Life Science Compliance Update

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30 posts from August 2017

August 31, 2017

The EpiPen Whistleblower Saga Comes to a Close

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Last week, Mylan Inc. and Mylan Specialty L.P. (hereinafter “Mylan”) reached an agreement with the United States Department of Justice (“DOJ”) to pay $465 million to resolve claims that they violated the False Claims Act (“FCA”). Mylan knowingly misclassified EpiPen as a generic drug, attempting to avoid paying rebates that were owed to Medicaid.

The settlement resolves the government’s allegations that Mylan, by erroneously reporting EpiPen as a generic drug to Medicaid despite the absence of any therapeutically equivalent drugs, was able to demand massive price increases in the private market while avoiding its corresponding rebate obligations to Medicaid. Between 2010 and 2016, Mylan increased the price of EpiPen by approximately 400 percent yet paid only a fixed 13 percent rebate to Medicaid during the same period. The government further alleged that although Mylan was well-aware that its drug was not a generic, it nevertheless claimed generic status for EpiPen in the Medicaid program to avoid paying a higher rebate.

The allegations were brought in a lawsuit filed under the whistleblower provisions of the False Claims Act, which permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. The whistleblower in this case was the pharmaceutical manufacturer, Sanofi-Aventis US LLC. It will receive approximately $38.7 million as its share of the federal recovery.

Mylan has also entered into a corporate integrity agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG) that requires, among other things, an independent review organization to annually review multiple aspects of Mylan’s practices relating to the Medicaid drug rebate program.

“Our five-year corporate integrity agreement requires intensive outside scrutiny to assess whether Mylan is complying with the rules of the Medicaid drug rebate program,” said Gregory E. Demske, Chief Counsel to the Inspector General for the U.S. Department of Health and Human Services. “In addition, the CIA requires individual accountability by Mylan board members and executives.”

“This settlement demonstrates the Department of Justice’s unwavering commitment to hold pharmaceutical companies accountable for schemes to overbill Medicaid, a taxpayer-funded program whose purpose is to help the poor and disabled,” said Acting Assistant Attorney General Chad A. Readler of the Department of Justice’s Civil Division. “Drug manufacturers must abide by their legal obligations to pay appropriate rebates to state Medicaid programs.”

“Mylan misclassified its brand name drug, EpiPen, to profit at the expense of the Medicaid program,” said Acting United States Attorney William D. Weinreb. “Taxpayers rightly expect companies like Mylan that receive payments from taxpayer-funded programs to scrupulously follow the rules. We will continue to protect the integrity of Medicaid and ensure a level playing field for pharmaceutical companies.”

A New Application of Escobar: Gilead or When Half-Truths Can Become Actionable Under the FCA

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On July 7, 2017, the Ninth Circuit in a very closely watched opinion determined that the whistleblowers in this case had demonstrated viable claims under the False Claims Act (“FCA”), alleging that their employer, Gilead Sciences, Inc. (“Gilead”) had made false statements to the U.S. Food and Drug Administration (“FDA”) regarding its HIV drug, resulting in billions of dollars of illicit payments from the government to Gilead. Such judicial decision is highly significant in that it is the first substantive Circuit Court decision since the U.S. Supreme Court decision in Universal Health Care v. Escobar, which effectively raised the legal burden by whistleblowers to demonstrate claims under the FCA.

In previous issues, we have discussed at great length the legal significance of the U.S. Supreme Court’s recent case in Universal Health Services, Inc. v. United States ex rel. Escobar (“Escobar”). Also in, those articles, we noted that full impact of the Escobar case had not yet been felt, but was likely to be substantial.

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August 30, 2017

After a Quiet Summer, Congress Starts Probe into MS Drugs

The-Most-Cost-Effective-MS-Drug-Is-the-One-That-Works-1440x810

Congress has recently taken a few months off from constantly barraging the pharmaceutical industry with daily probes and negative news. However, on Thursday, August 17, 2017, Representatives Elijah Cummings of Maryland and Peter Welch of Vermont announced a probe into multiple sclerosis (MS) drug costs, focusing on pricing from seven different pharmaceutical companies, starting with letters to those companies.

Cummings and Welch are asking Bayer, Biogen, Serono (Merck KGaA), Novartis, Sanofi, Teva, and Roche for details about their pricing, focusing on the reasons behind price increases over the past several years. Teva leads the pack with price increase – Copaxone 20mg increased over 1000% from 1996 through 2017. Compare that to Biogen’s Avonex (also approved in 1996), which increased by 691% during that same period.

The average annual cost of MS therapy rose to $78,000 in 2016 from $16,000 in 2004, according to the National Multiple Sclerosis Society.

A table created by FiercePharma shows the top fifteen MS drugs and their costs, along with the years the drugs were approved in and the percentage increase since the year of approval, can be seen below.

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A joint press release issued by the representatives states,

We are launching an in-depth investigation to determine why drug companies are dramatically increasing their prices for drugs used to treat Multiple Sclerosis (MS), which is a disease of the central nervous system that often has devastating and disabling effects on patients. We believe no American should be forced to struggle to afford lifesaving medical treatments, especially when drug companies increase prices without warning, cause, or justification.

In the letters, Cummings and Welch cited an American Academy of Neurology Study that found some drug companies seem to be increasing their prices and setting new, higher prices in tandem with their competitors.

The letters requested information to evaluate the substantial price increases of MS drugs, including information about corporate profits and expenses and documents concerning pricing strategies, patient assistance programs, and drug distribution systems. They requested the information be provided by August 31, 2017.

Representatives for Biogen, Novartis, Merck KGaA and Teva said the companies are reviewing the letters. A Bayer spokesperson said the company plans to respond directly. A Roche spokesperson said the company "will work with the Congressmen to address their request and questions."

This is the latest investigation into high drug prices in Congress. Some investigations have led to legislation to clamp down on high drug prices. For instance, Congress recently passed legislation that lets the FDA boost competition for off-patent drugs that see high price hikes.

Please see the following links for the letters to Bayer, Biogen, Serono, Novartis, Sanofi, Teva, and Roche.

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