Life Science Compliance Update

December 04, 2015

Sanofi Corporate Integrity Agreement 2015

Sanofi recently signed their latest Corporate Integrity Agreement (CIA) to settle the latest round of charges of violating the Anti-kickback statute. This is a far-reaching settlement involving Sanofi US Services Inc. and Sanofi-Aventis U.S., LLC (Sanofi US); Aventis, Inc.; and Genzyme Corporation (Genzyme) and will impact Sanofi until September 2, 2020.

This CIA is a condition precedent for other agreements set by Sanofi and the United States to resolve allegations that between 2005 and 2009, Sanofi US violated the False Claims Act by giving physicians free units of its knee-injection Hyalgan® in violation of the Anti-Kickback Statute, to induce the physicians to purchase and prescribe the product. The settlement also resolves allegations that Sanofi US submitted false average sales price reports for Hyalgan® that failed to account for free units contingent on Hyalgan® purchase. The government alleged that those false average sales price reports caused government programs to pay inflated amounts for Hyalgan® and a competing product.

This agreement was signed on September 2, 2015, but was not made public on the Health and Human Services Office Inspector General's website until late November.

At first glance, this Sanofi CIA might look similar to the GlaxoSmithKline and Johnson & Johnson CIA's. However, as we have seen many times from the OIG, there are several subtle, but important, differences.

The differences and nuances cover a wide range of topics, from the scope and breadth of this CIA, to a puzzling departure relating to certifications, to differences in training requirements. For a more in-depth review of the recent Sanofi CIA, see the December issue of Life Science Compliance Update (subscription required).

Life Science Compliance Update December 2015 Issue: Back to the Future

The December 2015 issue of Life Science Compliance Update, available with a subscription here, offers a more in-depth look at several recent enforcement and legislation actions affecting the compliance world.

Issue Summary

In this month's issue, you'll find a thorough look at the enforcement activity against Warner Chilcott, as well as insight into enforcement issues on the horizon relating to the Government's new push for individual accountability. The issue also features an article on the Yates Memo, with insight from Paul Kalb, of Sidley Austin, as well as how the DOJ, FBI, and OIG view it.

The issue also features an article on Sanofi's Corporate Integrity Agreement, which was signed with no fanfare from the compliance community. We also hear from a panel of five Chief Compliance Officers what life is like after the CIA ends. Finally, we have updates on key First Amendment cases and the Prevor combination products case.

Table of Contents

Back to the Future Compliance Style

The Yates Memo: This seems all too familiar

The New Gilded Age of Individual Accountability – Views from the Enforcers

Sanofi (finally) signed their Corporate Integrity Agreement

How not to move the needle – Lessons from the Warner Chilcott Settlement

Bipartisan Budget Act Increases Civil Monetary Penalties

Speaking Frankly – Post CIA Insights from Five Chief Compliance Officers

FDA v. the 1st Amendment – The Saga Continues

Strike Two – HRSA's 340B Orphan Drug Policy Struck Down Again

Allowing Industry to Decide Its Own Regulatory Fate? Evaluating the Long-Term Significance of the Prevor Case

Subscription

An annual individual subscription of twelve electronic issues is available for $1,200.00 U.S., with multiple subscriber-based discounts available. To learn more and purchase, visit www.lifescicompliance.com. A free sample issue is available for download by visiting www.lifescicompliance.com.

November 30, 2015

Novartis Settlement and Corporate Integrity Agreement Amendment

We have previously written about the proposed Novartis AG settlement relating its False Claims Act suit. The suit alleged Novartis participated in improper kickbacks to pharmacies to boost sales of several prescription drugs. Novartis Chief Executive Joe Jimenez claimed that Novartis had made the disputed payments, but did so to ensure patients took the drugs.

In October, Novartis announced a $390 million tentative agreement to settle that claim against them. That tentative agreement did not assign liability for the resolved allegations of improper discounts and rebates to specialty pharmacies in conjunction with the immunosuppressant Myofortic and the iron overload drug Exjade.

Allegedly, sales of Exjade were not meeting expectations primarily due to the side effects of the drug, when Novartis pressured a set of three hand-selected specialty pharmacies, including Bioscrip, Inc. and Accredo Health Group, to "hire or assign nurses to call Exjade patients and under the guise of education or clinical counseling, encourage patients to order more refills."

With regard to Myofortic, Novartis allegedly offered "lucrative rebate offers to five specialty pharmacies in return for the pharmacies' promise to recommend to doctors that they switch patients to Myofortic from competitor drugs."

Settlement and Admissions

The final settlement, approved November 20, 2015, settled the claims against Novartis for $370 million. That $370 million goes towards paying the fines to settle the claims against it, while an additional $20 million in profits will be forfeited, bringing the total settlement to $390 million. This is much less than the $3.35 billion the government was seeking. Of the $270 million, $286,870,245.98 will be paid to the federal government and $83,129,754.02 will be paid to settling states.

This settlement is the third settlement of this lawsuit – in January 2014 and April 2015, two specialty pharmacies (Bioscrip and Accredo) agreed to pay a total of $75 million to resolve federal and state claims against them based on the same allegations. Taken with this recent Novartis settlement, the federal and state governments' recovery will total $465 million.

In addition to the settlement, Novartis made a lengthy list of admissions relating to the Exjade and Myofortic claims. Novartis admitted to pressuring at least one of the specialty pharmacies into filling more Exjade prescriptions, even if it meant skirting the law a bit. Novartis also admitted to offering discounts and market share rebates to certain specialty pharmacies that dispensed Myofortic, though the agreements did not refer to any action that the pharmacies contemplated taking to increase Myofortic's market share.

Corporate Integrity Agreement Amendment

Part of this settlement requires Novartis to add provisions relating to specialty pharmacies as part of an addendum to its existing corporate integrity agreement, which will be extended for five years from November 19, 2015. These new CIA obligations will provide greater clarity on working with specialty pharmacies in support of patient care.

Novartis will "implement the agreed upon controls to ensure appropriate support for patients, and compliance with all Federal Healthcare program requirements related to its interactions with specialty pharmacies." These controls include a variety of things, such as "enhancing policies and procedures at [Novartis] for specialty pharmacy service arrangements and contracts, training for [Novartis] associates, as well as strengthened monitoring and tracking processes to ensure that services are provided in a compliance manner."

Part of those controls require an annual certification from Novartis officers and employees that the applicable Novartis business unit is compliant with applicable Federal health care program and FDA requirements.

In addition, Novartis will design policies and procedures to ensure that Novartis' arrangements with specialty pharmacies are "used for legitimate and lawful purposes in accordance with the federal anti-kickback statute ... and other applicable Federal health care program and FDA requirements." All arrangements will be subject to a written review and approval process. The policies and procedures shall include requirements about the business need for the arrangements, the services provided under the arrangements, and the amount of compensation provided under the arrangements – including that the amount of compensation is fair market value for the service.

Within 120 days of the effective date of the addendum, Novartis is required to create procedures reasonably designed to ensure that each existing and new or renewed arrangement does not violate the anti-kickback statute or the regulations, directives, and guidance related to the statute. Each new or renewed arrangement must be set forth in writing and comply with the arrangements procedures. Each party to the arrangement must have a copy of its Code of Conduct and relevant policies and procedures relating to the anti-kickback statute. A certification must be signed that the parties shall not violate the anti-kickback statute with respect to the performance of the arrangement, and that certification must remain on file.

Novartis has stated that they will provide its contracted specialty pharmacies with a "clear understanding of the Novartis Code of Conduct and training on the policies that guide our activities to help ensure compliance with Federal Healthcare program requirements." Novartis has agreed to provide a comprehensive annual report to the government of on its compliance with the aforementioned, and other, CIA obligations.

Novartis insists that it is "committed to high standards of ethical business conduct" and now has a comprehensive compliance program in place to ensure its future responsible behavior.

Preet Bharara, the U.S. Attorney for Manhattan made a warning statement to all pharmaceutical companies, stating, "Novartis turned pharmacies that should have been disinterested healthcare providers into a biased sales force for the drug maker. Drug makers and their relationships with healthcare providers ... must comply with the Anti-Kickback Statute. If they don't we will bring all appropriate law enforcement tools to bear to ensure that they do."

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