Transcript Learn the Prescription for Compliance: Pharmaceutical Company

Health Care Compliance Assoc.
2000 Compliance Institute
Valli Baldassano
Pharmacia Corporation
On the Agenda
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History
Dose of Reality
The Arsenal
Take Aways
History
• 1991 OIG Study: “Promotion of
Prescription Drugs Through Payments and
Gifts”
– Approved product studies are schemes to pay
doctors
• 1993 & 1994 State enforcement against
“Switching Programs”
– Miles pays $805,000 and Upjohn pays
$675,000
• cognitive services programs to pharmacists
• 1992 J&J Settles with States
– Rebate coupons to customers
• August 1994 OIG Fraud Alert:
“Prescription Drug Marketing Schemes”
– Cash to pharmacists for “product conversions”
– Free airline miles to docs for prescribing
– Research payments to docs for de minimis
record keeping tasks
• 1993 Ayerst Labs $830,000
– Patient profiling program corrupts doctors
• 1994 Rugby $200,000
– Pharmacists get vacation packages for buying
product
• 1994 Hoffman La Roche $450,000
– Small grants to doctors for sham research on
FDA approved products
• 1995 Merck-Medco
– Consent decree: full disclosure of relationship
with Merck and switching programs
• 1995 Caremark International $161,000,000
– Kickback claims that took several forms:
research grants, consulting agreements and
paying for office expenses
Recent Activity
• March 1999 Novartis (Ciba-Geigy)
$8,000,000
– Overcharged VA by failing to provide accurate
pricing information during negotiations
• May, 1999 Genetech $50,000,000
– Off-label promotion of Protropin, allegedly
facilitated through educational grants and sham
research payments
• May, 1999 NMC $16,500,000
– Kickbacks for diagnotic tests
– NMC president & vice president indicted
• January, 2000 Fresenius Medical Care
$486,000,000 (including $101,000,000
criminal fines)
– False claims/ giving educational grants and
other payments as kickbacks for business
• California allergist indicted (winter 2000)
– Study for RPR faked
• Bindley Western 4/2000 $25,800,000
– (criminal) rogue employees of wholesaler
diverting drugs through gray market
• Bayer and others (reported 5/2000)
– Deceptive Pricing Practices
• AWP
• Medicaid Best Price
– repackaging
– Federal and State Enforcement
– Congressional Inquiry
• Warner Lambert (reported 5/2000)
– Whistleblower suit involving promotion of WL’s
epilepsy drug
• PBM Investigation (reported March 2000)
– Switching Programs
– Upstream and Downstream Rebates
– Formulary Access
Government Aresenal
• Anti-kickback Statute 42 U.S.C. § 1320a7b(b)
– Illegal remuneration to influence purchase,
prescription or recommendation of any item
reimburseable by Medicare or Medicaid
– “One Purpose” Test
• liability if only one purpose of payment is to
influence. U.S. v. Greber, 760 F.2d 68, 69
(3d Cir. 1985)
Kickbacks can be
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wining and dining
consulting services
advisory boards
clinical studies
free goods
business assistance
charitable/public service expenditures
discounts and rebates
bundling arrangements
No Easy Escape Through Safe Harbors
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Discount
Bona fide Employees
Group Purchasing Organizations
Personal Services
Shared Risk
False Claims Act
• Civil liability for person who knowingly
presents or causes to be presented a false
or fraudulent claim for payment. 31 U.S.C.
§ 3729
– Home of the whistleblower
– Industry practice under attack: AWP and
Medicaid Best Price
How Can AWP Reporting be a False
Claim?!
• Claim is Facially False
– AWP not defined by regulation and widely
published
– Would have to prove knowledge of or willful
blindness to doctor’s failure to report discounts
• questionable whether doctors are required
to report discounts
• “Fraudulent Implied Certification” Theory
– Claimant implicitly certifies compliance with the
law when submitting claim.
• U.S. ex rel. Pogue v. Healthcorp, Inc., 914
F.Supp. 1507 (M.D. Tenn. 1996)
– Liability attaches only if compliance with
regulations at issue is a prerequisite for
obtaining the benefit and the defendant
affirmatively certified such compliance
• Harrison v. Westinghouse Savannah River
Co., 176 F.3d 776, 778 (4th Cir. 1999)
• Thompson v. Columbia/HCA Healthcare Corp.,
125 F.3d 899, 902 (5th Cir. 1997)
• “Fraudulent Course of Conduct” Theory
– Fraudulent course of conduct caused
government to pay claim for money
• U.S. v. Incorp Village of Island Park, 888 F.
Supp. 419, 439 (E.D.N.Y. 1995)
– FCA “reaches beyond ‘claims’ which might be
legally enforced, to all fraudulent attempts to
cause the government to pay out sums of
money.”
• U.S. v. McLeod, 721 F.2d 282, 284 (9th Cir.
1983)
• U.S. Neifert-White Co., 390 U.S. 228, 233
(1968)
A Note on PBMs . . .
• FCA potentially applies to allegations:
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skimming discounts to pharmacies
“playing the float”
billing for services not provided
brand/generic switch & bill
switch programs
• Kickbacks in procurement: 41 U.S.C. § 51 or
Robinson Patman § 2(c)
– formulary inclusion
Take Aways
• Pharma Initiatives Are Here
– Medicare Drug Benefit
– Congressional hearings
– Public proclamations
• The Rules are Being Redefined
• Difficult to Advise Clients
• Compliance Programs Make Sense