Life Science Compliance Update

February 16, 2018

Aegerion Sentenced to Pay $7.2 Million to Patients


On January 30, 2018, Federal U.S. District Court Judge William Young sentenced Aegerion to pay some of the roughly $36 million fine for off-label marketing to Juxtapid patients. In November, Judge Young rejected an initial plea deal between the Department of Justice (DOJ) and Novelion Therapeutics (who now owns Aegerion) because it would have restricted his ability to impose a sentence upon the company.

Judge Young instead sentenced Aegerion in a deal that gave him discretion to determine how the payment would be split up. Young ordered the company to pay $7.2 million – the same amount the company had agreed to pay from the beginning – as part of the total $40.1 million fine.

Young’s concern with the DOJ-Aegerion agreement was that it was a fine that entirely went to the government, he instead wanted it to go to ninety-one patients who may have been harmed by Aegerion’s conduct. In a statement to the prosecution, Young stated, “I think you ought to pay more attention to the actual people who were harmed here.” He also went on to say, “I feel so strongly that people who were harmed by this criminality ought to have some recompense,” as quoted by the Boston Globe.

The patients who were affected and are set to receive a portion of the fine had taken Juxtapid for reasons other than the FDA-approved marketed reasons (which was to treat high cholesterol in people with a rare genetic disease). Instead, the company promoted the drug to patients who did not have the rare genetic disease, some of whom wound up with side effects including liver toxicity and gastrointestinal distress.

During court on the day of sentencing, Aegerion pled guilty to two misdemeanor counts that it misbranded Juxtapid in violation of the Federal Food, Drug & Cosmetic Act. In total, Aegerion agreed to pay $36 million to resolve criminal and civil claims by the DOJ and a $4.1 million deferred prosecution agreement to resolve a United States Securities and Exchange Commission case.

Jeffrey Hackman, Novelion’s chief operation officer, accepted responsibility for the conduct and stated, “It never should have occurred, and we strive to ensure it never occurs again.”

In a statement, Novelion called the sentence an "important milestone" that allows it to focus on its business going forward. "As a company, we are deeply committed to legal and regulatory compliance," Chairman Jason M. Aryeh said. "We have worked tirelessly to build a culture of integrity and ethics under our new management team and board of directors, in an effort to put legacy Aegerion challenges behind us."

This is certainly an interesting way of sorting out the total fine for the company, and it will be interesting to see if any other judges begin to take the same tact – or better yet, if other companies get out in front of the issue and start to make payments to certain patients as part of settlement deals, or if this is a one-off situation.

January 25, 2018

CMS Changes Policy Regarding Enforcement Actions


On October 27, 2017, CMS issued a draft Survey and Certification Memo (S & C Memo) in which it announced its intention to reverse a previous policy regarding “immediate jeopardy” and federal enforcement actions. The new draft policy significantly revises the previous position of CMS and offers a more equitable and pragmatic approach to enforcement actions.


CMS Regional Offices have been imposing high 6-figure civil money penalties (CMP), and frequently CMPs well in excess of $1 million, for alleged deficiencies that constitute immediate jeopardy. The approach by CMS regarding CMPs was fueled, in part, by an S & C Memo from July 29, 2016.

CMS is authorized to impose either a per instance or a per day CMP for noncompliance with the Requirements of Participation. When CMS alleges that immediate jeopardy existed for months prior to a survey and opts to impose a per day CMP instead of a per instance CMP, the financial impact of that decision can be devastating. The draft S & C Memo reflects a major policy shift that may offer relief for providers alleged to have noncompliance at the immediate jeopardy level.

Instead of reflexively imposing a per day CMP whenever immediate jeopardy is alleged, which has been the practice of many CMS Regional Offices, the new policy states that “when the current survey identifies Immediate Jeopardy (IJ) that does not result in serious injury, harm, impairment or death, the CMS Regions may determine the most appropriate remedy.”

Purpose and Other Changes

CMS notes that “the purpose of federal remedies is to encourage the provider to achieve and sustain substantial compliance.” Additionally, the draft policy does not change statutorily required remedies such as a mandatory denial of payment for new admissions (DPNA) when there is 90 days of noncompliance and termination from the Medicare program when there is six months of noncompliance. It does however, recommend that the CMS Regional Offices use “the type of remedy that best achieves the purpose based on the circumstances of each case.” This view represents a departure from the previously inflexible approach employed by some CMS Regional Offices.

CMS emphasized that when there is immediate jeopardy without resultant serious harm or death, “the [CMS] RO [Regional Office] must impose a remedy or remedies that will best achieve the purpose of attaining and sustaining compliance.” Such a refreshing policy statement connects the type of remedy with the underlying facts rather than using a cookie-cutter per day CMP approach to enforcement. It reflects serious thought and a practical approach that will better enable providers to achieve, maintain, and sustain substantial compliance with the Requirements for Participation.

Among the remedies CMS may impose are the following: Directed In-Service Training; a Directed Plan of Correction; Temporary Management; Denial of Payment for New Admissions (DPNA); Denial of Payment for all Medicare and Medicaid Residents (DPAA); State Monitoring; and Termination of the Medicare Provider Agreement.

The provider community, acting through professional organizations, elected officials, and individual counsels, had been raising concerns with CMS about the inappropriate imposition of per day CMPs in the context of alleged immediate jeopardy.

January 23, 2018

AARP v. EEOC : Motion to Vacate Granted


In AARP vs. EEOC, U.S. District Court Judge John D. Bates granted a motion by AARP to vacate the EEOC’s current wellness regulations, which allow companies to charge employees who decline to participate in wellness questionnaires and exams with penalties. The resulting decision is a win for workers seeking to protect their medical and genetic information but also creates uncertainty within the compliance landscape for employer wellness programs.

Background and Decision

A wellness program involving medical exams or inquiries must be voluntary in order to comply with the Americans with Disabilities Act (ADA) and the Genetic Information Non-Discrimination Act (GINA). Until this decision, “voluntary” was never defined. There had been almost no limitations, or even judicial or legislative guidance, on allowable penalties or incentives that can be tied to screenings or health reimbursement arrangements (HRAs). The only line was the Affordable Care Act’s 30%-of-total-health-benefit-spending limitation (50% for smokers).

AARP vs. EEOC’s decision means that the Equal Employment Opportunity Commission must rewrite its definition of “voluntary” to achieve consistency with the dictionary definition. Additionally, the EEOC must issue rules soon enough for employers to incorporate the new limits for incentives and penalties into their own wellness programs starting in January 2019. AARP sued the EEOC in October 2016 on the grounds that EEOC’s wellness rules were coercive, making workers pay much more for health insurance if they decided to protect private medical information.

Employer Wellness Programs Face Uncertainty

Under the court’s ruling the EEOC wellness program regulations will remain effective for 2018 but will become null and void beginning on January 1, 2019. As a result, there will likely be an element of uncertainty within the compliance landscape for employer wellness programs under the ADA and GINA beginning in 2019.

As reported, the main types of employer wellness program features impacted by the court’s ruling are:

  • Biometric screenings (and any other medical examinations) for employees and spouses;
  • Disability-related inquiries directed at employees (which might include some questions on an HRA, depending on how questions are worded);
  • Family medical history questions (HRA questions that ask about the manifestation of disease or disorder in an employee’s family member and/or HRA questions that ask an employee’s spouse about his or her own manifestations of disease or disorder); and
  • Any other features that involve genetic information (i.e., an employee’s genetic tests, the genetic tests of the employee’s family members, biometric screening results of the employee’s spouse.

You can learn more about the decision here and also sign up for an upcoming webinar to learn about the case, how it effects employers, the wellness industry, and to find additional information.


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