Life Science Compliance Update

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33 posts from August 2016

August 30, 2016

Railroad Retirement Board (RRB) First to Double-Down on DOJ’s Civil Penalties for FCA Violations

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In early July of this year, the Railroad Retirement Board (RRB) became the first federal agency to implement the mandatory requirements under the Bipartisan Budget Act of 2015, the doubling of civil monetary penalties (“CMPs”) to be assessed for violations of the False Claims Act (FCA). Specifically, the new RRB final rules now increase the minimum per claim civil penalty from $5,500 to $10,781 and increasing the maximum per claim civil penalty from $11,000 to $21,563. Life science companies should be cognizant of such changes, where agencies such as the RRB, are significantly changing the landscape on how civil penalties are being calculated, imposed, and otherwise assessed against FCA violators.

Buried in the Bipartisan Budget Act of 2015 64 Is a provision that requires agencies to increase increases the civil monetary penalties (“CMPs”), including False Claims Act (FCA) penalties.

 Read Full Article in the August 2016 Issue of Life Science Compliance Update

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August 29, 2016

HRSA Releases Proposed Rule on 340B ADR Program

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On August 12, 2016, the Health Resources and Services Administration (HRSA) published a proposed rule: “340B Drug Pricing Program; Administrative Dispute Resolution.” The Affordable Care Act required the Department of Health and Human Services (HHS) to promulgate a regulation that establishes and implements a binding administrative dispute resolution (ADR) process for resolving certain disputes under the 340B Program.

This proposed rule lays out the requirements and procedures that will apply to all drug manufacturers and covered entities that participate in the program. HRSA states that the ADR process is not intended to mock trial and should be used as a last resort, after good faith efforts to resolve disputes have been unsuccessful. There is a sixty day comment period for stakeholders.

Proposed Rule Highlights

Administrative Dispute Resolution Panel

HRSA proposes to establish a decision-making body to review and make binding decisions for claims filed by covered entities and manufacturers. The proposed panel will be made up of federal employees who have expertise in, and experience with, the 340B Program. HRSA welcomes comments on the proposed size and composition of the panel.

Claims

The ADR process is intended to be used with two different types of claims: (1) claims by covered entities who believe they have been overcharged for covered outpatient drugs by manufacturers and (2) claims by manufacturers that a covered entity has violated the prohibition on diversion to ineligible patients or duplicate discounts. This can only be done by manufacturers after they have conducted an audit. In the proposed rule, HRSA proposes that a claim be filed in writing within three years of the date of the sale or payment at issue and include sufficient documentation for the claim to be evaluated.

Consolidated Claims

HRSA proposes requirements for a covered entity to request consolidation of individual claims. Consolidated claims may also be made on behalf of covered entities by associations or organizations representing their interests. The ACA, however, disallows consolidated claims on behalf of manufacturers by associations or organizations representing their interests. HRSA would like specific feedback related to consolidated claims for manufacturers.

Deadlines

HRSA proposes that the part that files the claim must send the opposing party written notice within three business days. HRSA will make a determination regarding whether all requirements for a claim have been met and notify all parties within twenty business days of receiving the claim. If all requirements have been met, the claim will be forwarded on to the ADR Panel. HRSA proposes that the opposing party have twenty business days to submit their written response to the allegations, to both the Panel and the complaining party.

Final Agency Decision

In the proposed rule, HRSA proposes that the Panel prepare a draft letter that includes findings and conclusions regarding the alleged violation. The draft letter will be sent to all parties and allow for a twenty-day response period. Once responses to the draft letter have been received, the Panel will issue the final decision. The Final Decision will be binding on all parties involved, unless invalidated by a court order.

Comment Submission Information

Interested stakeholders can submit comments, identified by the Regulatory Information Number (RIN) 0906-AA90 via: (1) the Federal eRulemaking Portal; (2) email to 340BNPRMADR@hrsa.gov; or (3) regular, express, or overnight mail to CAPT Krista Pedley, Director, Office of Pharmacy Affairs (OPA), Healthcare Systems Bureau (HSB), HRSA, 5600 Fishers Lane, Mail Stop 08W05A, Rockville, MD 20857.

A Mixed Bag - Implied Certification in False Claim Act Cases after the Escobar Decision

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The United States Supreme Court, in recent decision in Universal Health Services, Inc. v. United States ex rel. Escobar (“Escobar”) reaffirmed that the government and realtors via qui tam suits can pursue False Claim Act (“FCA”) liability against life science and healthcare companies. In doing so, the Court recognized such claims can proceed on an implied false certification theory. The Court also added a requirement that such parties must also demonstrate any misrepresentations were “material” on statutory, regulatory, or contractual requirements that make such representations misleading on those goods and services. Given that this heightened materiality standard is new, and the Court has remanded some cases for application of such new standard, the impact of Escobar on FCA liability will require a wait and see approach.

The case of Universal Health Services, Inc. v. United States ex rel. Escobar (“Escobar”) has been closely followed and frequently discussed by the members of both the legal and compliance professions. Now that the U.S. Supreme Court has decided the case, it appears that neither side won a decisive victory. What this means for compliance professionals remains unclear, but for the legal profession, it portends further litigation to clarify the ruling.

 Read Full Article in the August 2016 Issue of Life Science Compliance Update

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