Life Science Compliance Update

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30 posts from October 2015

October 30, 2015

Warner Chilcott Pleads Guilty to Healthcare Fraud Pays $125 Million Fine and Former President Arrested

Warner Chilcott has agreed to plead guilty to healthcare fraud and will pay the government $125 million to settle both civil and criminal allegations against it. Under the plea agreement, Warner Chilcott will pay a criminal fine of $22.9 million and a civil settlement of $102 million to the federal government and the states who made payments through Medicare, Medicaid, and other programs. The whistleblowers who sued Warner Chilcott under the False Claims Act in 2011 will receive approximately $22.9 million from the civil portion of the settlement.

The government alleged Warner Chilcott employees doctored prior authorization requests to insurance companies for their drugs using prepared explanations that often did not apply to the patient's individual medical conditions. Warner Chilcott employees would doctor the requests either by pretending to be the physicians and submitting the justifications directly to the insurance companies, or other times, the employees would coach doctors about how to falsely fill authorization requests out.

The government had further alleged that Warner Chilcott paid kickbacks to prescribing doctors in connection with promotional "Medical Education Events"  and speaker programs, often held at expensive restaurants and involved little to no actual education, dubbing some of the events "nurses night out." The government alleged that the speakers who were paid to attend did not usually speak about any clinic or scientific topics but earned between $600 and $1,200 just for attending. Part of the allegations were that some of the speakers were told they would not be paid for additional events unless they prescribed more of Warner Chilcott's medication.

In addition to the Warner Chilcott financial settlement, the former president of Warner Chilcott, Carl Reichel, was arrested Thursday in Boston. He has been indicted and charged with conspiring to pay kickbacks. He has been indicted on one count of conspiring to violate the Anti-Kickback Law, and the Assistant United States Attorneys on the case have also asked that a forfeiture action be commenced.  The indictment outlines that Reichel believed that because Warner Chilcott was not a signatory to the PhRMA code of interaction with health professionals that they could commit practices his competitors were not permitted to do "Breakfasts, Lunches, Goodies," because "Competitors cannot do this anymore-sets W.C. apart!"  They failed to recognize that there were solid legal reasons for limiting these practices.

The arrest of Reichel comes after the "Yates memo," which was written in September and emphasized the importance of holding individuals accountable in cases involving illegal corporate conduct.

Marc Raspanti, an attorney who represents whistle-blowers and criminal defendants, believes that "the Department of Justice is not going to sign off on a case now until they have really vetted whether or not there's any [individual] liability."

In addition to Reichel's arrest and the charges pending against him, other Warner Chilcott managers have entered guilty pleas, including two former district managers, Jeffrey Podolsky and Timothy Garcia, who pled guilty to conspiring to commit health care fraud, and violations of HIPAA. Another former district manager, Landon Eckles, was criminally charged earlier this month for alleged HIPAA violations relating to the allegations of falsified prior authorizations.

Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department's Civil Division stated, "The Justice Department is committed to protecting the integrity of physician prescribing decisions and ensuring that financial arrangements in the healthcare marketplace comply with the law. The Department will continue to hold companies and responsible individuals accountable when they use improper incentives, like those alleged here, to promote their products."

According to United States Attorney Carmen M. Ortiz for the District of Massachusetts, "Doctors' medical judgment should be based on what is best for the patient, and not clouded by expensive meals and other pharmaceutical company kickbacks. Pharmaceutical company executives and employees should not be involved with treatment decisions or submissions to a patient's insurance company. Today's enforcement actions demonstrate that the government will seek not only to hold companies accountable, but will identify and charge corporate officials responsible for the fraud."

This settlement illustrates the government's focus on looking for health care fraud, especially under the Health Care Fraud Prevention and Enforcement Action Team initiative, which was announced in May 2009. One of the most frequently-used tools in this effort is the False Claims Act – since January 2009, the Justice Department has recovered over $26.2 billion through False Claims Act cases. More than $16.4 billion of that involved fraud against federal health care programs.

This case will serve as a case study to emerging pharmaceutical companies who are buying up older products that the need for a comprehensive compliance program is essential for staying within the law.

Interestingly, the settlement does not seem to make mention of off-label promotion, a routinely hot-button topic lately, but instead is concerned with kickbacks. This could be a sign that the Food and Drug Administration and the Department of Justice are slowly beginning to back off of making off-label promotion claims, and instead starting a trend focused toward kickback claims.

October 29, 2015

Turing Pharmaceuticals – Compounding Pharmacy Fights Back

Turing Pharmaceutical's purchase of Daraprim from Impax Laboratories in August 2015 for $55 million was followed by a huge frenzy in the news media. Daraprim, which is used to fight toxoplasmosis, was previously priced at 13.50 per tablet. Once Turing purchased the drug, they raised the price per tablet to $750.

Turing's rationale behind the price jump was to place the additional money into research and development, to develop better treatments for toxoplasmosis, with fewer side effects, and to invest in marketing and education tools to make people more aware of the disease. Martin Shkreli, the founder and CEO of Turing, stands by his decision to raise the price of the drug, stating, "This isn't the greedy drug company trying to gouge patients, it is us trying to stay in business."

While Shkreli believes he and his company are doing a service to the pharmaceutical industry and patients as a whole by reinvesting in R&D, the Infectious Diseases Society of America and the HIV Medicine Association estimate that it would cost $336,000 a year to treat someone with toxoplasmosis at the $750/pill price. Both organizations believe that "this cost is unjustifiable for the medically vulnerable patient population in need of this medication."

Dr. Judith Aberg of Mount Sinai said that some hospitals will now find Daraprim too expensive to keep in stock, possibly resulting in treatment delays. Mt. Sinai will continue to use the drug, but each use of the drug requires special review.

After the initial outcry over the price hike of Daraprim, Shkreli responded by stating they would lower the price of the drug to an unidentified price, which would still allow the company to break even or even retain a small profit. To date, they have still not noted the new, lower price of Daraprim, but a spokesman did state the company is capping patient copayments at $10.

Recently, however, Imprimis Pharmaceuticals a compounding pharmacy claims they can make a close, customized version of Daraprim for just $1 a tablet. Imprimis Pharmaceuticals is known of mixing approved drug ingredients to fill individual patient prescriptions.

Imprimis CEO Mark Baum states, "While we respect Turing's right to charge patients and insurance companies whatever it believes is appropriate, there may be more cost-effective compounded options for medications, such as Daraprim, for patients, physicians, insurance companies and pharmacy benefit managers to consider."

Not only is Imprimis working on a more cost-effective tablet for fighting toxoplasmosis, but they are also "forming a new program called Imprimis Cares, which is aligned to [Imprimis'] corporate mission of making novel and customizable medicines available to physicians and patients today at accessible prices."

Imprimis says their version of the tablet, which would have to be compounded to order, has something extra known as leucovorin. "According to the Centers for Disease Control and Prevention, pyrimethamine [Daraprim's generic name] works to block folic acid synthesis in the parasite T. gondii, the cause of toxoplasmosis, and leucovorin helps to reverse the negative effects on bone marrow caused by the mechanism of this action," according to Imprimis. Imprimis is planning to sell their form of the tablet in oral capsules starting as low as $99.00 for a 100 count bottle.

Compounded drugs are typically made to fill a doctor's prescription for an individual patient, sometimes because the mass-produced version is either in short supply or completely unavailable. Compounded drugs can also allow for customized patient-specific formulations or dosages. Unlike drugmakers who make huge batches of drugs on complex production lines, compounders do not need Food and Drug Administration approval to create their compounded drugs.

It is worth keeping an eye on Imprimis to see what other drugs they imitate for a lower price. Imprimis CEO Baum stated, "We are looking at all of these cases where the sole-source generic companies are jacking the price way up. There'll be many more of these" compounded drugs coming in the near future.

The Fourth Annual Corporate Compliance & Transparency in the Pharmaceutical Industry Europe

The Fourth Annual Corporate Compliance & Transparency in the Pharmaceutical Industry, presented by Fleming Europe, will take place February 24 – 25, 2016 in Zurich, Switzerland.

The two-day event is packed with speakers who will aim to provide attendees with: an update on the implementation of the Disclosure Code and the first outcomes and how to evaluate your implementation process; tips on how to unravel compliance challenges relating to data privacy; an understanding of how to optimize interactions with health care providers and health care organizations through a fully compliant and transparent strategy to obtain consent; and information on compliance implications and concerns for merging corporate cultures.

On Wednesday, February 24, 2016, the day will begin with an update on implementation of the disclosure code from the European Federation of Pharmaceutical Industries and Associations. Richard Bergstrom of the EFPIA will discuss do's and don't when implementing EFPIA's codes, what will happen once the data is disclosed, and challenges relating to external communication and specific countries relating to disclosure. The morning continues with three separate discussions about transparency: a panel on transparency obligations; a panel on local perspectives – disclosure and transparency lessons learned; and keynote on data privacy and transparency requirements under the EU Data Protection Directive. Following lunch, the afternoon brings more panels and discussions, including a talk on how to determine fair market value, a keynote from Adrien Van Den Hoven of European Generic and Biosimilars Medicine Association, and a case study on communication and relationships with health care providers. Wednesday ends with a networking cocktail reception.

Thursday, February 25, 2016, begins with a panel on best practices: compliance program structure and effectiveness, with speakers from Sandoz, Acino Pharma AG, and Biogen. Following the panel, Nina Stoeckel from Merck KGaA will speak about how critical team structure is to success. Marit Pless will conclude the morning session by providing a roadmap for conducting internal investigations. The afternoon will be spent hearing from representatives from AstraZeneca and Johnson & Johnson on topics such as compliance and risk assessment and how to organize an approach for communicating, training, and monitoring third parties.

If you're interested in attending the Fourth Annual Corporate Compliance & Transparency in the Pharmaceutical Industry, you can register here.


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