Kicking Out Kickbacks in the Medical Device Industry

The federal Anti-Kickback Statute prohibits the exchange of anything of value to induce or reward the referral of federal health care program business. Business processes that are perfectly legitimate in other industries, like entertaining clients, or providing gifts to prospects, can be tricky in the medical device industry. Identifying the activities hold the potential to implicate the Anti-Kickback Statute is key to reducing risk across a medical device company.

Here are five areas to evaluate for risk:

Device Loaners/Evaluation Units
Device loaners and evaluation units are big risks. Be sure to provide only as many units as needed for evaluation, and for no longer than is necessary for the evaluation. If the loaner is provided to temporarily replace a broken unit, make sure the loan period does not continue past the time necessary to complete the service work.

Pricing Discounts
Pricing discounts require a level of transparency on the part of the seller and the buyer. Purchase agreements must clearly disclose the discount, and purchasers should be advised in writing that they too need to disclose the discount when they submit information to federal healthcare programs for reimbursement.

Gifts, Meals, Travel
Providing meals, gifts, travel and hospitality to an individual who is in a position to purchase, or recommend the use of a product, is risky. Gifts that do not have an educational benefit for the recipient or patients are particularly problematic.

When a gift is provided, the value should be nominal and cash or cash equivalents are never appropriate. Avoid lavish meals, and make sure meals occur in locations that are conducive to holding a business, educational, or scientific discussion. Finally, do not provide lavish travel or hospitality for company training or meetings.

Consulting Agreements
Remember to establish the objectives for consulting engagements with healthcare professionals (HCPs) prior to the start of the business relationship and only use as many consultants as needed to achieve the objectives. Timelines need to be included in the agreement and the consultants must be compensated at fair market value. The consulting relationship needs to be disclosed during the program.

Grants and Donations
Establish processes to objectively evaluate requests for grants and donations. Support should not be awarded to induce or reward the purchase or recommendation of product. Support of educational grants should not be contingent on the ability to select faculty or determine content of the program.

Medical Device Anti-Kickback Training
Our Compliance Foundations medical device eLearning modules cover critical topics such as the Anti-Kickback Statute, interactions with healthcare professionals, transparency, and speaker programs. Course titles include The AdvaMed Code; Global Anticorruption Laws; Medical Device Compliance Overview; and On-label Promotion. To see a demo and learn more, please contact Dan O’Connor at doconnor@nxlevelsolutions.com or 609-483-6875.

Thanks for reading!

Lauren Barnett, Senior Compliance Specialist

Compliance Trends 2018: Our Point of View

The festivities have ended and a shiny new year is upon us, so we are switching hats – from party to prognostication – to delve into what we see as the hot compliance topics and trends for 2018. Based on our reading of the enforcement tea leaves, several 2017 topics should remain at the forefront, but our prediction on the level of activity emanating from the OPDP has changed from last year. So if you’ve resolved to stay up-to-date on all the compliance news fit to blog this year, what better way to start than with this look ahead.

We expect funding for patient assistance organizations, which are charities that provide financial assistance to patients to help cover the cost of medications, to be a trending topic in 2018. In 2016, federal agencies started to focus on the topic and issued subpoenas related to support provided to these charities. In 2017, two companies entered into settlements with the government over that funding. The government considers the practice to be a violation of the Anti-Kickback Statute because the funding offsets the co-pay of patients who participate in government healthcare programs.

Donations to charities that assist with medication costs are permitted, but assistance cannot be directed to patients who are prescribed the donating company’s medications. We would not be surprised to see the government take more of an interest in the financial relationship between the industry and charitable patient organizations this year. Training must emphasize the need to maintain appropriate independence between the company and the patient organizations it chooses to support.

In 2017, a small group of states passed laws related to price reporting, sales representative registration, and physician payment caps. That trend should continue in 2018 and the laws will most likely be focused on pricing transparency, as opposed to spend transparency, which was more common a few years ago. Expect more states to follow New Jersey’s lead and implement broader restrictions and caps on payments to healthcare professionals. The law is intended to combat the growing opioid addiction crisis.

2017 was a surprising year for the Office of Prescription Drug Promotion (OPDP). After a flurry of letters at the end of 2016, we expected the agency to continue that trend into 2017, but only four letters were issued the entire year. That is a record low. Don’t expect a dramatic increase this year.

The letters that were issued last year were focused on false and misleading statements related to risk and omission of risk. Two industry settlements in 2017 included charges of failure to disclose risk in violation of the Risk Evaluation and Mitigation Strategy, so emphasizing the importance of fair balance and truthful, accurate promotional statements when training sales representatives is critical.

On the global front, we would not be surprised to see an uptick in Foreign Corrupt Practices Act enforcement following the implementation of new processes that reward companies for self-disclosing potential violations and cooperating with investigations.

With that, we end this “preview” edition of the Compliance News in Review. To be automatically notified when we post new editions of the News in Review, conference highlights, or compliance training tips, just click the “follow” button on the right side of this page.

Have a safe and compliant 2018!

The 2017 Compliance Year in Review!

As the year winds to a close, we take a break from the hustle and bustle of holiday preparations to reflect on the 2017 trends, topics, and focal points from the world of life sciences compliance. It’s been a busy year, with some expected updates, along with a few surprises, filling our News in Review missives from month to month. So, grab a cup of egg nog, fire up the Yule Log on YouTube, and enjoy this “year in review” edition of the Compliance News in Review.

Drug pricing transparency was a hot topic at the end of 2016, and the trend carried through 2017. The rules for Chicago’s new sales representative licensure law, which is intended to help combat opioid addiction, went into effect. The law requires representatives to obtain a license to sell products in the city and to document their interactions with healthcare professionals. In California, drug manufacturers must now notify the State and other payers in advance when they intend to raise the wholesale acquisition cost of a drug over a certain percentage, and when new drugs are expected to have a wholesale acquisition cost that exceeds the Medicare Part D specialty drug threshold. Nevada passed similar legislation, but its law focuses on diabetes drugs. Nevada also requires sales representatives to be licensed and provide reports of their interactions with HCPs. Finally, Louisiana also jumped on the pricing transparency train.

In an effort to combat the opioid crisis,  Governor Christie in New Jersey issued rules that cap payments made to healthcare professionals by pharmaceutical companies.  Maine passed a gift ban law similar to the existing Minnesota law and, not surprisingly, we heard from Vermont in 2017. The attorney general there is reportedly investigating whether drug and device companies are adhering to the state’s HCP gift ban law.

Not all state-level action was successful. Missouri’s proposed price transparency law did not pass during the past legislative session, and a bill in California to restrict gifts and payments to HCPs passed the state Senate, but was rejected in the Assembly.

Pharmaceutical support for patient assistance charities was another 2016 hot topic that continued through 2017.  An IRS investigation into one of the charities focused on whether it provided an improper benefit to pharmaceutical donors by using the donations to purchase the drugs manufactured by those same companies. Support of patient assistance charities also figured into one company’s healthcare fraud criminal and civil settlement with the government.

2017 was a quiet year for the Office of Prescription Drug Promotion (OPDP). During December of 2016, the agency dropped a flurry of letters, but 2017 will likely see record low in activity with only three letters being issued so far for the entire year.

This was an interesting year in bribery and corruption enforcement. It began with a bang in January as the Serious Fraud Office entered into its first major Deferred Prosecution Agreement. With a changing of the guard in the U.S., FCPA actions were more subdued, but the diagnostic test company, Alere, settled with the Securities and Exchange Commission over improper payments to foreign officials allegedly made by its Colombian and Indian subsidiaries.

The Department of Justice (DOJ) published its Compliance Program Evaluation Guidance in 2017. The document offers details on what the agency considers to be an effective compliance program. Perhaps most notably, the DOJ made its Foreign Corrupt Practices Act Pilot Program permanent. The pilot program ended in early 2017, but it was effectively made permanent with the announcement of a new FCPA Enforcement Policy. Like the pilot program, the new policy encourages companies to self-report possible FCPA violations and rewards companies for their  cooperation during investigations.

With that, we close out another issue of the Compliance News in Review, and another year in the wonderful world of life sciences compliance. We look forward to keeping you up-to-date on all compliance news fit to blog in 2017 and continuing to provide you with an ever-expanding suite of PharmaCertify compliance training products and services.

Thank you for reading. Have a warm and wonderful holiday season and a happy New Year!

One company seeks to negotiate a settlement with the several states over opioid marketing, while Vermont investigates violations of its gift ban regulation…in this edition of Compliance News in Review.

Will Purdue Pharma go for the Hail Mary? Is Vermont about to throw a flag for gift ban violations? Is there a new way to offset bribery penalties? Will there be a third down push from the OPDP? We address these questions and more, in this edition of the Compliance News in Review.

In the words of Max from Where the Wild Things Are, “let the wild rumpus start.” No, not the holiday shopping frenzy (although that certainly applies), but the college football conference championships! Championship weekend is upon us and with it, the fight for a position in the playoffs. So far, the season has had its share of twists and turns, and the conference championships should provide additional drama. It all ends with the selection of the four playoff teams on December 3rd. To help fill the time to kickoff, we offer “X’s” and “O’s” of our own, in this edition of the Compliance News in Review.

Has Purdue Pharma huddled up with several state attorneys general? According to people familiar with the situation, the company has reached out to the states to gauge their interest in a global settlement related to its opioid drug. Currently, a consortium of 41 state attorneys general are investigating several opioid manufacturers’ marketing and sales practices. While Purdue is not authorized to represent other opioid makers, those familiar with the situation say the company is seeking an agreement that would cover all states’ lawsuits against all opioid manufacturers.

Vermont is calling for a review. The Vermont attorney general is investigating possible violations of the state’s gift to healthcare professionals ban according to a source familiar with the matter. The state law bans the provision of most items of value to healthcare providers. However, Open Payment data shows that physicians are receiving gifts, travel, and other banned transfers of value.

Companies that cooperate in FCPA investigations will now score big points with the Department of Justice. The agency will now consider foregoing criminal charges when a company self-reports. If a company cooperates with prosecutors, fixes the issue that led to the investigation, and helps investigators find the individuals responsible for the misconduct, the DOJ will presume the issue can be resolved without criminal charges. Any profits received from the misconduct will still need to be forfeited. Companies that do not voluntarily report possible FCPA violations may still be eligible for some leniency if they cooperate with investigators.

The Office of Prescription Drug Promotion has issued its third violation letter for 2017. A warning letter was issued to Amherst Pharmaceuticals and Magna Pharmaceuticals over promotional statements related to an insomnia drug. The OPDP cited false or misleading information about the risks and efficacy of the drug found on a product webpage and an exhibit panel. The letter also stated that the companies failed to submit the webpage and exhibit panels to the FDA prior to them being first used, as is required. Magna Pharmaceuticals says it will correct the exhibit panels and make sure all materials in the marketplace are correct. Amherst Pharmaceuticals was cited for information on the product webpage, but sold the insomnia drug to Magna in May.

With that news from the OPDP, the clock is winding down on this conference championship edition of the Compliance News in Review. If you’ve got a Dawg (how’s that for a hint as to who we will be pulling for?) in the fight in this weekend’s conference championships, we wish you luck (unless of course, your “Dawg” is a Tiger). Good luck to your favorite team or alma mater and we’ll see you here for the next edition.

Thanks for reading!

Open Payments Funding and Another Kickback Case in the News

An Open Payments letter from two senators, a list of diabetes drugs from Nevada, near silence from the Office of Prescription Drug and Promotion (OPDP), and an unsealed kickback case…all in this edition of the Compliance News in Review.

Thanksgiving is just around the corner! There’s nothing like a day of food, family, friends, and parades (and of course, football!) to kick off the holiday season. Can’t you just smell the turkey and fixings permeating the hallways and your olfactory senses now? Before we go unpack our “Thanksgiving pants,” we’ll leave you with a different type of tasty morsel: a new edition of the Compliance News in Review. Bon appetit!

Senators Richard Blumenthal and Chuck Grassley don’t want to see CMS’s Center for Program Integrity (CPI) left at the kids’ table. They sent a letter to the acting Health and Human Services Secretary urging that funding for the CPI be made a priority. The CPI is responsible for managing the Open Payments database. The letter includes references to “recent reports that have raised concerns about the effect payments to health professionals may have on opioid prescribing practices, which in many ways has exacerbated this ongoing public health epidemic.”

Nevada’s Department of Health and Human Services published its list of three dozen diabetes drugs that are subject to the State’s new transparency law. Manufacturers with a drug on the list will have to report a variety of financial information, including costs associated with production the drug; rebates and coups offered; and profits earned from the drug. Regulations for reporting the information are still pending.

Will the OPDP pass on dessert at Thanksgiving Dinner? OPDP is on pace to issue a record low number of letters this year. So far, only two letters have been issued. In 2016, the agency issued five in the first six months, then in December, it issued six more. The letter count has steadily declined over the last sixteen years. Will 2017 will be a record low?

On the social media front, Twitter upped its character limit to 280, and according to social media manager, Andrew Grojean, pharmaceutical marketers should take advantage of the expanded word count. Grojean says the change does not solve all the issues related to use of the platform, but it provides more freedom and flexibility, as well as more space for the required fair balance.

Did Eli Lilly over stuff the turkey? A recently unsealed whistle blower case alleges that the company provided kickbacks to boost sales of its drugs. According to the suit, the company offered nursing services to HCPs through a third-party to induce doctors to prescribe three of its drugs. Allegedly, the nurses essentially acted as sales reps even though they were supposed to be providing independent medical advice and disease state education.

With that, we end this holiday edition of the Compliance News in Review. In the spirit of the season, we are thankful to all who take the time to read our tome on a regular basis, and as always, we invite you to contact our editor, Sean Murphy, with your feedback. He can be reached at smurphy@nxlevelsolutions.com.

Have a fun and festive Thanksgiving holiday!

The Los Angeles City Attorney opens an investigation against one pharmaceutical company, while the founder of another is indicted on federal racketeering charges.

This year’s World Series brought record-setting excitement and late nights (more like wee hours of the morning for those of us in the East) for fans of America’s game. Congratulations to the Houston Astros, who outlasted the Los Angeles Dodgers, in a seven-game extravaganza, just as Sports Illustrated predicted…three years in advance!

If you’re searching for a new pastime to fill the void left by passing of another season, we have just the ticket. Step into the batter’s box as we present all the life sciences compliance news fit to blog, with this edition of the Compliance News in Review.

Leading off this week, a Wisconsin state legislator introduced a bill that will require drug manufacturers to notify the state in advance if they plans to increase the price of a drug by more than 25%. The lawmaker cited the costs to Medicaid budgets and a lack of transparency with consumers as the justification for the bill.

There’s no “Dodging” the Los Angeles City Attorney for Avanir Pharmaceuticals. On the heels of a CNN report, the City Attorney announced that he intends to open an investigation into the company’s prescribing practices for elderly patients in nursing homes. The report pointed to a rise in prescriptions for the drug in question, even though the studies supporting use with elderly patients are lacking. Top prescribers allegedly received speaking and consulting payments from the company.

Canada is pulling facilitation payments from the mound. The Canadian government announced it will repeal the exception for facilitation payments from its Corruption of Foreign Public Officials Act. The repeal was effective October 31. The law had previously permitted payment to expedite routine services, such as obtaining permits and scheduling inspections.

In news from overseas, the Prescription Medicines Code of Practice Authority (PMCPA), the group responsible for overseeing adherence to the Association of the British Pharmaceutical Industry’s Code of Practice (APBI), saw a rise of more than 40% in the number of complaints it received in 2016 about marketing and promotional practices. The complaints led to 100 new cases, with more than half of those resulting in the determination that the Code was breached.

Insys is on the losing end of a doubleheader, with the founder being indicted on federal charges and a New Jersey doctor potentially losing his license for allegedly accepting kickbacks from the company. The founder was indicted on charges of racketeering, conspiracy to violate the Anti-Kickback Statute, and conspiracy to commit mail and wire fraud. The company has been accused of promoting its opioid product for off-label uses and paying kickbacks to healthcare professionals.

The attorney for the New Jersey doctor says his client has never been the subject of a disciplinary hearing, or had a patient complaint in 25 years of practice, and he welcomes the chance to present his case to the medical board.

Speaking of New Jersey, a public hearing was held to receive feedback on the state’s pending regulation, “Limitations on Obligations Associated with Acceptance of Compensation from Pharmaceutical Manufacturers by Prescribers.” The regulation, which was announced by Governor Christie in late summer, includes restrictions related to transfers of value to prescribers of prescription drugs.  Many of the groups in attendance have expressed concern that the regulation’s $10,000 per year cap on bona fide services payments would have unintended consequences on clinical research. The New Jersey Attorney General stated that while some revision is possible, the State is committed to moving forward with the regulation. Public comments will be accepted through December 1.

With that, we end this “boys of summer (and well into fall)” edition of the Compliance News in Review. One final note: if you’re attending the 18th Annual Pharmaceutical and Medical Device Compliance Congress in Washington DC, November 6-8, stop by Booth 112 (back by all the good food!) to see demos of our newest compliance training solutions and the Compliance 365 Continuous Learning System.

See you in Washington!

Friday the 13th Brings Multiple Settlements for One Unlucky Company

CMS posts new Open Payments thresholds, MedTech Europe revises its Code, California deals with two new pharmaceutical laws, and multiple settlements are announced for one “unlucky” pharmaceutical company…in this Friday the 13th edition of the Compliance News in Review.

Be careful what you wish for, Freaky Friday (a.k.a. Friday the 13th) has arrived. Steer clear of those sidewalk cracks, black cats, and broken mirrors! We prefer to focus more on the “Friday” part of the date stamp rather than the “13th.” Whether you’re working for the weekend, or just counting down the minutes until it officially begins, we offer the latest edition of the Compliance News in Review to help you whittle away the hours until the superstitions have subsided.

Change doesn’t have to always be scary. MedTech Europe, a joint venture of EucoMed and European Diagnostic Manufacturers Association, changed its Code of Ethical Business Practice. Changes include the phasing out of direct sponsorship for HCPs to attend medical conferences; enhanced transparency of educational grants; and new guidelines for demonstration products and samples. In addition, starting in 2018, members will only be able to provide educational grant support for meetings that have been vetted by the organization.

The “lucky” numbers for the Open Payments reporting thresholds for 2018 have been posted by CMS. The small payments, or de minimis threshold, was raised to $10.49, and the annual aggregate threshold was raised to $104.90.

California passed two new laws affecting the pharmaceutical industry. First, SB 17 requires health plans and insurers to report information about drug pricing. The information will be compiled into a report showing how drug pricing effects health insurance premiums. The law also requires drug manufacturers to notify purchasers 90 days in advance if a drug’s wholesale acquisition cost (WAC) is going to increase.

AB 265 prohibits prescription drug manufacturers from offering assistance to lower out of pocket costs, if a lower-cost generic equivalent drug is available. Exceptions include the discounts required under an FDA Risk Evaluation and Mitigation Strategy (REMS); single-tablet drug regimens for the treatment of HIV or AIDS that are as effective as a multi-tablet regimen; and completion of step therapy or prior authorization requirements for a branded drug, as mandated by the individual’s health coverage.

Time to start throwing copious amounts of salt over the shoulder at Aegerion. The company pled guilty and pay over $35 million to settle criminal and civil charges that it violated the FDCA, HIPAA, and the False Claims Act. According to the Department of Justice, Aegerion did not follow the proper Risk Evaluation and Mitigation Strategy when educating prescribers about the rare cholesterol condition its drug was approved to treat. The government also claimed the company filed a misleading REMS report and promoted the drug for the general treatment of high cholesterol, all in violation of the FDCA.

Aegerion also resolved civil charges it violated the False Claims Act. The company allegedly shared misleading information about its drug, altered or falsified statements of medical necessity or prior authorization to federal healthcare programs, and defrayed the copay obligations of patients in federal healthcare programs, which is a violation of the Anti-Kickback Statute.

Following the settlement, the patient assistance organization involved, Patient Services, Inc. (PSI), acknowledged it received a subpoena from the DOJ. PSI said it had cooperated with the government in the case. The organization said it operates “under guidelines set by the U.S. Health and Human Services Office of the Inspector General and does not funnel funds for manufacturers.”

Some “strange magic” leads to a $13 million FCPA settlement for Alere to resolve charges it violated the FCPA. The company allegedly paid bribes to meet its revenue targets. According to the SEC, company subsidiaries in India and Colombia used distributors or consultants to make improper payments to foreign officials. The agency said the company failed to maintain adequate internal controls to prevent the payments and recorded the payments incorrectly.

With that, we close out this superstitious edition of the Compliance News in Review. Thanks for reading! Stay safe out there as you navigate the potholes and pitfalls that allegedly lurk in shadows, and no matter what, don’t walk under that ladder!