Insert Slide Title. Jennifer A. Romanski, Esq. February 8, 2017

Transcription

1 Insert Slide Title Jennifer A. Romanski, Esq. February 8, 2017

2 Interactions/Engagements with Healthcare Professionals (HCPs) and Healthcare Organizations (HCOs) Consulting Payments Service Arrangements Joint Marketing/Co-Marketing Royalty Payments Grants, Donations and Other Funding Pricing and Contracting/Reimbursement Communications Third Party Distributors US and Overseas

3 Anti-kickback Law FCPA / Anti-Bribery Laws Federal, State, Ex-U.S. Transparency Clinical Integrity Conflicts of Interest Public Perception An effective compliance program should incorporate thorough monitoring of its implementation and an ongoing evaluation process. - OIG Guidance The organization shall take reasonable steps to ensure that the organization s compliance and ethics program is followed, including monitoring and auditing to detect criminal conduct. - United States Federal Sentencing Guidelines

4 Allergan/Forest - The New Jersey-based pharmaceutical and medical device company agrees to pay on behalf of two of its subsidiaries, Forest Laboratories and Forest Pharmaceuticals, $38 million to settle charges that it paid kickbacks to physicians to prescribe three medications. (12/15/16) Cardiovascular Systems, Inc. - The Minneapolis-based medical device manufacturer agreed to pay $8 million to settle charged that it paid illegal kickbacks to induce physicians to use the company s medical devices. (6/28/16) Salix Pharmaceutical, Inc. The North Carolina-based pharmaceutical and medical device manufacturer agreed to pay $54 million for alleged kickback and False Claims Act violations. It is alleged they used speaker programs as a mechanism to pay kickbacks to doctors to induce them to prescribe their drugs and medical devices that were reimbursed by federal health care programs. Specifically, the United States Complaint-in-Intervention alleges that SALIX held sham speaker programs, frequently at high-end restaurants, where doctors were paid substantial honoraria purportedly to educate other doctors about a Salix product, but in reality spent little or no time discussing the product. The settlement also resolved numerous state law civil fraud claims. Olympus Corporation The Pennsylvania-based medical device manufacturer agreed to pay a $312.4 million criminal penalty over the alleged kickback scheme and $310.8 million to settle False Claims Act violations. The DOJ said it is the most a medical device company has ever paid under the act. The company s subsidiary, Olympus Latin America Inc., agreed to pay $22.8 million over alleged FCPA violations regarding a kickback scheme targeted at increasing medical equipment sales in Central and South America. (3/1/2016)

5 Analogic Corp. and Lars Frost - The Massachusetts-based medical device manufacturer agreed to pay nearly $15 million to settle parallel SEC and DOJ actions after its Danish subsidiary acted as a conduit for distributors to funnel money to third parties in hundreds of highly suspicious transactions. Frost, the subsidiary's CFO at the time, agreed to settle SEC charges and pay a penalty. (6/21/16) Novartis AG - The Swiss-based pharmaceutical company agreed to pay $25 million to settle charges that it violated the FCPA when its China-based subsidiaries engaged in pay-to-prescribe schemes to increase sales. (3/23/16) Nordion Inc. and employee - The Canadian-based health science company and a former employee agreed to collectively pay more than $500,000 to settle FCPA charges. Mikhail Gourevitch, an engineer, arranged bribes to Russian officials for drug approvals and received kickbacks in return. Nordion lacked sufficient internal controls to detect and prevent the scheme. (3/3/16) SciClone Pharmaceuticals - The California-based pharmaceutical firm agreed to pay $12 million to settle SEC charges that it violated the FCPA when international subsidiaries increased sales by making improper payments to health care professionals employed at state health institutions in China. Allegations also included a lack of books, records, internal controls and an effective anti-corruption compliance program. (2/4/16) Bristol-Myers Squibb - SEC charged the New York-based pharmaceutical company with violating the FCPA when employees of its China-based joint venture made improper payments to obtain sales. Bristol-Myers Squibb agreed to pay more than $14 million to settle charges. (10/5/15) Bio-Rad Laboratories - SEC charged the California-based clinical diagnostic and life science research company with violating the FCPA when its subsidiaries made improper payments to foreign officials in Russia, Vietnam, and Thailand in order to win business. (11/3/14)

6 Many physicians have taken a personal/professional stand against improper behavior Most medical societies have taken more than a passing interest in improper relationships with companies Industry groups have issued guidances/codes on the proper relationships with HCPs; they have trained their members The Sunshine Act, state regulations and ex-us guidelines are making payments public Many salespeople have been trained at some company (before they came to your company) in the last decade The public/media likes this topic

7 DOJ continues its enforcement of civil and criminal laws against industry FCA, FDCA and FCPA In June, DOJ announced that future FCA penalties will increase from the minimum per-claim penalty of $5,500 to $11,000 and the maximum per-claim penalty of $10,781 to $21,563 Number of cases focused on kickbacks increasing Over $1.2 Billion in recoveries in first half of major settlements in excess of $500 million 1 settlement is the largest anti-kickback settlement ever with a medical device company (Olympus) Focus of FCA cases in off-label area is false and misleading speech in order to avoid First Amendment issues

8 [M]anufacturers should separate their grant making functions from their sales and marketing functions. Manufacturers should establish objective criteria for making grants that do not take into account the volume or value of purchases made by, or anticipated from, the grant recipient and that serve to ensure that the funded activities are bona fide. Compliance with such procedures should be documented and regularly monitored. - OIG Guidance

9 Settlement - $646 million ($312.4 criminal + $310.8 civil + $22.8 FCPA) Allegations - Illegal kickbacks OCA allegedly gained new business and rewarded HCPs and HCOs with kickbacks, including consulting payments, travel, lavish meals, millions in grants and free endoscopes. Allowing Olympus to obtain over $600 million in sales and $230 million in profits. False claims OCA knowingly caused providers to submit false claims for OCA endoscopes to Medicare and Medicaid programs. FCPA From 2006 to 2011, OLA increased medical equipment sales in Central and South America by paying HCPs that could influence purchasing decisions at government-owned healthcare facilities, including cash and wire transfers, grants, personal travel and heavily discounted or free equipment. Training centers purportedly to educate HCPs were used as the primary means of delivering the illicit benefits to HCPs.

10 The Department of Justice has longstanding concerns about improper financial relationships between medical device manufacturers and the health care providers who prescribe or use their products. Such relationships can improperly influence a provider s judgment about a patient s health care needs, result in the use of inferior or overpriced equipment, and drive up health care costs for everybody. In addition to yielding a substantial recovery for taxpayers, this settlement should send a clear message that we will not tolerate these types of abusive arrangements, and the pernicious effects they can have on our health care system. Principal Deputy Attorney General statement regarding Olympus DOJ Press Release, March 1, 2016

11 What is the role of Sales/Marketing (not just on paper)? Who was the actual recipient? (review checks) Was payment tracked for Sunshine reporting? Did company receive an accounting of funding? If so, how was payment dispersed? How often, in the past, has particular entity received grant funding? How much?

12 Was program accredited? If so, did it meet guidelines of accrediting body? Did program meet the objective criteria that justified provision of funding? Was funding in any way tied to business? Did company have any control over speaker/speaker selection? Did company have control or influence over content?

13 Was donation to a tax-exempt entity? Was donation for a charitable purpose (e.g., no ROI )? Was contribution to gain access or offered as a price term? How did request come about? Was contribution made at the direction of an HCP or a customer? Was donation to benefit a particular individual (e.g., scholarship recipient)? Was recipient organization acceptable under corporate policies?

14 Pharmaceutical manufacturers sometimes offer purchasers certain support services in connection with the sale of their products. These services may include billing assistance tailored to the purchased products, reimbursement consultation, and other programs specifically tied to support of the purchased product. Standing alone, services that have no substantial independent value to the purchaser may not implicate the antikickback statute. However, if a manufacturer provides a service having no independent value (such as limited reimbursement support services in connection with its own products) in tandem with another service or program that confers a benefit on a referring provider (such as a reimbursement guarantee that eliminates normal financial risks), the arrangement would raise kickback concerns. - OIG Guidance

15 Settlement - $390 Million Illegal kickbacks in the form of rebates and discounts to 20 or more pharmacies in exchange for their switching transplant patients from competitor drugs to [Novartis s] drug, Myfortic. Similar kickbacks were paid to specialty pharmacies for recommending Exjade to patients. The more referrals and refills, the higher the rebates Novartis paid. Novartis kept Exjade scorecards, measuring pharmacy patient refill times and rewarded shorter times. The pharmacies also implemented a clinical counseling and education program - with Novartis approved scripts/presentations - to encourage patients to refill Exjade prescriptions. The presentations potentially harmed patients by emphasizing refilling benefits, while understating the severity of side effects. False claims the illegal kickbacks caused false claims (extra refills) to be submitted to federal health care programs.

16 Is support offered without cost to physician? Does support have a substantial value that is independent of the product? Is value dependent on use or referral of products? How often are services being utilized? Are services utilized in some territories more than others? Have you seen marketing materials related to reimbursement support? How have reps been trained? Has information about reimbursement support surfaced during ride-alongs or other types of monitoring?

17 Co-marketing in general is: A partnership between two or more entities to jointly market the entities products and/or services Not so simple when the arrangement is between a US life sciences company and an HCP customer/potential customer Examples: Find-a-Physician Directory (listed on company website) Shared Promotional Content (provided by a company to a practice or an institution website) Combined Advertising (designed with HCP and company space in a single ad) Informational Event (organized to educate patients or referring physicians)

18 Patient safety or quality of care issues Offering, promising, granting, requesting, accepting kickbacks The skewing of clinical decision-making Manipulation of the reimbursement system Submission of false claims Overutilization of medical care paid for by the government Promotion of off-label uses

19 Cardiovascular Systems, Inc. Settlement - $ 8 million Products Medical Devices Whistleblower yes Allegations Illegal Kickbacks CSI allegedly marketed services to physicians utilizing CSI s devices to perform atherectomies. Atherectomy is a procedure that clears blockages restricting blood circulation in arteries. CSI also allegedly developed and distributed marketing materials to promote physicians utilizing CSI s devices to referring physicians; coordinated meetings between utilizing physicians and referring physicians; and developed and implemented business expansion plans for utilizing physicians.

20 Requirements for Co-Marketing Activities* Within 90 days after the Effective Date, CSI shall establish the processes described in this section. CSI shall establish a process to ensure that a needs assessment has been completed for any Co-Marketing Activities, prior to engaging in such Co- Marketing Activities. The needs assessment shall identify the business need for performing the Co-Marketing Activities and provide details about the Co-Marketing Activities (i.e., information about the type of Co-Marketing Activities and the role and contribution of each HCP or HCI involved in the Co-Marketing Activities). CSI shall establish a process to evaluate the fair market value of such Co-Marketing Activities. CSI shall also establish a process ensuring that all arrangements to engage in Co-Marketing Activities are set forth in a written agreement that describes the scope of work to be performed by all parties to the arrangement, the fees to be paid, and any work product that will be produced.

21 Was business need addressed/accomplished? Were policies followed? Rationale for Fair Market Value and cost-splitting percentages Limitation on use of a program by a single HCP/HCO, a single sales territory Commitment to make the program open to all appropriate HCPs/HCOs; no cherry-picking best customers or best potential customers Requirement to confirm that co-marketing HCPs have a valid medical license and are not on the HHS/OIG or GSA exclusion lists Were marketing materials approved by appropriate committee or individuals? Were signed agreement in place before program? Have records/fees been reconciled? Did program address inappropriate topics like off-label uses or reimbursement support?

22 The answers are not in the glossy diagrams of a company s core values or their training slides; rather, they are in what happens in real life, in the smallest details that manifest themselves in the company s daily operations. You look to see not just what the policy and procedures say, but how they are actually incorporated into the operations of the company. It s one thing to have a policy that requires third-party due diligence; it s quite another for all the steps of the due diligence to occur and to be actually built into the procurement and accounts payable operations. - Statements of Hui Chen, DOJ Compliance Expert, Interview with Ethics and Compliance Initiative (posted 2/1/16)

23 Does the clerk in the accounts-payable room understand his job to be processing payments as quickly as he can, or does he understand that he is supposed to keep an eye on certain things and escalate issues he identifies? Does the new salesperson understand her job to be making the deal at all costs, or does she understand that there are boundaries?. Are the compliance and control personnel empowered to identify, escalate, and address problems? Are there consequences of non-compliance: Processes continually improved based on lessons learned; people disciplined for noncompliance; or deals rejected and approvals not granted? - Statements of Hui Chen, DOJ Compliance Expert, Interview with Ethics and Compliance Initiative (posted 2/1/16)

24 Thank you! Jennifer A. Romanski, Esq. Principal, Porzio, Bromberg & Newman, PC Vice President & Chief Privacy Officer, Porzio Life Sciences (973)