Specialty Pharmacy: Learn the Legal Risks and Avoid Pitfalls. Annual Meeting & Exposition Seattle, Washington March 22 25

Transcription

1 Specialty Pharmacy: Learn the Legal Risks and Avoid Pitfalls Annual Meeting & Exposition Seattle, Washington March 22 25

2 Disclosures I declare that neither I nor any immediate family member have a current affiliation or financial arrangement with any potential sponsor and/or organization(s) that may have a direct interest in the subject matter of this presentation. 2

3 CPE Information Target Audience: Pharmacists and Pharmacist Technicians ACPE#: L03 P/T Activity Type: Knowledge based 3

4 Intro Specialty pharmacy poses unique legal risks, especially when pharmacies that are not routinely involved in specialty work drift into it. Learn about key laws that present challenges and how to steer clear of dangers. This session will focus on specialty offerings, ranging from patient adherence calls and free drug programs to sales force marketing efforts and patient financial assistance programs. The discussion will include the Health Insurance Portability and Accountability Act, the Anti Kickback Statute, Stark law, False Claims Act, common law fraud, and more. You ll also hear about recent whistleblower and government enforcement action. 4

5 Learning Objectives At the completion of this knowledge based activity, participants will be able to: Describe primary differences between specialty pharmacy and community pharmacy operations. List unique legal concepts applicable to specialty pharmacy. Identify operational programs that implicate unique legal issues (i.e., specialty legal landmines). Explain potential consequences of specialty programs and demonstrate an understanding of the basic components of balancing business risk. 5

6 The Ecosystem 6

7 Anti Kickback Statute ( AKS ) 42 U.S.C. 1320a 7b(b) Cannot request or accept anything of value in exchange for referrals, purchases, or orders of items or services directly or indirectly reimbursed by federal health care programs Anything of Value is broad: Gifts Meals Grants Fees Value Added Services Free Samples No intent to violate or knowledge of the statute is required A violation can be found even if there is only one purpose to induce referrals among other legitimate reasons for the remuneration There does not have to be an impact on reimbursement Criminal or Civil Penalties: $25,000 per offense If it s a knowing violation, then CMP liability can result If reimbursement was involved, then FCA penalties may also apply Exclusion from federal health care programs 7

8 False Claims Act ( FCA ) 31 U.S.C et seq. Cannot knowingly submit false or fraudulent claims or cause someone else to submit false or fraudulent claims for government reimbursement Knowingly is broad: 1. Actual knowledge 2. Deliberate ignorance 3. Reckless disregard Bootstrapping : Anything downstream from an AKS or Stark Law violation is a false or fraudulent claim under the FCA Whistleblowers or relators: individuals that file a civil qui tam suit for FCA violations on behalf of themselves and the U.S. government Civil Penalties: $5,500 $11,000 per claim Up to three times the amounts in damages ( treble damages) 8

9 Beneficiary Inducement Civil Monetary Penalty 42 U.S.C. 1320a 7a(5) Cannot offer or transfer remuneration to federal health care program beneficiaries that is likely to induce beneficiaries to order or receive an item or services from a particular provider, practitioner or supplier Civil Statute applies to providers, practitioners and suppliers Remunerations includes waivers of copayments and deductible amounts (or any part thereof) and transfers of items or services for free or less than fair market value Civil Penalties: up to $10,000 for each act Some exclusions, e.g., gifts of nominal value 9

10 Anti Kickback Statute: Personal Services and Management Contracts Safe Harbor A written agreement signed by the parties for period of at least one year. Agreement covers all of the services to be provided. Services are full time or intervals specified. Services do not exceed those necessary for commercially reasonable business purposes. All compensation is set in advance fair market value in armslength transaction and does not take into account value/volume of referrals between the parties. Services do not violate law. Arrangements outside the safe harbor are reviewed based on facts and circumstances. 10

11 Anti Kickback Statute: Discount Safe Harbor Statutory exception (42 USC 1320a 7b(b)(3)(A)) Regulatory safe harbor (42 C.F.R (h)) OIG position is that the safe harbor interprets the statutory exception Takeaway: Avoid mixing discounts and services. If a reduction in price is conditioned on more than a simple purchase, it is not a mere discount. 11

12 HIPAA Privacy Rule Among other things, the Privacy Rule protects PHI and sets federal limits and conditions on the uses and disclosures of such information without patient authorization. "Protected health information" or "PHI" = individually identifiable health information that relates to an individual s past, present or future physical or mental health or condition the provision of health care to the individual, or the past, present, or future payment for the provision of health care to the individual Only applies to PHI held by Covered Entities and their Business Associates Permitted uses and disclosures include treatment, payment and health care operations There are no restrictions on use/disclosure of de identified information Disclosures/uses can be accomplished with a HIPAA compliant patient authorization Civil Monetary Penalties: Assessed on a tiered per violation basis. The nature of the violation (e.g., unknowing, reasonable cause, willful neglect corrected and uncorrected), extent of the violation and the nature/extent of the resulting harm will determine the tier OCR selects. Maximum penalties for each tier are $50K per violation with a $50K cap per year Criminal Penalties: Different levels of severity: knowing, false pretenses, and offenses committed with intend to sell/transfer/use for gain or harm E.g.: For "knowing" violations. Fine up to $50K and imprisonment for up to 1 year. 12

13 HIPAA: Refill Reminder Exception Marketing Examples Exceptions A communication by a covered entity For which it receives remuneration Communications about a recently lapsed prescription Financial remuneration received by the covered entity for making the communication is reasonably related to the covered entity's cost of making the communication About a product or service that encourages recipients to purchase or use the product or service Unless an exception applies Adherence communications encouraging individuals to take prescribed medicines as directed are marketing Direct and Indirect Costs If not, need authorization 13

14 Laws and Regulations: FCA False Claims Act 31 U.S.C Civil Statute Cannot knowingly submit false/ fraudulent claims or cause someone else to submit false or fraudulent claims for government reimbursement A penalty mechanism for AKS and Stark Whistleblowers rely on False Claims 14

15 Navigate risks connected to specialty pharmacy arrangements including enhanced vs. core services, data service agreements, copay components and privacy issues 15

16 Core versus Enhanced Establishing FMV and commercial reasonableness Discounts versus Payments Evidencing Performance of Services 16

17 Data Services Agreements Understanding the data flow Ensuring responsibility for deidentification Various methods of deidentification Prescriber opt outs Payor contracting issues Scope of licensure Party B Party A Party C 17

18 Free Drug Program Advisory Opinion (November 16, 2018) Analyzes a free drug program offered to hospitals taking capitated risk for patients, ultimately finding that the program presents an unacceptable risk for fraud and abuse. Requester proposes to provide free vials of its injectable anticonvulsant drug to hospitals for administration to patients with infantile spasms, a rare form of epilepsy. Requester stated did not want to give discount to hospital because to do so would have negative impact on government price reporting Relied on extraneous public information Drastic increase in the cost of the drug from approximately $40 in 2001 to $38,892 in 2018, with net sales of $1.195 billion for the year 2017 despite the patient population remaining relatively unchanged. Requestor s recent settlement with the FTC involving charges that a company it acquired in 2014 illegally took ownership of the U.S. rights to develop a competing drug, substantially limiting competition. 18

19 Free Drug Program in Light of AO In AO the OIG found sufficiently low risk of fraud and abuse associated with free drug program what are the differences?? No benefit to the prescriber Benefit to hospital referral source in the form of free drug that is covered by hospital s in patient capitated payment No detriment to federal payment programs Proposed Arrangement would not result in any savings for the Federal health care programs Note the different standard Found low risk of seeding: (1) not actively marketed to patients and (2) Risk of seeding because patient will continue care reimbursed by federal only percent of shipments of the Drug have been shipped payment program. Because the prescribing hospital receives the benefit of pursuant to the Arrangement. For these reasons, prescribing habits free drug, likely to influence prescribing habits. unlikely to be influenced. Program only covers patient if there is more than five days without a coverage determination from the patient s insurer. Program offered without regard to insurance coverage in the hospital. Class competitors exist. No clinical barrier to switching drug therapy. No barrier to switching to alternative therapy Class competitor exists (plus use of off label drugs), but OIG found unfair competition Drug cannot be discontinued without potential adverse consequences to a patient s health. Patients who have insurance would make future purchases of the Drug in order to avoid potential adverse medical consequences. 19

20 Regulatory Trends 20

21 Reimbursement Specialists October 2015 Warner Chilcott Sales L.L.C. $125 million & criminal charges Prior authorization related support WC employees accessing patient records without a patient HIPAA authorization May 2018 Physician Criminal HIPAA Conviction Physician was convicted of HIPAA violations for providing a Warner Chilcott sales representative with access to the protected health information of patients with certain health conditions for facilitation of prior authorizations for Warner Chilcott products. September 2017 Aegerion Pharmaceuticals Inc. $35 million Sales personnel practice of assisting cardiologists identify patients for treatment with Juxtapid obtained patients personally identifiable health information, without patient authorization or from non English speaking patients with authorizations written in English and used and disclosed the patient information for the purposes of marketing Juxtapid. February 2018 Individual physician Criminal liability Pediatric cardiologist pled guilty to criminal HIPAA charges arising from his providing access to his electronic medical records and prescription forms with Aegerion without patient authorization. 21

22 Case Example Pharma Services False Claims Act/Anti Kickback Pending September 2018 Filed by California s Dept. of Insurance as part of whistleblower case Provided classic kickbacks in the form of cash, alcohol, vacations, gifts, patient referrals, and a large network of nurse ambassadors and sophisticated kickbacks in the form of expensive software and marketing assistance for physician practices Nurse ambassadors were sent into patient homes and were allegedly trained to hide Humira s serious risks from patients while trying to get HCPs to write more prescriptions, and to send patient complaints straight to AbbVie and not to HCPs Targets billing to private health insurers from for $1.29 billion in fraudulent claims Takeaway & Considerations Be aware of providing free services or assistance and things of value to HCPs and patients 22

23 Case Example of Pharma Services False Claims Act/Anti Kickback Pending Investigation 2018 Current investigations into whether defendants provided free services to doctors and patients in the form of nurses, education programs, and reimbursement support services Sanofi: diabetes educator program Gilead: reimbursement support offerings, clinical education programs, and interactions with specialty pharmacies Biogen: clinical education and reimbursement support services Takeaway & Considerations Even though programs may seem acceptable and beneficial for the patient (i.e., an education program), it can nevertheless be scrutinized for being a potential kickback 23

24 Case Example of Pharma Services Takeaway & Considerations False Claims Act/Anti Kickback Filed June 15, 2017; Dismissed Aug. 4, 2018 (E.D. Tex.) Health Choice Alliance (research org) accused Eli Lilly and others of conspiring to give health care providers free nursing services to boost prescription sales of insulin and osteoporosis drugs Nurses were supposed to offer doctors medical advice but acted as undercover sales reps offering free reimbursement support services for covered products U.S. and 31 states declined to intervene Dist. Ct. dismissed; found that allegations lacked specificity, showed no statistical certainty that companies submitted false claims to gov t, and no allegations of specific incidents in which one of the drugs was prescribed as result of alleged schemes New complaint filed and sealed Sept Adequately oversee all aspects of any partnership arrangements (i.e., when another entity is providing a specific service) Free services can significantly elevate risk 24

25 Case Example Charitable Contributions False Claims Act/Anti Kickback [Jan 2018] U.S. ex rel. Greenfield v. Medco, 880 F.3d 89 (3d Cir. 2018) Accredo allegedly donated to specific charities to exclusively receive patients as an approved vendor, AKS states that a claim that includes items or services resulting from a violation of this section constitutes a false or fraudulent claim for purposes of [the FCA]. Dist. Ct: Assumed AKS violation occurred, but granted summary judgment in favor of Accredo because relator didn t show that federally insured patients chose the pharmacy because of its donations; no link 3rd Cir: Affirmed summary judgment for defendants and held that plaintiff must establish that one of the patients was for whom a claim was submitted was exposed to a referral or recommendation in violation of AKS Did the alleged kickback caused the referral or recommendation of the item or service contained in the claim?? Takeaway & Considerations A kickback does not morph into a false claim unless a particular patient is exposed to an illegal recommendation or referral and a provider submits a claim for reimbursement pertaining to that patient. 25

26 Case Example Charitable Contributions False Claims Act/Anti Kickback May 2018 USAO Mass. Investigation Agreed to pay $23.85m to resolve Allegedly used a foundation as a conduit to pay the copay obligations of patients Pfizer used a 3 rd party specialty pharmacy to transition patients to the foundation, which covered the patients Medicare copays; generated revenue Used foundation instead of giving drugs patients who met the financial qualifications of existing free drug program. Pfizer raised the wholesale acquisition cost of a drug by over 40 percent knowing that the price increase would also increase copay obligations and potentially prevent some patients from being able to afford the drug sent to foundation Takeaway & Considerations Be careful with the establishment, operation, and interactions with charitable foundations Can be viewed as an inducement if OIG guidance not followed closely 26

27 Case Example Charitable Contributions False Claims Act/Anti Kickback Dec. 20, 2017 OIG Investigation UT allegedly donated money to charity s pulmonary arterial hypertension fund as conduit for paying copays of thousands of Medicare patients UT routinely obtained information from charity detailing how many patients had been assisted and how much the charity spent on those patients UT refused to let patients participate in its free drug program and instead referred those patients to the charity $210 million settlement Takeaway & Considerations Paying the copay obligations of patients can be a violation of the AKS Avoid excluding a specific patient population, such as Medicare patients, from a free drug program Interactions with foundations must comply with OIG guidance 27

28 Case Example Sales Force Activity False Claims Act/Anti Kickback Feb 2018 S.D. Fla. U.S. intervened and filed claims for alleged kickbacks against: Diabetic Care Rx LLC d/b/a Patient Care America (compounding pharmacy) alleging it paid illegal kickbacks to induce prescriptions for compounded drugs; 2 executives (Patrick & Matthew Smith); and a PE firm (Riordan, Lewis & Haden (RLH), which manages pharmacy and the PE fund that owns it Paid marketing companies to target TRICARE beneficiaries for RXs for compounded creams regardless of patient need; split profits Manipulated compound formulas to ensure highest possible reimbursement Paid telemedicine HCPs to prescribe creams without seeing patients and paid patients to accept creams Takeaway & Considerations Do not target specific patient populations without regard to patient need Do not split profits with marketers or pay patients 28

29 Case Example Off Label Marketing Anti Kickback; Off Label Marketing October 2018 Abbott (Abbott Laboratories and AbbVie Inc.) agreed to pay $25 million; whistleblower = $6.5m Sales reps allegedly provided HCPs with gift baskets, gift cards, and other items to induce prescriptions Engaged HCPs for consulting services and speaking engagements, where one purpose of the remuneration for the programs was to induce or reward physicians for prescription. Marketed drugs off label for uses that were not FDA approved and were not covered by federal healthcare programs Takeaway & Considerations Do not provide physicians with gifts Do not market a drug for uses not approved by the FDA and not covered by federal healthcare programs Have internal controls and processes designed to ensure the integrity of speaker program selection and payment 29

30 Case Example Privacy FDA Misbranding; HIPAA; FCA September 2017 D. Mass. Aegerion conspired to obtain patients personally identifiable health information without patient authorization for commercial gain Aegerion submitted false claims for Juxtapid and alteration/falsification of statements of medical necessity and prior authorization Orphan approval for HoFH, but the company trained sales representatives to more broadly promote Juxtapid by intentionally failing to define HoFH, discouraging the use of genetic testing and established diagnostic criteria to identify HoFH patients, misleading prescribers regarding the clinical profiles of patients in the Juxtapid pivotal trial, and identifying patients whose clinical profiles did not meet established diagnostic criteria for HoFH. Sales representatives were trained to tell prescribers and patients that Juxtapid would prevent impending heart attacks or strokes, despite not having meaningful data to support such claims. $35MM; Guilty Plea 30

31 Case Example Privacy HIPAA October 2018 HHS/OCR Investigation Continuous cyberattacks lead to the biggest healthcare data breach in history Initial attacks were through phishing attempts; at least one employee responded to the s and created a pathway in to the servers Between Dec. 2, 2014 Jan. 27, 2015, ephi of close to 79 million people was stolen; this included names, SSNs, medical ID numbers, addresses, DOBs, addresses, and employment information Anthem didn t have proper safeguards in place, such as procedures for regular review of system activity and implementation of minimum access controls to prevent cyberattacks Anthem also failed to identify and respond to known attacks or conduct an enterprise wide risk analysis $16MM 31

32 Case Example Privacy State privacy laws violation September 2018 E.D. Ca. Former administrator of California AIDS Drug Assistance Program (A.J. Boggs) allegedly violated several states privacy laws by launching an online enrollment system without checking for vulnerabilities Boggs took the site offline but not before unauthorized individuals exploited system flaws and downloaded PHI of 93 HIV/AIDS patients Pending 32

33 Case Example Privacy HIPAA September 2018 HHS/OCR Investigation Hospitals invited ABC film crews into the hospitals without first getting patient authorization Filming was for medical documentary $999k Settlement 33

34 Bad Facts Make Bad Law Insys Therapeutics former VP of Sales, Alec Burlakoff Pled guilty to racketeering conspiracy Alleged Paid doctors to speak at sham speaker events in exchange for prescribing Subsys; Took part in a music video for a national sales meeting set to A$AP Rocky s F**kin Problems where he danced with Insys employees while wearing a costume depicting a life sized bottle of the largest dose of Subsys; along with other reps in the video, Burlakoff sang about loving titration Brashly discussed the kickback scheme, including sending an s and making statements such as: To a pain clinic owner/doctor the day after meeting saying, Expect a nice bump fellas. To regional managers saying, Let s make some money, stop playing BS games trying to manage rookies. It s the [doctors like the one from the example above] that keep us in business. Let s get a few more and the rest... of this job is a joke. To company sales force saying, These [doctors] will tell you all the time, I ve only got like 8 patients with cancer, doc, I m not talking about any of those patients... do you have 1,000 patients... that leaves me with at least 500 patients that can go on this drug. Fun fact: Burlakoff was fired from Eli Lilly in 2003 for mailing unsolicited samples of Prozac to try and increase sales. push furor leads to lawsuit/ 34

35 Assessment Questions 1. If a pharmacy provides patient adherence services at the request of a drug manufacturer for free for the purpose have inducing the manufacturer choose the pharmacy for its limited distribution networks and to support patient s best clinical interests, is there a violation of the Anti kickback statute? A. Yes B. No C. Yes, but the fines will be reduced because only one purposes for which the pharmacy enters into the agreement is for inclusion in the drug manufacturer s network. D. Only if the manufacturer actually chooses the pharmacy for inclusion in the network. 35

36 Assessment Questions 2. If a pharmacy calls patients to remind them to take their specialty drug and the drug manufacturer pays for the call A. The pharmacy is acting as a HIPAA covered entity treating a patient and the call is acceptable under HIPAA B. The call could be deemed marketing under the HIPAA rules and a HIPAA authorization is required regardless of how much the pharmacy is paid for making the call C. The call could be deemed marketing under the HIPAA rules and a HIPAA authorization is required only if the pharmacy s payment is more than the direct and indirect costs 36

37 Assessment Questions 3. Pharmacy s can give things to patients for free as long as the items are related to a patient s underlying sickness (i.e. free anti nausea medicine to cancer patients, free skin creams to eczema patients). A. Yes, always B. No, never C. Yes, but only if the items are $15 or less and over a year do not add up to more than $75. D. Under certain circumstances, but the laws are complex and each situation should be analyzed. 37

38 Assessment Questions 4. Are there any regulatory problems with free drug programs? A. Yes, free drug programs are not allowed because it s marketing by a drug manufacturer. B. Yes there are many regulatory issues that intersect with these programs that must be analyzed. C. No, free drugs help patients and are therefore acceptable. D. There are no problems as long as the free drug is given for an on label use. 38

39 Questions? Shannon L. Wiley Attorney Bass, Berry & Sims, PLC 39