Life Science Compliance Update

June 15, 2016

Ex-Pharma Sales Staff Arrested on Anti-Kickback Charges

It was recently announced that Jonathan Roper, a former District Manager at Insys Therapeutics, and Fernando Serrano, a former sales representative at Insys Therapeutics, were arrested and charged with violating the Anti-Kickback Statute. The allegations are made as a result of their participation in a scheme to pay doctors thousands of dollars to participate in sham educational programs, in order to induce those doctors to prescribe millions of dollars' worth of a fentanyl spray.

The fentanyl spray at issue was approved by the FDA around January 2012, solely for the management of breakthrough pain in cancer patients who are already receiving, and who are tolerant, to opioid therapy for their underlying persistent pain. The spray is the only FDA-approved product Insys currently has on the market, and they reported approximately $330 million in net revenue from the spray in 2015.

The FBI and Department of Justice (DOJ) allege that in order to market the spray, Insys established a program to educate healthcare processionals about the spray. Doctors that were selected to be speakers for the program were compensated for "providing educational presentations to a peer-level audience of healthcare professionals using a preapproved PowerPoint presentation." In reality, however, many of the Speaker Programs that the two individuals organized and attended were predominantly social gatherings at high-end restaurants that had no educational component or slide presentation at all. Many of the programs also lacked a proper audience.

In an attempt to make these "speaker programs" seem legitimate, sign in sheets were forged by adding names and signatures of physicians who had not attended the program. Repeat attendees were also common at speaker programs organized by Serrano. Since all legitimate speaker programs required the use of the same preapproved slide presentation, there was really no educational purpose for healthcare professionals to attend multiple times.

There were a handful of doctors in particular that often acted as the purported speakers at the speaker programs. Those doctors were highly compensation by Insys for their duty as "speaker": one doctor received over $147,000 and another received over $112,000 in speaker fees in 2014 alone. Those two physicians were also the two largest prescribers of the spray in the United States during that time period: prescribing over $3 million and over $2 million, respectively.

While it was widely understood at the company that doctors were selected as speakers in an attempt to induce them into prescribing large quantities of the spray, Roper explicitly instructed his sales team as such, in one email stating

Where is the ROI [Return on Investment]??!!! All prescribers from this team that are on this list are [Pharma Company-1] speakers. We invest a lot of time, $, blood, sweat, and tears on "our guys" and help spreading the word on treating BTCP [breakthrough cancer pain]. We hire only the best of the best to be apart [sic] of our speaker bureau and dropping script counts is what we get in return?

. . . 

This is a slap in the face to all of you and is a good indication as to why NONE of you are climbing in the rankings this quarter. DO NOT be afraid to set your expectations and make them crystal clear as to what they are before, during, and after HIRING these priviliged [sic] set of docs who are fortunate enough to be a part of the best speaker bureau in the market in the world of BTCP [breakthrough cancer pain]. Please handle this immediately as funding will not be given out to anymore [sic] "let downs" in the future. Thanks. 


Roper and Serrano were each charged with one count of conspiracy to violate the Anti-Kickback Statute and one count of violating the Anti-Kickback Statute. Each of the two counts carries a maximum term of five years in prison.

According to FBI Assistant Director Diego Rodriguez,

This case should be something the medical industry and the general public should pay close attention to because it's one of the reasons we're experiencing an epidemic of overdoses and deaths in this country.  Not only did the defendants in this case allegedly bully sales reps into pushing this highly addictive drug, they paid doctors to prescribe it to patients.  The more prescriptions written, the more money the doctors made.  Instead of seeing a way to help people who are dealing with extreme pain, they allegedly saw a huge payday that potentially put people's lives in danger.

There are two interesting things to note with respect to this case. First, Insys was not mentioned by name in any of the charging documents; however, it is clear from other details in the document – i.e., when the drug was approved and its annual sales in 2015 – make it clear that Insys is the company in question. Insys has also previously disclosed that it is under a federal investigation for its sales and marketing practices.

Second, the FBI agent utilized both Open Payments data and Medicare Part D data to make his case against Serrano, once again showing that those data can, and will, be used against physicians and others in the healthcare industry.

June 09, 2016

Vermont Governor Signs Drug Price Transparency Bill

On Friday, June 3, 2016, Vermont Governor Peter Shumlin signed into law a bill that aims to require greater transparency on behalf of drug manufacturers when they increase the prices of prescription medicine.

The law, S.216, will require state health care regulators to develop an annual list of fifteen drugs for which "significant health care dollars" are spent and where the wholesale acquisition costs (i.e., list prices) rose by fifty percent or more over the previous five-year period, or for which the list prices rose by fifteen percent or more over a twelve-month period. The Green Mountain Care Board of Vermont will work with the Department of Vermont Health Access to develop that list.

Select manufacturers will then need to disclose "all the factors that have contributed to a price increase" and justify the price increase to the Attorney General's office, which could take companies to civil court if they decline to provide the requested information. Each violation also carries a $10,000 penalty.

The law also requires Vermont's Medicaid program to use the 340B drug pricing formula to save money on prescription drugs, and require health insurance companies to provide information for consumers on what they may need to pay for their prescriptions.

In addition, the bill requires health insurance companies through the state's Health Connect program to set up interactive websites for patients so they can find out how much their prescription drugs cost before going to get the prescription filled at the pharmacy.

In a statement issued by Governor Shumlin's office, he noted that "This bill is about accountability. The reality is that we have pharmaceutical companies raising prices on lifesaving drugs five thousand percent. When asked about those outrageous increases, CEOs are literally laughing in front of Congress. That needs to change."

What Governor Shumlin does not seem to recognize is that Martin Shkreli, presumably the aforementioned CEO, does not represent the pharmaceutical industry on the whole. Unfortnately there are going to be a few organizations that game the system, and painting all pharma execs in the same light at Shkreli does everyone a disservice.

Many of the drugs that the bill targets actually save health care costs by enabling patients to avoid more expensive procedures. It is possible that by revealing competitor pricing, or the perception that such information could be revealed in the aggregate in the Green Mountain Care Board's report, could lead to disincentivizing deeper discounts and rebates.

At an April Vermont House Health Care Committee meeting, PhRMA submitted written testimony, noting that the information on pricing may not actually be relevant because companies do not sell drugs to doctors and pharmacies and in many cases, manufacturers are actually "not privy to the final price paid in Vermont." The testimony also noted that forcing companies to disclose prices may "chill the incentive" for drug makers to give discounts to those groups.

PhRMA recommends that legislators in other states who are contemplating similar legislation instead focus "on giving patients and families what they actually need: predicable and accessible information about the out-of-pocket costs they will face and enforceable, common-sense rules that prevent discrimination and remove barriers to receiving care."

June 03, 2016

Using Massachusetts Physician Payment Data Prescribing Patterns Under Attack (Again)

Prescribing practices of physicians are once again under attack. And, once again, the attacks leave consumers, patients, and their families feeling confused. This time, the confusion is a result of a study done by researchers from Harvard Medical School and published in JAMA Internal Medicine which found that "medical industry payments to physicians in Massachusetts are associated with higher rates of prescribing brand-name drugs that treat high cholesterol."

Right off the bat, there are some interesting things to note relating to the study. First of all, the study only looked at physicians in Massachusetts, a relatively small state. Second, the study only focused on the prescribing of brand-name drugs for high cholesterol, a relatively small portion of total branded drugs prescribed since the largest players have since gone generic. These are not suggested to discredit the research, but instead, to help put it in perspective.

However, even acknowledging those realities, it is always beneficial to read through the entire study to ascertain the methods, the reasoning, and, if possible, the true results of the study, to best understand the study and the points behind it.

Design, Setting, and Participants

The study used cross-sectional linkage of Part D Medicare prescriptions claims data with the Massachusetts physician payment database. The database includes all licensed Massachusetts physicians who wrote prescriptions for statins that were paid for under the Medicare drug benefit in 2011.

Study Results

Among the 2444 Massachusetts physicians in the Medicare prescribing database in 2011, 899 (36.8%) received some form of industry payments. The most frequent payment was for company sponsored meals, accounting for 71.1% of payments.

Statins accounted for 1,559,003 prescription claims, 22.8% of which were for brand name drugs. According to the study, physicians with no industry payments listed had a median brand name prescribing rate of 17.8%. For every $1,000 received in payments, the brand name statin prescribing rate increased by a statistically insignificant .1%.

However, interestingly, payments for educational training were associated with a 4.8% increase in the rate of brand name prescribing. While that percentage is more significant than the overall percentage mentioned above, it is still not that significant. As we have mentioned before, and continue to opine on, we do not believe that physicians becoming more educated about certain drugs is typically a bad thing. The more they learn, they more they know and can understand how individual drugs can help their patients and what kind of side effects they need to be looking for.

Using the foregoing figures, the researchers concluded that industry payments to physicians are associated with higher rates of prescribing brand-name statins.


As we have all know, and the Harvard researchers even stated, correlation does not equal causation. Simply because there is a correlation between receiving payments (such as a company sponsored meal) and prescribing rates does not mean that one is caused by the other. Even if it is a true causation, physicians who attend company sponsored meals learn more about the drug, and therefore feel more comfortable prescribing it, than a physician who does not have the benefit of that knowledge. Further, the correlation they are trying to bring to bear is a one in one thousand percent, a statistically insignificant amount.

Most patients likely prefer to have a physician who knows exactly what they are prescribing, and a physician who knows which individual patients may be someone who benefits from the name-brand drug, instead of the generic. In the case of statins not all patients can tolerate all statins some patients who have problems taking one statin often can use another statin and several of those statins that utilize different pathways are still branded products.

The study's limitations included the possible inaccuracy of the reporting of payments and prescriptions covered outside of Medicare. Further, they could not determine "which physicians received payments from a specific company and analyze their prescribing of that company's products."


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