OIG Favorable Advisory Opinion Involving Sponsored Tests

Introduction: When “Free” Lab Tests Meet Federal Fraud Laws

When you hear that a pharmaceutical manufacturer wants to pay for a patient’s lab test, your inner compliance alarm probably goes off like a fire drill. Free testing? Tied to a drug? Paid for by the company that sells the drug? That has Anti-Kickback Statute written all over it.

Yet in July 2025, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued a favorable advisory opinion involving sponsored tests: Advisory Opinion 25-07. In it, OIG signed off on a program where a pharmaceutical manufacturer sponsors a specific companion diagnostic test for eligible patients so providers can determine whether those patients are appropriate candidates for the manufacturer’s drug.

This wasn’t a one-off fluke. AO 25-07 sits on top of a growing line of favorable OIG opinions about sponsored diagnostic testing and free genetic testing programs, including opinions on manufacturer-paid genetic tests and counseling for ultra-rare conditions.

So what changed? Did OIG suddenly decide it loves free stuff? Not exactly. Instead, the agency laid out a very structured, very compliance-heavy roadmap for when sponsored testing can pass Anti-Kickback Statute (AKS) and Civil Monetary Penalty (CMP) scrutiny. In this article, we’ll break down:

• What sponsored tests are and why they’re controversial
• What happened in OIG Advisory Opinion 25-07
• How this opinion builds on earlier favorable advisory opinions
• Key safeguards you’ll need if you want to design a legally defensible sponsored testing program
• Real-world experiences and practical lessons from implementing these programs

Sponsored Tests 101: What Are We Even Talking About?

In OIG’s words, “sponsored tests” are diagnostic tests or lab services that are partially or fully paid by a third partyoften a pharmaceutical or device manufacturerrather than by the patient, their insurer, or the ordering provider.

Typical examples include:

• Genetic testing panels to confirm whether a patient has a specific mutation that a drug targets
• Companion diagnostic tests required by a drug’s FDA labeling to identify appropriate candidates
• Monitoring tests to track side effects or long-term response to therapy

On paper, sponsored tests sound great. Patients get essential testing without crushing out-of-pocket costs, clinicians get important data, and manufacturers get better identification of the right patients for their drug. Everyone wins, right?

The problem is that under the Anti-Kickback Statute and the Beneficiary Inducements CMP, giving something of value (like a free test) to patients or providers who generate reimbursable business for federal health care programs can be treated as remuneration. That remuneration might improperly influence which drugs are prescribed, which tests are ordered, and which labs are used.

Quick Refresher: The Legal Landmines

Anti-Kickback Statute (AKS)

The AKS makes it a crime to knowingly and willfully offer, pay, solicit, or receive anything of value to induce or reward referrals for items or services reimbursable by federal health care programs. That means a sponsored test can be “remuneration” if:

• It reduces a patient’s cost sharing, or
• It lets a provider offer a service at no cost that might lead to other billable services, or
• It benefits the lab that’s getting paid to run more tests.

Beneficiary Inducements Civil Monetary Penalties

The CMP rules similarly prohibit offering something of value to Medicare or Medicaid beneficiaries that is likely to influence their selection of a provider, practitioner, or supplier. A free diagnostic test definitely has valueespecially if it spares the patient from a co-pay or deductible.

Importantly, there is no safe harbor that neatly fits manufacturer-sponsored lab tests. So OIG has been evaluating these programs under a “facts and circumstances” fraud-and-abuse risk analysisleading to a handful of carefully tailored favorable advisory opinions.

Inside Advisory Opinion 25-07: The Sponsored Companion Diagnostic Program

In Advisory Opinion 25-07, OIG reviewed a program under which a pharmaceutical manufacturer pays a laboratory to perform a specific next-generation sequencing (NGS)-based companion diagnostic test for eligible patients. The test is required by the drug’s FDA labeling and determines whether a patient’s tumor has a particular genetic deficiency that would make them a candidate for the manufacturer’s drug.

Here’s the basic setup:

• The manufacturer contracts with one (or a small number of) independent labs to perform the test.
• Eligible patients get the test at no cost; the manufacturer pays the lab directly.
• The test result determines whether the manufacturer’s drug is indicated.
• Only about half of patients with the underlying condition test positive and are eligible for the drugso the test often rules patients out.

OIG concluded that the arrangement did involve remuneration under AKS and the CMP. The free test clearly has value to patients (no cost sharing) and providers (the ability to offer an additional clinical service that might lead to follow-up visits and billable services). However, OIG still found the risk of fraud and abuse low enough to issue a favorable advisory opinion.

Why OIG Still Said “Yes”: Key Factors in the Favorable Opinion

If you’re a lab or manufacturer, the heart of AO 25-07 is the analysis of why OIG was comfortable with this sponsored test program despite the clear presence of remuneration.

1. The Test Is Clinically Necessary and Narrowly Tailored

OIG placed significant weight on the fact that the companion diagnostic test was:

• Required by the drug’s FDA-approved labeling, and
• Designed to determine whether the drug was medically appropriate for a particular patient.

The test doesn’t screen for broad disease categories or incidental findings; it targets a specific genetic deficiency related to the drug’s mechanism. This narrow scope limits the separate value the test might have for unrelated clinical decisions.

2. The Test Often Rules Patients Out of the Sponsor’s Drug

OIG emphasized that only around half of eligible patients test positive for the deficiency. In other words, the sponsored test is just as likely to show that the manufacturer’s drug is not indicated for a given patient. Some patients who test negative may instead be treated with a competing drug. This significantly reduces concerns that the sponsored test program is simply a funnel into the manufacturer’s product.

3. Limited Promotional Activity and Separation from Detailing

The manufacturer’s field team did not use the sponsored test program as an excuse to promote the drug. Disease-awareness efforts were non-promotional and focused on the underlying condition and the availability of testing, not on the drug’s brand messaging. OIG highlighted that field personnel discussing the test program would not, at the same time, discuss the drug.

4. No Financial Benefit to Ordering Providers

Providers did not receive any direct payments, rebates, or discounts tied to ordering the test or prescribing the drug. They were not paid to enroll patients, interpret results, or shift their prescribing habits. Their only “benefit” was the ability to offer patients a clinically appropriate test at no cost, which OIG saw as acceptable in the context of the other safeguards.

5. Lab Independence and Limited Data Use

The laboratory performing the companion diagnostic test operated independently and was not owned by the manufacturer. In addition, any data shared back to the manufacturer was limited and de-identified or aggregated where appropriate, reducing the risk that test information would be used to target high-prescribing providers or to build marketing lists.

6. No Cost-Sharing Waivers for the Drug Itself

The manufacturer did not waive cost sharing on the drug, offer copay coupons that applied to federal program beneficiaries, or wrap the free test into a broader scheme of financial assistance linked to product selection. The test stood alone as a sponsored service, reducing the chance that the whole package would function as an aggressive inducement.

How AO 25-07 Fits into the Broader OIG Story on Sponsored Testing

Advisory Opinion 25-07 is not OIG’s first rodeo with sponsored tests. Earlier opinions, such as AO 22-06 and AO 24-12, also approved programs where a pharmaceutical manufacturer paid for free genetic testing and counseling for patients with an ultra-rare genetic condition.

Historically, OIG looked for an “attenuated nexus” between the test and the sponsor’s drugbasically, they wanted the odds to be low that a positive test would almost automatically lead to prescribing the sponsor’s product. That looseness reduced the risk that free testing was simply a shortcut to more prescriptions.

AO 25-07 softens that stance. Here, the test is an FDA-approved companion diagnostic that is literally required by the drug’s label. The link between the test and prescribing the drug is much tighter. Yet OIG still approved the program, largely because:

• The test helps rule out inappropriate candidates.
• The program is heavily constrained by clinical criteria.
• The structure does not meaningfully skew clinical judgment in favor of the sponsor’s drug.

Think of AO 25-07 as OIG saying: “We still care about the nexus, but we’re willing to tolerate a closer connection if the program is designed to support high-quality, targeted care and not just drive product volume.”

Compliance Takeaways: Designing a Low-Risk Sponsored Test Program

If your organization is contemplating a sponsored testing arrangement, AO 25-07 plus the earlier favorable advisory opinions create a pretty clear checklist. Here are practical best practices derived from those opinions.

1. Tie Eligibility to Objective Clinical Criteria

Eligibility should be based on medical necessity and clinical factors, not marketing categories. Require providers to attest that:

• The patient meets specific clinical or family-history criteria.
• The test is appropriate for that patient’s current condition, not just “nice to have” information.

2. Limit the Test’s Scope

Keep the test narrowly focused. Companion diagnostics and mutation-specific panels that directly relate to a therapy’s use are more defensible than broad “fishing expedition” tests that generate lots of incidental data and alternative uses. OIG has consistently favored arrangements where the value of the test is cabined to the product’s indication.

3. Avoid Provider Remuneration

Do not pay providers:

• To recruit patients into the program
• To interpret test results
• To participate in “bonus” programs tied to test volume or drug prescribing

The provider’s only role should be clinical decision-making and standard-of-care counseling. The second you start layering on fees, honoraria, or volume-based rewards, your fraud-and-abuse risks skyrocket.

4. Keep Promotion and Testing Clearly Separated

Train field teams not to blend drug promotion and test promotion. Disease education may be acceptable, but tying the testing program directly to brand messaging in sales visits will undermine the compliance structure OIG found comforting in AO 25-07.

5. Protect Data and Limit Targeting

Sponsor access to individual-level test data should be minimal and justified. When possible:

• Use aggregated or de-identified data.
• Prohibit using program data to create “high-prescriber” or “likely prescriber” targeting lists.
• Ensure the lab’s relationships and ordering patterns are not used to selectively reward certain providers.

6. Document the Patient-Centric Rationale

OIG repeatedly notes that these programs help patients access clinically necessary tests that might otherwise be cost-prohibitive. Build and document that patient-centric story:

• Highlight the out-of-pocket burden the test would otherwise impose.
• Explain why coverage gaps or cost-sharing make the test unaffordable.
• Show how timely testing improves care quality and avoids inappropriate treatment.

Real-World Experiences and Practical Lessons from Sponsored Test Programs

Reading AO 25-07 and its cousins, you might think implementing a sponsored testing arrangement is as simple as signing a lab contract and announcing “free tests for everyone!” In reality, organizations that have tried to operationalize these programs have learned a few hard-earned lessons.

First, internal alignment is crucial. Legal, compliance, medical affairs, commercial, and market access teams all tend to view sponsored tests through slightly different lenses. Legal focuses on Anti-Kickback Statute risk. Medical affairs obsesses over clinical appropriateness. Commercial thinks about access and uptake. Getting everyone to agree on narrow eligibility criteria, lab selection, data flows, and communications often takes multiple rounds of negotiation and policy drafting.

Second, educating providers is trickier than it looks. Many clinicians instinctively distrust anything that sounds like “industry-paid testing,” especially when it involves a high-cost specialty drug. Successful programs tend to emphasize:

• The test’s role in avoiding inappropriate therapy (not just enabling access)
• The fact that negative results are expected and clinically useful
• That the program doesn’t obligate them to prescribe the sponsor’s drug

This type of messaging helps reposition the sponsored test from a marketing perk to a clinical tool that supports evidence-based care.

Third, there’s the very real challenge of workflow integration. Even when a test is free, clinicians won’t order it if the process is clunky. Programs that work well in practice usually:

• Offer easy ordering pathways through existing lab portals or EHR workflows
• Minimize separate forms, portals, or multi-step enrollment hoops
• Provide clear instructions for handling specimens, reporting, and follow-up

On the compliance side, many organizations have learned to treat program rollout as an ongoing project, not a “launch it and forget it” initiative. That means:

• Periodic audits of ordering patterns to detect outliers or unexpected spikes
• Monitoring field communications to ensure sales teams don’t drift into risky messaging
• Revisiting eligibility criteria if the clinical landscape or competitive environment changes

Another real-world consideration is how sponsored tests intersect with payer coverage and prior authorization. Some payers may already cover the relevant diagnostic test but impose high patient cost sharing or rigid utilization-management criteria. Others may not cover it at all. Organizations that implement compliant sponsored testing find it helpful to:

• Clarify that the program supplements, not replaces, existing coverage
• Ensure that claims are not billed twiceonce to the payer and once via sponsored funding
• Coordinate with labs so that patients aren’t unexpectedly balance-billed

Finally, there’s the human side: patients. For individuals facing cancer or an ultra-rare genetic disease, the difference between “we can run this test” and “we can’t because it’s too expensive” is enormous. Sponsored testing programs, when implemented within the guardrails outlined in AO 25-07 and related favorable advisory opinions, can make access to precision medicine feel less like a luxury and more like a standard part of modern care. The challengeand the opportunityis to keep that patient benefit front and center while designing a structure that regulators can live with.

Conclusion: A Compliance Roadmap, Not a Blank Check

The OIG favorable advisory opinion involving sponsored tests in AO 25-07 doesn’t mean “free lab tests for all” is now officially blessed. Instead, it offers a nuanced blueprint: sponsored diagnostic testing can pass AKS and CMP scrutiny if it:

• Targets clinically appropriate patients using objective criteria
• Uses a narrow test that often rules patients out, not just in
• Separates disease education from product promotion
• Provides no direct financial benefit to ordering providers
• Handles data and lab relationships in a way that avoids marketing abuse

For life sciences companies and laboratories, AO 25-07, along with earlier favorable opinions involving free genetic testing and counseling, signals that patient-centric sponsored testing is possibleif you’re willing to invest in thoughtful design, tight safeguards, and ongoing monitoring. The test may be free, but the compliance work definitely isn’t.