Health Care Compliance Assoc 2000 Compliance Institute Valli

Health Care Compliance Assoc. 2000 Compliance Institute Valli Baldassano Pharmacia Corporation

On the Agenda • • 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 – Kickback claims that took several forms: research grants, consulting agreements and paying for office expenses

Recent Activity • March 1999 Novartis (Ciba-Geigy) $8, 000 – Overcharged VA by failing to provide accurate pricing information during negotiations • May, 1999 Genetech $50, 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 (including $101, 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. § 1320 a 7 b(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. 2 d 68, 69 (3 d Cir. 1985)

Kickbacks can be • • • . . . 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 • • • 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. 3 d 776, 778 (4 th Cir. 1999) • Thompson v. Columbia/HCA Healthcare Corp. , 125 F. 3 d 899, 902 (5 th 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. Mc. Leod, 721 F. 2 d 282, 284 (9 th Cir. 1983) • U. S. Neifert-White Co. , 390 U. S. 228, 233 (1968)

A Note on PBMs. . . • FCA potentially applies to allegations: – – – 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