Life Science Compliance Update U.S. Edition further scrutiny into the pharmaceutical industry. Big The Media Has Been All pharma couldn’t catch a break in the media as millions Over “Bad Pharma,” But of viewers tuned in to hear “Last Week Tonight” host John Oliver lambast pharmaceutical marketing practices Has the Department of to doctors.4 Oliver digs up clips from a 2001 GSK sales meeting where reps are told they’ll make an “ungodly Justice Followed Suit? sum of money selling Advair,” he spends some time on good-looking but unqualified sales reps, free lunches, Senator Elizabeth Warren (D-Mass) made a splash in the and even throws in an Open Payments database critique, news earlier this year when she introduced the Medical noting, “the only way a four cent meal makes sense is if Innovation Act,1 which would that doctor is a mouse!” institute a so-called “swear jar” for pharmaceutical companies.2 Based on conversations at The Act requires drug companies A “swear jar” conferences over the last month, that want to settle alleged compliance officers seemed violations with the government like the show’s biggest fans. for big pharma: to also pay one percent of the Many of the marketing schemes profits for each “blockbuster the Medical Innovation Act would Oliver references would be drug” with more than $1 billion tack on additional punishment unimaginable now, and the in annual sales that can be video clips demonstrate how far traced to government research for companies looking to settle the industry has come since the support. The penalty payments alleged violations with the early 2000s. would be split between the Food and Drug Administration government. Oliver also put a plug in and the National Institutes of for patients to search Open Health. Rarely do blockbuster Payments to find their doctor. drugs “appear as the result of a single, giant company’s This raises an interesting question—are doctors even individual genius,” Warren stated. “Drug companies aware of this database? The market research firm make great contributions, but so do taxpayers. In other MedPanel published survey results of close to 500 words, we built those medical innovations together.” physicians across diverse specialties suggesting perhaps not.5 Almost a third of surveyed doctors had not heard Stakeholders have listed numerous issues with such a of the Open Payments website, and less than half had law. For one, companies would be penalized based on visited the link. Going forward, it will be interesting to their profits, rather than the gravity of their alleged see whether a comedian has more sway in getting both violations. The added fines would also disincentive patients and doctors to look at Open Payments than the companies from settling, and encourage prolonged government. litigation. Furthermore, as the Biotechnology Industry Organization (BIO) notes, “by tying the tax to prior NIH involvement in the drug discovery or development 1 “Medical Innovation Act of 2015,” available at http://www.warren.sen- process, the bill would create a chilling effect on NIH- ate.gov/files/documents/Medical_Innovation_Act.pdf 2 Elizabeth Warren (Jan. 22, 2015), “My new bill: A swear jar for the drug industry collaborations at the very moment in time companies,” available at http://elizabethwarren.com/blog/my-new-bill- when Congress and the Administration are trying to a-swear-jar-for-the-drug-companies increase such collaborations to help patients suffering 3 BIO Expresses Concerns with Medical Innovation Act, available at from unmet medical needs.”3 https://www.bio.org/media/press-release/bio-expresses-concerns-medi- cal-innovation-act 4 “Last Week Tonight with John Oliver: Marketing to Doctors” (HBO), Despite the Medical Innovation Act’s implementation available at https://www.youtube.com/watch?v=YQZ2UeOTO3I 5 MedPanel, “Impact of the Physician Payment Sunshine Act on Market issues, Warren’s announcement of her latest big business Research,” full report available at http://medpanel.com/Expert-Insight/ “target” generated a ton of press and could indicate Insights/Impact-of-the-Physician-Payment-Sunshine-Act-on-Ma.aspx Contents 2 Volume 1.2 | April 2015 which may indicate questionable marketing tactics on The New Enforcement the part of the manufacturer. Such data can corroborate Frontier? a whistleblower’s allegations, and perhaps even allow Despite the recent media fervor surrounding “bad the DOJ to expand upon a whistleblower case by looking pharma,” federal enforcement actions paint a different at other companies engaged in similar, or even more picture. 2015 has seen just a handful of DOJ settlements suspicious, behavior. with pharmaceutical and device Prosecutors stated that the DOJ’s manufacturers, and most ability to find a “needle in the surprising has been the relatively haystack” is much better than it small dollar amounts at stake when used to be. Using the data allows compared to enforcement actions The days of billion dollar them to track situations where, for two or more years ago. settlements may be over. example, doctors are implanting Indeed, the message from the Small pharmaceutical and medical devices of a certain type where the area’s demographics Department of Justice (DOJ) at device companies are the compliance conferences across the don’t seem to support that level country has been similar: the days new targets, and new data of use. The DOJ is expecting of billion dollar pharmaceutical companies to actively utilize all settlements may be over. Small sources help the government available data to monitor both pharmaceutical companies and find outliers. their own compliance programs, device companies, however, are as well as their competitors. The the new targets. U.S. Attorney panels at a number of conferences have stated that At the CBI Medical Device and Diagnostic Compliance companies should have processes in place to monitor Congress in Chicago, a panel of U.S. Attorneys noted that healthcare professionals—both from a business better coordination between the FBI, HHS, and other perspective and a risk-management perspective agencies has allowed for more streamlined enforcement regarding off-label use. “Companies should look hard of smaller companies. Furthermore, False Claims Act at their own data,” stated one such prosecutor, and cases usually start with whistleblowers, and as these “quickly have appropriate answers” for payments that “qui tam relators” have earned substantial payouts may seem to raise kickback and off-label red flags. for their part in settlements, this has served to attract more complaints targeting a wide range of companies. During the recent CBI Pharmaceutical Compliance Prosecutors then have an obligation to investigate every Conference in Washington, D.C, the enforcement qui tam that comes through their door. panel also cautioned attendees on the proliferation of mergers and acquisitions, which often bring bigger, Perhaps the biggest boon to prosecutors is the new data compliant companies into a potentially messy situation. available to them. On March 24, 2015, Shantanu Agrawal, Companies could be “buying themselves a major the Deputy Administrator and Director at the Centers problem,” stated the prosecutors. Illustrating this point, for Medicare and Medicaid Services (CMS) provided a the topic of “thorough due diligence” in the M&A space detailed analysis on “The Use of Data to Stop Medicare was highlighted throughout the conference. Fraud.”6 He stated: “CMS has been using its Fraud Prevention System (FPS) to apply advanced analytics on all Medicare fee-for-service claims on a streaming Despite the dwindling settlement figures, national basis by using predictive algorithms and other there have been a couple of noteworthy sophisticated analytics to analyze every Medicare cases to come through this year. fee-for-service claim against billing patterns.” U.S. Attorneys believe tools such as Medicare payment data and the Open Payments databases are important ways 6 http://waysandmeans.house.gov/uploadedfiles/2015_03_24_oversight_ to track outliers in prescriptions or device utilization, shantanu_agrawal_testimony.pdf 3 Contents Life Science Compliance Update U.S. Edition Daiichi Sankyo and Speaker AstraZeneca and Pharmacy Programs Benefit Managers The largest manufacturer settlement in the last six AstraZeneca’s $7.9 million settlement was low on the months involved Daiichi Sankyo Inc., which paid $39 dollar scale, but offered an interesting look into how the million to resolve kickback and off-label allegations Department of Justice views the relationship between mainly related to its speaker programs. The government pharmaceutical manufacturers and pharmacy benefit 9 alleged that Daiichi paid physicians improper kickbacks managers (PBMs). The DOJ accused AstraZeneca of offering kickbacks to Medco Health Solutions (now as part of the company’s Physician Organization and Express Scripts) in exchange of Medco maintaining Discussion programs. Daiichi allegedly made payments AstraZeneca’s drug Nexium in favorable status on its where physician participants “took turns ‘speaking’ formulary. on duplicative topics over Daiichi-paid dinners, the recipient spoke only to members of his or her own staff PBMs such as Medco act as intermediaries between in his or her own office, or the associated dinner was so pharmaceutical manufacturers and third-party payers lavish that its cost exceeded Daiichi’s own internal cost to administer a plan’s prescription drug benefits. PBMs limitation of $140 per person,” according to the DOJ.