Compliance News in Review, March 8, 2016

A bill is introduced in the Senate to end DTC advertising, Endo settles with New York over alleged marketing violations, and Olympus settles multiple False Claims Act, Anti0kickback, and FCPA charges.

March has certainly roared in like a lion, but will it go out like a lamb? Or will it go out more like a Blue Devil, a Jayhawk, a Cardinal, or a Wolverine? March Madness is almost here, so rise up bracketologists! Whether you employ a highly-scientific method for filling out your brackets, or you make your picks based on which team colors, it’s time to put pen to paper (or fingers to keyboard) and make you selections official. Before you get completely engrossed in what sixteen seed might have a shot at the huge upset in the first round, let’s take a look at what has dribbled through the newswires lately, as we tip off on this edition of the Compliance News in Review.

Senator Al Franken is the latest to join the “Ban DTC Advertising” team. The Senator has introduced a bill that would end the DTC advertising tax break for drug companies. Franken argues the costs of the ads are increasing the costs of drugs, and they encourage consumers to seek new, expensive medications, over cheaper alternatives. A spokesperson for PhRMA said the legislation “ignores the value of information patients about their health care and treatment options,” and it may have the unintended consequence of a patient not seeking medical attention for chronic conditions that can be managed more cost effectively when treatment begins early.

Endo has resolved a marketing foul with the state of New York. The company reached a settlement with the State over its marketing of an opioid pain medication. According to the state’s Attorney General, Endo claimed its painkiller, Opana ER, was crush resistant and it underplayed the addictive nature of the drug. The AG said the misleading marketing led to increased sales of the drug because it created a “false sense of security.” The company agreed to pay $200,000 and to cease marketing the drug as crush resistant. Additionally, Endo must create a program to keep its sales team from promoting the drug to healthcare providers who may be prescribing it in an abusive manner.

Olympus Corporation of the Americas (OCA), has agreed to pay $646 million to settle criminal and civil charges related to violations of the False Claims Act, the federal Anti-kickback Statue and the FCPA. The endoscope maker was accused of paying kickbacks in the form of consulting payments; free endoscopes; travel; meals; and grants. The company will pay $312 million to settle charges of paying kickbacks and $310 million to resolve the False Claims Act charges. The company’s Latin American subsidiary is accused of making payments to healthcare providers working in government-owned hospitals in Central and South America in order to secure business. The company will pay $22.4 million to resolve charges it violated the FCPA and it has entered into a three year Deferred Prosecution Agreement (DPA) and a Corporate Integrity Agreement (CIA). The DPA requires the establishment of a confidential hotline, improvements to the compliance training and the establishment of a program to recoup executive performance pay for those who participate in misconduct or fail to promote compliance. The CIA requirements include the implementation of a healthcare code of conduct; specific training and education; and requirements around grants and charitable contributions, consulting arrangements, and travel expenses.

The DOJ noted in its press release about the Olympus settlement that “the criminal complaint alleges that the improper payments happened while Olympus lacked training and compliance programs.” A “subpar compliance program,” was also noted by prosecutors in the recent SciClone FCPA case and the Sweett Group UK Bribery Act case. Regular and effective training is a key element of any effective compliance program, and helps reduce the risk of violations. While laws such as the False Claims Act of the FCPA may not change often, training on these laws cannot be conducted in a “one and done” manner. It should be reviewed and refreshed regularly, and highlight real-world examples applicable to the industry to keep it relevant and fresh.

With that, the buzzer has sounded on this edition of the Compliance News in Review. If you have a rooting interest, good luck to your team(s) in the upcoming tournament.

Stay compliant and we’ll see you right back here for the next edition

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