OIG Advisory Opinion 25-11: Key Compliance Insights for Manufacturers

By Lisa Damhof

Overview

In Advisory Opinion 25-11 issued December 15, 2025, the Department of Health and Human Services Office of Inspector General (OIG) offers important and practical guidance for pharmaceutical and medical device manufacturers on its approach to evaluating discount and rebate arrangements under the Federal Anti-Kickback Statute (AKS).

In the Opinion, OIG outlines the biopharmaceutical manufacturer’s (“Requester’s”) various discount structures, including the following “Arrangements”:

• Upfront discounts 
• Upfront discounts with a purchase requirement 
• Bundled upfront discounts with a purchase requirement 
• Bundled rebates

Some Arrangements fell squarely within the discount safe harbor to the AKS (“Discount Safe Harbor”). Others did not. Even so, OIG signaled openness to flexible discount structures by emphasizing a practical, risk-based approach to assessing fraud and abuse risk on those Arrangements outside safe harbor protection, with a focus on transparency, structure, and overall intent.

Discount Safe Harbor Anchors Pricing Flexibility 

When cleanly structured within the Discount Safe Harbor, discounts and rebates are highly defensible. While arrangements that fall outside the Discount Safe Harbor are not per se unlawful, they will be subject to a more fact-intensive, risk-based analysis as outlined in the Opinion.

The Opinion reflects OIG’s openness to a variety of commercial discount structures, including volume-based and market-share rebates, tiered discount arrangements, and bundled discounts across multiple products. When structuring discount and rebate arrangements, manufacturers should keep Discount Safe Harbor requirements in mind from the outset, especially requirements regarding transparency in how and when price reductions are earned, calculated, and reported.

Price Concessions Based on Purchasing Behavior Require Careful Guardrails

Discount models based on purchasing behavior can be permissible if appropriately designed, even when their practical effect may influence customers’ purchasing behavior. 

OIG acknowledged that many discount arrangements inherently relate to customers’ purchasing decisions. The key compliance question is whether an arrangement functions as a bona fide price reduction rather than a disguised remuneration intended to induce referrals or purchases. Manufacturers must use objective, transparent metrics (e.g., volume thresholds, uniform tiering) that are clear and agreed upon by customers at the outset. When structured appropriately, an arrangement should not emphasize exclusivity, impede the sale of competitor products, or require customers to switch from competing products. 

OIG recognizes that competitive pricing strategies may increase patient choice and benefit payor programs through lower costs. The aim is to minimize the risk of customers making purchasing decisions that are based on factors that do not serve their patients’ best interests.

It is worth noting that the Opinion highlights OIG’s ongoing concern with “swapping” arrangements and cross-product bundling that is structured in a way that may inappropriately influence purchasing decisions. Manufacturers should carefully evaluate bundled discounts and rebate arrangements for unintended referral or reimbursement distortions.

Transparency and Disclosure to Customers Are Non-Negotiable

The Opinion repeatedly emphasizes the expectation that discounts and rebates provided by manufacturers must be clearly disclosed and properly reflected in invoices and other documentation provided to customers. Ultimately, those price concessions must be structured so that customers can accurately determine and report the net price of any item for payer program purposes.

To meet this requirement, manufacturers must not only remain transparent with customers, but also ensure internal alignment across their own contracting, finance, and compliance functions to support consistent documentation and reporting.

 “Advisory Opinion 25-11 makes clear that manufacturers have flexibility in designing and offering competitive discount and rebate models to customers. OIG even recognizes the potential benefit of these models to patients and payors, but only if compliance is incorporated into the structure from the very outset.”
Lisa Damhof, Associate Attorney

 Safe Harbor Compliance Is Preferred, but Not Always Required

Overall, the Opinion signals OIG’s openness to non-traditional structures, including market share and bundled arrangements, which may be permissible even if they do not fit squarely within the Discount Safe Harbor, provided they pose a sufficiently low risk of fraud and abuse.

Where safe harbor alignment is not feasible, manufacturers should conduct and document a robust AKS risk assessment. Relevant factors for consideration include:

• Transparency in the terms of the arrangement
• Absence of intent to induce inappropriate utilization 
• Preservation of independent clinical judgment
• Commercial reasonableness
• Absence of problematic steering of federal program business

Key Takeaway

Advisory Opinion 25-11 confirms that OIG is not opposed to discounting; in fact, it recognizes the pro-competitive value of price concessions to both patients and payors. However, flexibility comes with expectations. Manufacturers should:

• Anchor discount and rebate arrangements in the Discount Safe Harbor where possible 
• Design arrangements proactively to promote transparency and support proper reporting
• Mitigate AKS risk through objective non-steering features

How Gardner Law Can Help

Our team advises pharmaceutical and medical device manufacturers on structuring compliant discount and rebate arrangements, including alignment within the Discount Safe Harbor, AKS risk assessments, and implementation across commercial and compliance functions. Contact us if you need assistance reviewing existing or proposed discount and rebate programs.