Vendor Discounts and the OIG—Where Things Stand After Recent OIG Advisory Opinion

On December 15, 2025, the OIG issued Advisory Opinion No. 25-11 dealing extensively with discounts from vendors.  Vendor discounts raise anti-kickback concerns because, on their face, there is remuneration to a customer (in the form of a reduced price or rebate) in exchange for the customer’s purchase of goods or service which may be paid for by a Federal health care program.  Public policy favors open and legitimate price competition in health care and thus, the anti-kickback statute contains an exception for discounts offered to customers that submit claims to the Federal health care programs, if the discounts are truly reductions in price and properly disclosed and accurately reported.  The safe harbor defines a discount as a reduction in the amount a buyer pays, but it does not include (a) cash payments back to the buyer, (b) supplying one good or service without charge or at a reduced charge to induce the purchase of a different good or service, unless they are reimbursed under the same Federal program using the same methodology and the reduced charge is fully disclosed, or (c) a reduction in price applicable to one payer but not Medicare, Medicaid, or other Federal programs. 

The Advisory Opinion dealt with a vaccine manufacturer that offered discounts to a variety of purchasers, including retail pharmacies, GPOs, SNFs, health care providers, and physician practices.  The OIG concluded that it would not impose sanctions based on the proposed arrangements.  But the Advisory Opinion is also an important reminder that providers should ensure discounts comply with a safe harbor or are at low risk of violating the anti-kickback statute. 

Key determinations from the Opinion include:

1. Percentage discounts contingent on meeting certain purchase requirements (market share or volume purchase) fall within the safe harbor.
2. A discount should be readily attributable to the products purchased and reported as such on the cost report. When bundled discounts relate to products reimbursed under different Medicare programs (e.g. Medicare Part B and Medicare Part D), then the discount should be readily attributable to each item and either apply to both items or neither item. 
3. Rebates, in contrast to discounts, must generally be fixed and disclosed in writing at the time of the initial purchase even though the discount is not given at the time of sale. But, if the agreement allows for changes and the increase is to meet competition, then the OIG finds that the risk is sufficiently low, resulting in a favorable ruling. 

One of the issues the OIG addresses relates to a service component tied to the discounts.  The OIG states that if services were required to qualify for the discounts, it would come to a different conclusion in that the price reductions would not be protected by the discount safe harbor.  What constitutes a service is still unclear.  The Advisory Opinion states that price reductions based on market share or having a “preferred” status are not “services.” However, requiring customers to switch from competitor vaccines or take other action to impede the sale of competing vaccines could be viewed as services. 

A related issue is an exclusivity requirement.  The Advisory Opinion notes that none of the discounts required exclusivity, thus reducing the risk that customers make stocking decisions based on factors that are not in the best interests of patients.  This comment suggests that the OIG may look differently at a discount dependent on a customer using a product exclusively.  We may see increased scrutiny on exclusivity requirements in the future.

In the end, the Advisory Opinion confirms that the OIG continues to view discounts positively and believes that discounts present low risk of an anti-kickback violation if structured and disclosed properly.  That said, the OIG continues to provide important caveats to consider with discount arrangements.