinions for Dental Supply Loyalty Program and Pharmaceutical Manufacturer Sponsor of Genetic Tests

Introduction

In February 2025, the Office of Inspector General (OIG) for the US Department of Health and Human Services issued favorable advisory opinions Advisory Opinion 24-10 and Advisory Opinion 24-12, providing additional guidance on risk-mitigating strategies for compliance with the Anti-Kickback Statute (AKS).

In Advisory Opinion 24-10, the OIG approved an expanded customer loyalty program by a global medical and dental supplies distributor, demonstrating that even if a loyalty program does not fully meet discount safe harbor requirements, a well-structured arrangement with sufficient safeguards can be acceptable under the AKS. In Advisory Opinion 24-12, the OIG endorsed a pharmaceutical manufacturer’s program to sponsor free genetic testing, genetic counseling, and disease awareness education for patients at risk for an ultrarare genetic condition causing kidney stones — provided that strict eligibility criteria and robust data protection measures are maintained. These opinions serve as helpful guideposts for device distributors and pharmaceutical manufacturers looking to enter into similar arrangements.

Advisory Opinion 24-10 (Dental Supplier Customer Loyalty Program)

In Advisory Opinion 24-10, the OIG provided a favorable opinion regarding a proposed expansion of an existing customer loyalty program operated by a global distributor of dental supplies. The program rewards member customers — including dental practitioners, specialists, dental laboratories, and dental service organizations — with points and tiered benefits based on their purchasing activity. Although the arrangement generates prohibited “remuneration” (points and noncash benefits) that would not qualify for the discount safe harbor under the AKS, the OIG concluded that the arrangement poses low risk of fraud or abuse, and that the OIG would not impose sanctions.

Existing Program Structure

• Earning points: Customers earn points on purchases made through the distributor’s “Dental Division.” These points are credited uniformly within each membership tier, which is determined by annual spending levels.
• Tiered benefits: In addition to points, customers receive tier-specific benefits such as discounts on support services, warranties, and other customer care offerings.

Proposed Arrangement

• Broader applicability: The expansion would allow customers to earn and redeem points on purchases not only from the Dental Division but also from additional subsidiaries in which the distributor holds significant ownership.
• Scope of redeemable products: Points could be applied toward approximately 200,000 dental-related products or services provided by a broad network of manufacturers and service providers.
• Redemption limitations: The program is designed so that points can be used to cover only up to 50% of the purchase price, ensuring that customers always contribute a cash component.

Remuneration Streams Implicated

• Points program: Points — each with a very low monetary value of approximately $0.005 — act as a form of remuneration for qualifying purchases.
• Tiered benefits: Additional noncash benefits are awarded based on spending thresholds and are structured as customer support services rather than lavish rewards.

OIG’s rationale: The OIG found that the safeguards built into the loyalty program — such as the low per‐point value, strict redemption limits, and objective criteria for tiered benefits — render the risk of fraud and abuse low.

• Points program: Permissible for the following reasons:
  
  • Low dollar value: The nominal value of each point minimizes the incentive for steering or influencing purchase decisions toward particular items.
  • No free items or services: Restricting redemption to dental-related products and capping the discount at 50% helps prevent the creation of “free” products or services that might otherwise trigger AKS concerns.
  • Limited redemption scope: Points have no independent value outside of the program (i.e., they are distinguishable from rewards programs that bestow concert and sports tickets, consumer electronics, or vacation travel).
• Tiered benefits: Permissible for the following reasons:
  
  • Benefit types offered: The types of benefits offered under tiered benefits would reduce the risk of unfair competition and improper steering of customers because benefits are limited to customer services of products (priority service and scheduling for in-office equipment service calls, extended labor warranties on equipment purchases).
  • No independent value: Customer support services do not earn the member any additional, independently valuable rewards and therefore are unlikely to drive overutilization or corrupt medical decision-making.
  • Objective criteria: Tiered benefits are predetermined and uniformly applied based on objective spending criteria, reducing the likelihood of selective or improper reward allocation.

Key takeaways: Although the arrangement does not fall within the discount safe harbor (because it is not a straightforward price reduction), the OIG found that the safeguards built into the loyalty program — such as the low per‐point value, strict redemption limits, and objective criteria for tiered benefits — render the risk of fraud and abuse acceptably low. Importantly, the OIG cautions that discount programs that do not meet the discount safe harbor are generally “high risk and suspect under the” AKS. Suppliers considering similar loyalty or discount arrangements should conduct a thorough fact-based analysis to ensure their programs are comparably structured.

Advisory Opinion 24-12 (Pharmaceutical Manufacturer Free Genetic Testing and Services Arrangement)

In Advisory Opinion 24-12, the OIG provided a favorable opinion regarding a pharmaceutical manufacturer’s program that sponsors free genetic testing, genetic counseling, and disease state awareness education for patients at risk for an ultrarare genetic condition that causes kidney stones.

Program Structure

The manufacturer’s proposed program would cover all costs associated with genetic testing (including a follow‐up assay when needed) and counseling. The program is designed solely to help identify patients who might benefit from early diagnosis of this rare condition, without conditioning access on the prescription or use of the manufacturer’s drug.

OIG’s rationale: Although the arrangement implicates the AKS and the Beneficiary Inducement Civil Monetary Penalty provisions — because free services are considered forms of remuneration — the OIG found that the risk of fraud and abuse is sufficiently low for the following reasons:

• Controlled access and utilization: The arrangement enforces strict, narrow eligibility criteria (based on symptoms, impaired renal function, or family history) and allows the treating healthcare professional to select one of three approved genetic tests. Additionally, no patient or payer is billed for any component of testing or counseling, which minimizes the risk of overutilization or inappropriate use, especially given the ultrarare nature of the condition.
• Clinical neutrality and independence: The program uses commercially available testing panels without offering incentives to providers to favor the manufacturer’s drug. The drug is approved solely for a specific subtype and is not mandated by the arrangement. Moreover, no identifiable data about patients or providers is shared with the manufacturer, ensuring that clinical decision-making remains independent and free from targeted marketing influences.
• Low fraud and abuse risk: Fixed fees are paid to the laboratory and its subsidiary for services, and genetic counselors are restricted to discussing only the tests and hereditary conditions, without addressing treatment options. This structure, combined with stringent data protection measures that prevent the manufacturer from identifying participating providers or patients, significantly limits the risk of fraud or abuse under the arrangement.

Key takeaways: The OIG’s favorable opinion demonstrates that innovative patient support programs — especially those addressing rare diseases — can be acceptable if structured with appropriate safeguards. However, the OIG warns that any changes (for example, if identifiable data were shared that could facilitate targeted marketing) might lead to a different regulatory outcome.

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.