Life Science Compliance
Update
U.S. EDITION
Volume 3.1 | January 2017
Thomas Sullivan . . . . . . . . . . . . . . . . . . . . . . . . . Publisher
Seth Whitelaw, JD, LLM, SJD . . . . . . . . . . . . . . . . Editor
Cheryl Landis,
LANDIS DESIGN STUDIO . . . . . . . . . . Graphic Design
Feature Article
Feeling Needy
INSIDE
The Why, What and How of
Needs Assessments
•Feeling Needy - The Why, What and . . . 1
How of Needs Assessments
By Tynan P. Olechny, MBA/MPH, CVA, Consulting Principal, PYA, and
Christina L. Hummel, MBA, Senior Consultant, PYA1
FEATURE
Abstract: Given trade association guidance and recent government involvement
COMPLIANCE OPERATIONS
•Maintaining Independence . . . . . . . . . . . . . . 6
& Objectivity - OIG Releases
New IRO Guidance
DATA, METRICS & ANALYTICS
•Managing Medical Inquiries
in an Era of Data Analytics
. . . . . . . . . . . .
8
PRIVACY
•Sailing with a New Safe Harbor . . . 11
in Sight: The EU-U.S. Privacy Shield
ENFORCEMENT
•Planning for the Future . . . . . . . . . . . . . . . 15
- HHS OIG’s 2017 Work Plan
•Co-Payment & Deductible Waivers . . 18
as Illegal Inducements
•Nursing Facilities & Kickbacks . . . . . . . . 21
- Is the DOJ Shifting Away from
Pharma?
•Not All Discounts Are Equal: . . . . . . . . . . 23
Evaluating When Discounts May
Be Construed as Unlawful
EDITIOR’S CORNER . . . . . . . . . . . . . . . . . . . 25
BOARD CORNER
. . . . . . . . . . . . . . . . . . . . . .
27
in life sciences transactions, this article emphasizes the importance of developing
and implementing needs assessments related to engaging healthcare professionals
to provide services to pharmaceutical or medical device companies. It describes
a four-step process for identifying and documenting the business purpose of
such arrangements, including 1) developing and implementing a written needs
assessment policy, 2) identifying the business purpose, 3) completing a provider
analysis, and 4) addressing additional considerations and documenting the need.
Just as a physician assesses the needs of his or her patients, companies
manufacturing and providing pharmaceuticals or developing medical
devices must assess the need to involve physicians in their business
operations. As the federal government strives to bring more
transparency to relationships between physicians and life sciences
companies, an organization’s decision to collaborate with healthcare
professionals (“HCPs”) should be evaluated utilizing more structured
and formal processes. It is not enough to merely analyze and document
that the remuneration for identified HCP services is consistent with
fair market value.2 Consideration that a proposed arrangement meets
a legitimate and supportable business need has taken on heightened
significance for many life sciences companies, including many currently
1 PYA (Pershing Yoakley & Associates, P.C.), a national healthcare consulting firm, has helped
clients navigate and derive value amid complex challenges related to regulatory compliance,
mergers and acquisitions, governance, business valuations and fair market value assessments,
best practices, tax and assurance, business analysis, and operations optimization. PYA
assists clients in all 50 states from offices in Atlanta, Kansas City, Knoxville, Nashville, and
Tampa.
2 Generally, the fair market price is the compensation that has been included in bona fide
service agreements with comparable terms at the time of the agreement, where the price or
compensation has not been determined in any manner that takes into account the volume
or value of anticipated or actual referrals (42 C.F.R. § 411.351).
Contact: www.lifescicompliance.com
© 2017 Life Science Compliance Update. All rights reserved.
Life Science Compliance Update U.S. Edition
operating under Corporate Integrity Agreements (“CIAs”).
Many large, established organizations have quantified
an arrangement’s need via more formal, and often welldeveloped, activities. However, it is an evolving concept
for emerging and midsize companies.
company. These companies have a long-standing history
of business relationships with physicians, as a physician’s
involvement can be a pivotal factor in the acceptance and
demand for a company’s particular product. Furthermore,
physicians providing such services (typically referred
to broadly as consulting services) are often utilized
because of their status as key opinion leaders (“KOLs”)
in their respective fields or specialties, as well as for the
knowledge they bring to an arrangement. While using an
HCP may appear to make perfect sense on the surface,
completing a needs assessment helps an organization
determine if engaging this individual and compensating
him or her for both knowledge and time is commercially
reasonable, thus helping to avoid potential compliance
issues.
Addressing the important questions of “why,” “what,” and
“how” is a critical part of the needs assessment process
in determining whether the proposed services fulfill a
legitimate business need. Specifically, completion of
a needs assessment is often described as a systematic
process for determining and addressing needs, or “gaps”
between current conditions and desired conditions or
“wants.” There is a much higher degree of scrutiny
regarding the “wants” for life sciences companies, as
the remuneration for HCP services cannot result in
inducements to purchase a company’s products or, in
other words, generate payment for referrals.
The “What”
The Need for HCPs
The “Why”
It is not uncommon for pharmaceutical and medical
device companies to gain valuable insight through
collaboration with HCPs, or more specifically, by engaging
KOLs. While pharmaceutical companies rely heavily on
physicians to provide scientific and therapeutic expertise
and guidance, medical device companies depend on a
physician’s expertise and knowledge in order to help with
various stages of medical device product development. In
some cases, the physicians are the actual inventor of the
product. Additionally, many organizations use HCPs for
marketing purposes, participation on advisory boards,
educational presentations, and other consulting services.
As the federal government strives to reduce healthcare
costs and focuses significant efforts on healthcare fraud
and abuse, financial relationships between physicians
and healthcare entities have received more attention
and evaluation, and are expected to continue to do
so in the future. For example, governmental lawsuits
involving pharmaceutical company Novartis and medical
device maker Olympus focused on violations of the
Anti-Kickback Statute. 3 Both cases involved various
forms of remuneration given to HCPs. Specifically,
payments to HCPs were determined to be excessive and
predicated on inducing a healthcare provider to purchase
or prescribe each company’s products. The outcomes of
these cases provide valuable insight into the importance
of the needs assessment process. They also highlight the
risks associated with engaging HCPs for various services
without establishing and documenting the business
justification for these arrangements. Evaluating whether
the need for a specific arrangement is prudent, and makes
good business sense (i.e., is commercially reasonable4) is
essential.
By using HCPs, a pharmaceutical or medical device
company may be able to develop its product in a more
efficient and effective manner. Additionally, HCPs
can add credibility to a product and possess clinical
expertise critical to drug and device development. Further,
3 For a detailed discussion of these cases, see the previous issues of the
Life Science Compliance Update.
4 Commercial reasonableness is defined by the Department of Health
and Human Services (HHS) as an arrangement which appears to be
“a sensible, prudent business agreement, from the perspective of the
particular parties involved, even in the absence of any potential referrals”
(63 Fed. Reg. 1700 [Jan. 9, 1998]). Additionally, according to the Office
of the Inspector General (OIG) of HHS, in order to meet the threshold of
commercial reasonableness, compensation arrangements with physicians
should be “reasonable and necessary” (70 Fed. Reg. 4866 [Jan. 31, 2005]).
This article focuses on the development of needs
assessments related to the utilization of HCPs to
provide services to a pharmaceutical or medical device
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Life Science Compliance Update U.S. Edition
Volume 3.1 | January 2017
physicians trust other physicians and their opinions and
may, therefore, listen and respond better to a colleague
versus a medical sales person.
entity agrees to perform as part of the settlement and
gives the industry a better understanding of the OIG’s
requirements for compliance in particular sectors of the
healthcare industry. In order to quantify the OIG’s focus
on needs assessments, a review of over 20 CIAs instituted
for medical device or pharmaceutical companies over the
last four years revealed that more than half of the CIAs
required that a needs assessment be completed as part of
CIA implementation. When the OIG issues a CIA, it also
takes into account a company’s pre-existing compliance
program in order to determine the requirements of the
CIA. One may infer that those organizations required to
complete a needs assessment as part of their CIA may
have had an inadequate compliance program or process
in place for objectively evaluating the need for entering
into relationships with its physicians.
While these are all solid reasons for retaining an HCP to
provide services, compliance issues can arise if a company
does not determine the commercially reasonable business
need for the selected service. Importantly, the needs
assessment process should be performed prior to selecting
the HCP in order to help ensure the services performed
are not later viewed as inducements to purchase or use
a company’s products, or to generate referrals from the
HCP.
Trade Associations and Government Involvement
Highlight the Need
The presence and support of business need is not new
to the pharmaceutical and medical device industries.
Specifically, trade associations representing such
manufacturers, including the Pharmaceutical Research
and Manufacturers of America (PhRMA) and the Advanced
Medical Technology Association (AdvaMed), have adopted
codes of ethics that govern the interactions between
their members and the HCPs they utilize. PhRMA’s Code
on Interactions with Healthcare Professionals (PhRMA
Code) states that a bona fide consulting arrangement
includes, among other criteria, a legitimate need for
the service which has been identified in advance of the
request and prior to entering into an arrangement with a
potential HCP.5 Further, the PhRMA Code indicates that
the “number of healthcare professionals retained is not
greater than the number reasonably necessary to achieve
the identified purpose.” Similarly, AdvaMed’s Code of
Ethics states that “consulting arrangements should be
entered into only where a legitimate need for the services
Further, in early 2016, the OIG issued guidance stating
its goal, and arguably its expectation, is to encourage
the creation of compliance programs, and to encourage
the operation of effective compliance programs.7 One
can therefore deduce that development of policies and
processes, as well as completion of needs assessments
for all identified HCP transactions, may be considered
not only a prudent best practice, but also a requisite part
of a company’s established compliance plan.
The “How”
While there are numerous resources publicly available to
an organization in developing a general needs assessment,
to date there does not appear to be any “bright line”
guidance with respect to conducting one for purposes of
validating arrangements with HCPs. The following four
steps may serve as a “road map” for organizations seeking
to develop or refine their approaches for completing a
needs assessment regarding their relationships with HCPs.
is identified in advance and documented.”6
Step One: Develop and Implement a Written Needs
Assessment Policy
As a result of industry standards and other investigated
cases of non-compliance, the importance of a documented
needs assessment has increased over the last several
years. If an entity is found to have acted in a manner that
attracted the attention of investigative authorities, the
entity may be required to enter into a CIA which is often
issued as part of a civil settlement between healthcare
entities and the OIG. A CIA outlines the obligations an
Contents
The size of the company may dictate the intensity or
formality of the exercise involved in creating a needs
assessment. Whether the HCP is sought by a business
5 http://www.phrma.org/codes-and-guidelines/code-on-interactions-withhealth-care-professionals
6 http://www.advamed.org/issues/code-ethics
7 https://oig.hhs.gov/exclusions/files/1128b7exclusion-criteria.pdf
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unit, a division, or for the entire company, the process
for initiating HCP engagement to perform consulting
services should be consistent across the organization.
Further, while different areas may have diverse needs of
varying complexities, a standard policy and procedure
should be followed.
business need is to identify an HCP and describe how
that particular individual, regardless of KOL status,
may help the company. However, there are several key
considerations that must be addressed before identifying
the HCP. First, an organization should identify the
“gap” that it is trying to fill, which presumably includes
engaging an individual with the background, expertise,
and skills necessary to meet a desired business need.
For example, a medical device company may have a
surgical product that requires a certain level of refined
clinical skill for helping train other physicians in using its
particular product. In order for this product to ultimately
improve patient outcomes, the end user must have the
appropriate training, which may be difficult to obtain
via current academic and other traditional educational
means. Once the gap has been defined, the next step is
to specifically detail why closing this gap accomplishes
a commercially reasonable business purpose. Questions
to ask and subsequently document include, but are not
limited to, the following:
Perhaps the most critical step in policy development,
outside of specifying the particular need and detailing
the consistent procedures that must be completed,
is obtaining input from those individuals who will be
responsible for implementing the policy. While advice
from legal and compliance experts is critical given the
current regulatory focus, input from the individuals (i.e.,
business unit representatives, medical affairs liaisons,
etc.) ultimately completing and adhering to the policy
should be sought. This is an effort to determine the most
efficient way to gain the necessary information, and to
document the need in the most comprehensive manner.
Specifically, the written policy and procedures should
delineate items such as:
• What is the specific purpose of the arrangement?
• What information should be included in the needs
assessment.
• Does the proposed arrangement with an HCP
represent a reasonable necessity that is essential to
the functioning of the company?
• How the information should be documented (i.e., via
an identified form or in another standardized format).
• How and to whom the needs assessment should be
submitted for review and approval.
• Is the proposed arrangement “reasonably necessary”
to accomplish the commercially reasonable business
purposes of the services?
• The process for next steps (i.e., fair market value
determination and written agreement development).
• In what manner do the proposed services the HCP
will provide relate to the company’s business and/or
clinical plans and strategies?
Additionally, to prevent a perceived conflict of interest, an
organization may determine that individuals with certain
roles and responsibilities be excluded from participation
in HCP selection (i.e., sales representatives) especially
when the need is for specific scientific expertise. The
policies and identified procedures should be reviewed at
regular intervals (i.e., bi-annually) to make sure they are
current with regulatory guidance and the organization’s
business practices, and to identify areas for additional
refinement.
• Does the arrangement contribute to the company’s
profits and/or the development of a particular product
or service without requiring income from proscribed
referrals?
• What are the relevant national, regional, and local
economic conditions, and how do these circumstances
affect the appropriateness of the proposed arrangement
with an HCP?
Step Two: Identify the Business Purpose
Comprehensively documenting answers to these questions
should assist a company better assess the commercial
reasonableness of the arrangement. Since recent CIAs
Following policy and procedure development, many
companies may assume the first step in analyzing the
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Life Science Compliance Update U.S. Edition
Volume 3.1 | January 2017
have resulted from arrangements that the OIG and United
• What is the nature of the duties to be performed and
States Department of Justice (“DOJ”) feel do not reflect
how does the identified HCP help fulfill this need?
a prudent business need in the absence of referrals, this
Step Four: Address Additional Considerations and
Document the Need for the Arrangement
documentation is more important than ever to avoid
significant costly investigations of potential compliance
breaches. For example, Cardiovascular Systems, Inc.
Once the business need has been established and the
(“CSI”), agreed to pay $8 million for allegations the
qualifications of the HCP have been identified, the next
company rewarded physicians for using its medical
step is to document any outstanding, yet critical, details
device in the absence of a justifiable business purpose.
of the proposed arrangement. For example, a company
Specifically, the DOJ alleged that CSI provided marketing
should document the amount of time required for the
and other practice development services to physicians in
HCP to perform the proposed services, and the anticipated
return for their use of CSI’s medical device, as opposed to
frequency of the services. Additional documentation may
providing an identified and bona fide service.
also include details as to how the specific services will be
Step Three: Complete a Provider Analysis
measured and documented (i.e., time sheets, performance
After the facts and circumstances associated with the
information that may further bolster an organization’s
evaluations, etc.). Further, any qualitative or quantitative
specific business need have been identified, the next
rationale for engaging an individual should be considered
step in the process is focused on describing HCPs that
and included.
are qualified to provide the defined services. Certain
Consistent with the concepts discussed in Step One,
questions must be asked such as:
formal written documentation specific to the proposed
• How many HCPs are required?
arrangement should be completed and submitted in
• Who is required to perform the identified service (i.e.,
accordance with an organization’s defined policies.
a physician, non-physician provider, etc.)?
Finally, agreements with HCPs may span multiple years,
but that does not preclude the implementation of an
• Is specialty-specific expertise needed?
established review and monitoring process (i.e., annually)
Also at this point, a company should consider what
of the initially identified need to ensure the need still
minimum and optimal qualifications of the HCP are
exists and/or does not require modification.
required. The level of expertise, credibility, and reputation
Conclusion
of a specific thought or opinion leader in his or her field
is also important for determining the explicit experience
While the frequency of scrutiny associated with
required for the identified service. Specifically, questions
transactions between HCPs and pharmaceutical, medical
that may be able to support the need for a particular HCP
device, and other life sciences companies is anticipated
include, but are not limited to, the following:
to increase, the benefit these organizations receive
• Does the proposed arrangement require a physician
from such providers remains critical. HCPs and KOLs
to perform the service(s)?
are central to scientific discovery and advancement,
the development of safe and efficacious products, and
• Does the proposed arrangement require a physician
the continued improvement of clinical treatments and
of a specific specialty to perform the service(s)?
health outcomes. Therefore, it is vitally important that
• Is any specialized training and/or experience required
organizations clearly and intentionally identify, define,
which should be considered in evaluating the proposed
document, and monitor the specific business rationale
arrangement?
associated with these critical provider relationships.
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Life Science Compliance Update U.S. Edition
Volume 3.1 | January 2017
compliance program in general, but they also are required
to support their determinations with specific transactional
testing. The sheer scope of these types of reviews limits
the number of independent firms with the necessary
infrastructure and operational expertise to undertake the
required activities.
Maintaining
Independence &
Objectivity - OIG Releases
New IRO Guidance
In many cases, the firms that could serve as an IRO are
already serving as independent auditors for companies.
Since the IRO is an extension of the OIG, the fact that
a firm also is the independent auditor for the Board of
Directors creates an implicit, if not actual, conflict of
interest.
By Kaitlin Fallon Wildoner, Esq.,
Senior Staff Writer, Life Science Compliance Update
Abstract: The Health and Human Services Office of Inspector
General has released new guidance on an important topic,
Independent Review Organizations within Corporate Integrity
Agreements. This article goes through the recent guidance and
explains the requirements of objectivity and independence. The
conclusion also provides several practical takeaways from the
new guidelines.
IROs are required to maintain objectivity and independence so that their findings are viewed as impartial and
accepted by the OIG. The Guidance identifies two categories of potential threats to objectivity and independence.
Since the Sarbanes-Oxley Act and the greater focus on
auditor independence that followed, Independent Review
Organizations (“IROs”) have been a staple provision in the
Health and Human Services (“HHS”) Office of Inspector
General’s (“OIG”) Corporate Integrity Agreements
(“CIAs”). With CIAs on the rise, in August 2016, the
OIG issued new guidance on IRO independence and
objectivity.8 The new guidance was prompted by concerns
expressed by both individuals and entities, regarding
circumstances that may affect the independence of an
IRO that performs CIA reviews.
Incidences where the IRO performs management functions
for the provider is typically deemed to be fatal by the OIG.
The OIG generally finds that no amount of safeguards or
firewalls would likely reduce the threat to an acceptable
level. Providers that are subject to a CIA should not
engage their IRO to assist with management functions or
decisions, nor should they retain an IRO that was involved
in provider management in the past.
Independence Issues Are Nothing New
Concerns about independence and objectivity have been
around for many years. These concerns especially are true
for internal audit firms (e.g., “The Big Four”). According
to the United States Security and Exchange Commission
(“SEC”), the Commission’s general standard of auditor
independence is that “an auditor’s independence is
impaired if the auditor is not, or a reasonable investor
with knowledge of all the facts and circumstances
would conclude that the auditor is not, capable of
exercising objective and impartial judgment on all issues
encompassed within the audit engagement.”12
OIG first published guidance on IROs in 2004 in response
to increased inquiries regarding the Sarbanes-Oxley Act
and a focus on auditor independence, primarily basing the
advice off auditing standards issued by the Government
Accountability Office (“GAO”). 9 The GAO updated its
auditing standards in 2007, and OIG updated its IRO
guidance in 2010 to reflect the GAO standards.10
The GAO updated its auditing standards (referred to as
the “Yellow Book”) again in 2011, and this most recent
OIG guidance reflects the 2011 standards. The professional
judgment and competence guidance was added for the
2016 IRO Guidance, based on the 2011 Yellow Book
revisions.11
8
See 2016 OIG Guidance on IRO Independence and Objectivity, at https://
oig.hhs.gov/fraud/cia/docs/iro-guidance-2016.pdf
9 See 2010 OIG Guidance on IRO Independence and Objectivity, at https://
oig.hhs.gov/fraud/cia/docs/oig_guidance_on_iro_independence_2010.pdf
10Id.
11 See 2016 OIG Guidance on IRO Independence and Objectivity, at https://
oig.hhs.gov/fraud/cia/docs/iro-guidance-2016.pdf
12 See Office of the Chief Accountant, Audit Committees, and Auditor
Independence, at https://www.sec.gov/info/accountants/audit042707.
htm
Concerns About Objectivity and Independence
Serving as an IRO is extremely labor intensive. Not only
are IROs responsible for examining the adequacy of the
6
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Life Science Compliance Update U.S. Edition
Volume 3.1 | January 2017
Independence
To determine whether an auditor meets the independence
requirement, the audit committee must consider all of
the relationships between the auditor and the company,
the company’s management, and directors, not just
those relationships related to reports filed with the
Commission.13 The audit committee reviews whether a
relationship with, or service provided by, an auditor: “(a)
creates a mutual or conflicting interest with their audit
client; (b) places them in the position of auditing their
own work; (c) results in their acting as management or
an employee of the audit client; or (d) places them in a
position of being an advocate for the audit client.”14
The Yellow Book requires that in all matters relating to
audit work, the audit organization and individual auditor
remain independent.17 Independence comprises both
independence of mind and independence in appearance.
IROs must maintain independence so that their opinions,
findings, conclusions, judgments, and recommendations
are impartial, and viewed as impartial by the OIG.
The Yellow Book identifies two categories of threats to
independence: (1) “self-review threat”: the threat that an
auditor or audit organizations that has provided nonaudit
services will not appropriately evaluate the results of
previous judgments made or services performed as part of
the nonaudit services when forming a judgment significant
to an audit and (2) “management participation threat”:
the threat that results from an auditor taking on the role
of management or otherwise performing management
functions on behalf of the entity undergoing the audit.
The SEC prohibits audit firms and the companies
they audit from having certain relationships, such as:
employment relationships (a one-year cool-off period is
required before a company can hire auditors); contingency
fees; direct or material indirect business relationships;
and certain financial relationships (i.e., creditor/debtor
relationships, banking, broker-dealer, and interests in
investment companies).15
Professional Judgment and Competence
The newest addition to the Yellow Book and accompanying
IRO guidelines notes that auditors should use
professional judgment in all aspects of their professional
responsibilities, including following the independence
standards and related conceptual framework, maintaining
objectivity and credibility, assigning competent staff
to the audit, defining the scope of work, evaluation,
documenting, and reporting the results of the work, and
maintaining appropriate quality control over the audit
process.18
OIG’s Views
The OIG has previously determined it to be appropriate
to adopt the standards for auditor independence and
objectivity that are outlined in the GAO Government
Auditing Standards (December 2011 Revision). The
Yellow Book provides both ethical principles and general
standards that apply to all types of IRO reviews performed
under CIAs, forming the basis of the OIG’s requirements
relating to independence and objectivity of the IRO.
Services that Would Not Impair Independence
and Objectivity
Often, CIAs will require that each IRO used by the provider
furnish a certification that the IRO has evaluated its
professional independence and objectivity about the
review being performed for the provider and that the IRO
has concluded that it is independent and objective.
Objectivity
The OIG has set forth examples of nonaudit services
furnished by an IRO to an entity under a CIA that
likely would not present an impairment to the IRO’s
independence and objectivity concerning the IRO
performing a CIA review for that entity.19
The Yellow Book provides that objectivity includes
“independence of mind and appearance when providing
audits, maintaining an attitude of impartiality, having
intellectual honesty, and being free of conflicts of
interest.”16 The concepts of objectivity are closely related,
and independence impairments impact objectivity.
13Id.
14Id.
15 See Office of the Chief Accountant, Audit Committees, and Auditor
Independence, at https://www.sec.gov/info/accountants/audit042707.
htm
16Id.
17Id.
18Id.
19 See OIG Guidance on IRO Independence and Objectivity at https://oig.
hhs.gov/fraud/cia/docs/iro-guidance-2016.pdf
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Volume 3.1 | January 2017
Some services that likely would not impair the
independence and objectivity include services such as:
IRO personnel furnishing general compliance training
that addresses the requirements of the provider’s CIA and
introduces employees to the provider’s overall compliance
program; the IRO performs routine tasks relating to
the provider’s confidential disclosure program, such as
answering the confidential hotline or transcribing the
allegations received via the hotline; and the IRO provides
personnel to perform work plan procedures that are
developed by the provider’s internal audit department and
are not related to the subject matter of the CIA reviews.20
Managing Medical
Inquiries in an Era of
Data Analytics
By Tom Gregory, Partner and Megan Ellison Manager, Fraud
Investigation & Dispute Services, Ernst & Young LLP23
Abstract: Although compliance professionals tend to view
Corporate Integrity Agreements (“CIAs”) as setting the basic
compliance standards, in the area of medical inquiry monitoring,
they appear to buck the trend by relying on data analytics. This
article explores what these professionals are doing and why.
Services that Would Impair Independence
and Objectivity
For many in the compliance community, their time,
attention and resources are significantly dedicated
to fulfilling the requirements of a corporate integrity
agreement (“CIA”). This is to be expected if it’s their
company’s CIA, because the consequences for failing to
comply are severe, up to and including exclusion from
participation in federal health care programs. However,
many companies structure their compliance programs
around the requirements of someone else’s CIA.
Likewise, the OIG set forth a list of examples of nonaudit
services furnished by an IRO to an entity under a CIA
that, if the IRO performed, would likely be considered an
impairment of independence and objectivity.21
Services that likely would have an impact on independence
and objectivity include: a provider using a billing system
or coding software that was developed or designed by the
IRO and the IRO is being engaged to perform a claims
review; the IRO participates in decision making relating to
the confidential disclosure program, such as determining
which allegations warrant further investigation or the
appropriate corrective action to take in response to
compliance allegations; or the IRO is engaged to provide
consulting services to the provider during the term of the
CIA on a matter that is related to the subject matter of
the CIA reviews.22
There’s a commonly held belief that the Department of
Health and Human Services Office of Inspector General
(“OIG”) is the primary standard setter for life sciences
compliance programs. Therefore, under this assumption,
it follows that CIA requirements represent the OIG’s
expectations for the industry. In a profession that’s often
measured against subjective standards, such as “due care,”
“reasonable person,” “appropriate oversight” or “all
reasonable steps,” compliance leaders are always looking
for an objective standard to rally behind and many fear
straying from the herd; thus, many industry participants
adopt CIA requirements they see imposed on others as
that standard – even where other approaches may make
more sense.
Conclusion
Parties who have executed a CIA with the OIG should
carefully review the updated Guidance and underlying
Yellow Book to ensure the IRO they have retained will be
deemed acceptable by the OIG. If a company identifies a
potential threat to independence or objectivity, it should
either alleviate that threat so that the IRO can continue
its CIA work, or identify an alternate IRO. Companies
and their compliance professionals should also ensure
that any IROs they engage are technically qualified to
perform the needed monitoring.
Contents
The rise in off-label promotion cases began over a decade
ago, and since then CIAs in the life sciences industry have
20Id.
21Id.
22Id.
23 The views reflected in this article are the views of the authors and do not
necessarily reflect the views of the global EY organization or its member
firms.
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generally included requirements intended to mitigate the
risks of off-label promotion. One such requirement is that
companies must perform analyses of requests they receive
for medical information. This monitoring is intended to
look for patterns of medical professional inquiries about
off-label uses suggest that the inquiries are in response
to off-label promotion. Sometimes this requirement is
very general and sometimes it’s quite specific. Either way,
analysis of medical inquiries is one area where compliance
professionals are increasingly willing to deviate from
a strict application of traditional CIA requirements to
pursue a more efficient approach.
• Nature and form of the company’s response (including
a record of any materials provided in response to the
request), and
• Name of the company representative who called upon
or interacted with the HCP, HCI or customer, if known.
The second component is a requirement that the company
performs a review of the inquiries database to assess
whether off-label or other improper promotion may
have occurred. In some cases, the CIA doesn’t prescribe
a specific approach to this analysis, saying only that
the company should audit or test some of the medical
inquiries as part of the records review component of a
mandated field force monitoring program (e.g., pick a
random sample of transactions, as would be done for other
types of CIA-required records reviews).
CIA requirements
A common CIA requirement is that companies implement
tracking and analysis of the requests that their medical
personnel receive for information about their products
(“medical inquiries”).
In other cases, however, the CIA takes it further and
prescribes a model for this analysis.24 Under the most
common model, the review is conducted on a semiannual
basis by the compliance officer.25
The idea is that this analysis will help management
identify inquiries that may have resulted from off-label
or other improper promotion so that it can investigate
and take corrective action.
The compliance officer starts by obtaining a report from
the inquiries database containing the seven fields noted
above for each medical inquiry received during the prior
two-quarters. He or she then reviews this report to
assess whether the information suggests that off-label
or improper promotion may have occurred that prompted
any of the requests. If it is suspected that off-label or
improper promotion occurred, the compliance officer is
obligated to perform a follow-up review of the inquiry.
This follow-up review is what CIAs define as the “off-label
or improper promotion review.” Based on the outcomes of
this follow-up review, the compliance officer is required
to make specific additional inquiries and take responsive
action (e.g., disciplinary action, reporting the conduct,
etc.), if appropriate. It’s this second component, the
internal review, and analysis of the inquiries database,
in which companies are increasingly employing different
approaches than those set forth in previous CIAs.
This requirement for analysis of medical inquiries has
two key components. The first component is to establish
a database to document and record all medical inquiries
received by the company. This inquiries database must
contain, at least, the following seven fields:
• Date of the inquiry,
• Form of the inquiry (e.g., fax, phone, medical
information request form,)
• Name of the requesting health care professional (HCP),
health care institution (HCI) or other individual or
entity,
• Nature and topic of the request (including exact
language of the request if made in writing)
• An evaluation of whether the inquiry relates to
information about an off-label or unapproved use of
the product,
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24 Oddly, this prescribed approach isn’t usually set forth in the body of
the CIA itself but is instead included in the appendix describing the
Independent Review Organization transaction reviews.
25 CIAs with this requirement generally permit the compliance officer to
assign this responsibility to a designee.
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Alternative approaches
prompted by a sales rep or other promotional interaction
(e.g., “prompt,” “suggest,” “recommend,” “said to,” “told
me to,” “speaker program”).
For bigger companies, the volume of medical inquiries
can be so large that it’s impractical for the compliance
officer to review every one. Simple random sampling
can be unfocused and not cost-effective. Instead, many
companies evolve from a strict CIA approach of reviewing
every inquiry to employing data analytics to identify
patterns that suggest the need for further investigation.
Analyses such as the ones outlined below can be applied
either individually or in combination with each other.
Beyond simple key word searches, there’s been a rapid
adoption in the analytics community of tools that look for
meaning by considering not just the individual words, but
the context and intent behind the whole communication.
Latent semantic analysis and natural language processing
can look for relationships and key concepts across large
volumes of text. This sort of analytical firepower has yet
to be widely applied to compliance analysis of medical
inquiries, but where volumes are large, it certainly
could. To extend beyond review of the inquiries database
itself, compliance professionals are also applying these
monitoring tools to audio recordings.
Pattern analysis
Perhaps the most common approach is a simple pattern
analysis to look for concentration or anomalies within the
data. Tests can include looking for volume by geography
(e.g., zip code, state, or Metropolitan Statistical Area), by
associated sales rep, district manager or territory, by HCP
or clinical affiliation, or by the medical specialty of the
inquirer. The pattern analysis can look for concentration
based on any of these metrics as of a point in time but
often also considers trending over time, such as a sudden
increase in a single territory. Pattern analysis can also
look for anomalies, such as new questions or the same
question being asked by multiple HCPs, or volume specific
to a specific product.
Anywhere the company is conducting or sponsoring
interactions that may involve recorded clinical discussions
(e.g., nurse lines, medical affairs lines), often the
content of those communications can also be subject to
sophisticated data analysis to look for potential off-label
promotion.
Use analysis
Scores of data sets are available for companies to study
the off-label use of their products in the marketplace, and
this data can often be correlated against trends in medical
inquiries. Companies can look at volumes of actual offlabel use by product by territory and compare it to internal
or external benchmarks, or look for patterns over time.
While such data may be less available for niche products,
and generally it is quite expensive, this type of analysis
can make sense for larger products and those products
where the company already has the data in-house under
its existing licenses.
Correlation to other interactions
This approach looks for medical inquiries that may have
been prompted by sales rep interactions; the compliance
analyst may cross-reference the inquiries database
against call or event records. Medical inquiries coming
immediately after a sales call or certain promotional
events should be of interest as possibly having been
prompted by the interaction. Medical inquiries coming
immediately before a sales call could also be analyzed to
be sure that they are not rep initiated in preparation for
an inappropriate off-label discussion.
Risk-based
Most compliance professionals know where in their
organizations the risk of off-label promotion lies. Whether
it’s intuitive or the result of a formalized risk assessment
and mitigation program, as required by a CIA, this insight
can help the compliance team focus its resources on
the population of higher risk medical inquiries. This
compliance focus could be associated with certain
products (e.g., new launch, pending generic competition)
Key words
Another approach is to perform text searches within
the relevant fields of the inquiries database. Keywords
to search for could include variants of “sales rep,” the
name of the rep, and names of off-label diagnoses that
are known to be associated with uses of the product or
words that might suggest that the medical inquiry was
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or therapeutic areas with known off-label uses (e.g.,
many cancer drugs) or a history of off-label enforcement
actions (e.g., anti-epileptics, atypical antipsychotics).
Certainly, those medical inquiries coded in the inquiries
database as off-label should be subject automatically
to additional analysis, perhaps with the specific focus
on those associated with HCPs called on by field sales
personnel. Data analysis can flag and separate these
higher risk populations of medical inquiries so that they
can be specifically reviewed.
Sailing with a New Safe
Harbor in Sight: The EUU.S. Privacy Shield
By Nicodemo (Nico) Fiorentino, Esq.,
Manager, Research & Compliance, for G&M Health LLC26
Abstract: Beginning August 1, 2016, the United States
Takeaways
Department of Commerce began accepting self-certifications
to the EU-U.S. Privacy Shield from organizations looking to
transfer personal data collected within the European Union to
the United States. This article provides an overview of the Privacy
Shield, its interplay with privacy issues companies face with
compliance with the EFPIA Disclosure Code, provisions related to
pharmaceutical and medical products (i.e., clinical data, adverse
event reporting), and whether the Privacy Shield can survive.
Interestingly, many companies under CIAs indicate that
their data analytics and follow-up investigations do not
yield any instances in which there is a reason to believe
that improper promotion occurred. Thus, most companies
do not perform an off-label or improper promotion review
(i.e., root cause analysis) as defined in CIAs, since such
a review is only required when the company has reason
to believe that improper promotion occurred. Some say
that this raises questions about the utility of reviewing
medical inquiries as a tool to identify improper promotion.
Of course, all of this is dependent on the effectiveness of
the tracking and analysis that are applied to the inquiries
database.
Introducing the Privacy Shield
For fifteen years, the U.S.-EU Safe Harbor Framework27
(the “Safe Harbor”) protected transfers of personal data
from the European Union28 (“EU”) to the United States.
In October of 2015, the Court of Justice of the European
Union invalidated the Safe Harbor in Schrems v. Data
Protection Commissioner.29 Although other unfavorable
means to transfer personal data, such as model clauses
and binding corporate rules, existed both before and after
the Safe Harbor’s evisceration, it was clear that a new
safe harbor was quickly needed. The Article 29 Working
Regardless of these types of questions, tracking and
analyzing medical inquiries has become an expected part
of most life sciences compliance programs. Be sure you’re
doing it in a way that’s effective and makes sense for your
organization.
Managing Medical
26 Views expressed in this article are that of the author and do not
necessarily reflect the opinions, position, or policy of G&M Health, LLC,
its other employees, or its clients, and should not be interpreted or
relied upon as legal advice.
27 See Commission Decision 2000/520/EC, of July 26, 2000 Pursuant to
Directive 95/46/EC of the European Parliament and of the Council
on the Adequacy of the Protect Provided by the Safe Harbor Privacy
Principles and Related Frequently Asked Questions Issued by the U.S.
Department of Commerce, 2000.
28 The 28 EU member states are: Austria; Belgium; Bulgaria; Croatia;
Cyprus; the Czech Republic; Denmark; Estonia; Finland; France;
Germany; Greece; Hungary; Ireland; Italy; Latvia; Lithuania;
Luxembourg; Malta; the Netherlands; Poland; Portugal; Romania;
Slovakia; Slovenia; Spain; Sweden; and the United Kingdom. While not
part of EU, the Privacy Shield also extends to Iceland, Liechtenstein,
and Norway.
29 See Case C-362/14, Maximillian Schrems v. Data Prot. Comm’r,
2015 E.C.R. ---, available at http://curia.europa.eu/ juris/document/
document.jsf?text=&docid=169195&doclang=en.
Data analysis of medical inquiries can be a more
efficient and effective approach than a manual review of all inquiries or a random sample. Consider
using the following types of analytics:
• Pattern analysis versus benchmarks or over time
• Correlation to other promotional interactions
• Key words
• Use analysis
• Risk-based
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Party30 exacerbated the situation by giving a January 31,
2016 for a solution to be found.31
enforce the Privacy Shield and has doubled the amount
of staff to administer and supervise the program. 41
Accordingly, companies that decide to transfer personal
data from the EU to the U.S. should carefully weigh the
business need versus the company’s commitment to
compliance.
On February 2, 2016, the U.S. Department of Commerce
(“DOC”) and the European Commission (the “EC”)
announced agreement on a new framework, the EUU.S. Privacy Shield (the “Privacy Shield” or “Shield”).32
In July of 2016, the EC formally adopted the EU-U.S.
Privacy Shield (the “Privacy Shield” or “Shield”) adequacy
decision.33 Thereafter, the DOC’s International Trade
Administration issued a notice in the Federal Register
announcing the availability of the Privacy Shield
Framework documents34 and on August 1st, the DOC
began accepting self-certifications to the Privacy Shield.35
EFPIA Disclosure Code, Personal Data, and
the Shield
A pharmaceutical company sending data regarding
transfers of value to EU healthcare professionals to
the U.S. is engaged in the act of transferring personal
data. The EU Data Protection Directive 95/46 broadly
defines personal data (see Table 1) and includes a
person’s name. In March of 2016, the EFPIA released a
publication addressing, among other issues, data privacy
This article is a follow-up to this author’s November 2015
Life Science Compliance Update article, “Sailing with
No Safe Harbor in Sight: What is the Next Destination
for US-EU Data Privacy?,”35 and provides an overview
of the new Privacy Shield and need to self-certify,
data transfers related to the European Federation of
Pharmaceutical Industries and Associations (“EFPIA”)
Disclosure Code.36 This article also reviews the Shield’s
Supplemental Principles regarding pharmaceutical and
medical products, and current legal threats targeting
the Shield.
30 The Article 29 Working Party is composed of a representative from
the data protection authority of each EU Member State, the European
Data Protection Supervisor, and the EC.
31 See Article 29 Working Party, “Statement of the Article 29
Working Party” (Oct. 16, 2015), http://ec.europa.eu/justice/dataprotection/article-29/press-material/press-release/art29_press_
material/2015/20151016_wp29_statement_on_schrems_judgement.
pdf; see also European Commission, “First Vice-President Timmermans
and Commissioner Jourová ‘s press conference on Safe Harbour
following the Court ruling in case C-362/14 (Schrems)” (Oct. 6, 2015),
http://europa.eu/rapid/press-release_STATEMENT-15-5782_en.htm.
32 See Department of Commerce, “Statement From U.S. Secretary of
Commerce Penny Pritzker on EU-U.S. Privacy Shield” (Feb. 2, 2016),
https://www.commerce.gov/news/press-releases/2016/02/statementus-secretary-commerce-penny-pritzker-eu-us-privacy-shiel
33 Privacy Shield Framework, Notice of Availability of Privacy Shield
Framework Documents, 81 Fed. Reg. 51041 (Aug. 2, 2016), available
at https://www.federalregister.gov/d/2016-17961 [hereinafter “Privacy
Shield Framework”].
34 For additional information about the self-certification process
and the Privacy Shield, generally, go to DOC’s International Trade
Administration website, https://www.privacyshield.gov.
35 See Nicodemo Fiorentino, Sailing with No Safe Harbor in Sight:
What is the Next Destination for US-EU Data Privacy?, 1.9 LIFE SCI.
COMPLIANCE UPDATE 6 (Nov. 2015).
36 EFPIA, Code on Disclosure of Transfers of Value from Pharmaceutical
Companies to Healthcare Professionals and Healthcare Organisations
(Consol. Version 2014), available at http://transparency.efpia.eu/
uploads/Modules/Documents/efpia-disclosure-code-2014.pdf.
37 Privacy Shield Framework, supra n.9 at 51046.
38Id.
39 Id. at 51046, 51053.
40 Id. at 51060.
41 See Id. at 51044, 51059 (explaining in a Letter from FTC Chairwoman
Edith Ramirez to Věra Jourova´, Commissioner for Justice, Consumers
and Gender Equality, European Commission that “[a]s was the case
with the Safe Harbor program, the FTC hereby commits to vigorous
enforcement of the new Framework”).
The Need to Receive Personal Data
from the EU
The Privacy Shield Principles, including the Supplemental
Principles [collectively “the Principles”] are “intended
for use solely by organizations in the United States
receiving personal data from the European Union.”37
Once a company publicly self-certifies, the company’s
commitment becomes enforceable under U.S. law. 38
Companies will generally fall within the U.S. Federal Trade
Commission’s (“FTC”) investigative and enforcement
authority, which ensures companies do not engage in
unfair or deceptive acts or practices affecting commerce
under 15 U.S.C. § 45(a).39 Under the previous Safe Harbor,
the FTC brought thirty-nine (39) Safe Harbor enforcement
actions: thirty-six (36) alleging false certification claims
and three (3) involving alleged violations of the Safe
Harbor Principles.40 Undoubtedly, the FTC will vigorously
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time the subject agreed to participate. The requirement
for reconsent is potentially problematic, especially if a
significant amount of time has transpired between the
first and now new uses.
as it relates to the Disclosure Code.42 On page 8 of EFPIA’s
publication, the question, “Will individual healthcare
professionals need to give consent for information about
their payments to be disclosed?,” is asked. EFPIA states
that “companies . . . must comply with the relevant data
protection laws in each [EU] country . . . [and] have the
right to retain data but there are strict rules around how
data is obtained, recorded, stored, used and published.”43
Section III.14(d) permits data from clinical trials
conducted in the EU to be transferred to regulatory
bodies in the US (i.e., U.S. Food and Drug Administration)
for “regulatory and supervision purposes.” Data may be
transferred to non-regulated bodies, such as company
locations and other researchers, as long as the transfer is
“consistent with the Principles of Notice and Choice.”46
Section III.14(e) pertains to “blinded” studies and allows
companies to withhold providing access to this data to a
clinical trial participant, so long as the “restriction has
been explained when the participant entered the trial and
the disclosure of such information would jeopardize the
integrity of the research effort.”
Thus, most EU countries require a company to obtain an
individual’s consent, unless the publication of the data
is deemed to be in the public’s interest in which case no
consent is required.44 According to the EFPIA publication,
countries, such as Denmark, France, the Netherlands,
and Slovakia, are adopting this approach. Therefore, the
consent obtained from the healthcare professional should
contain language regarding transfers of personal data
from the EU to the U.S. in conformity with the Privacy
Shield’s Principles.
Once the clinical trial has concluded, participants must
be granted access to their data, if requested. This section
is problematic for manufacturers, who normally do not
have access to information identifying participants. That
information usually is maintained at the study site level.
Therefore, it is unclear as to how manufacturers can
design a system to grant the required data access.
The Shield’s Principles Relating to
Pharmaceutical and Medical Products
Section III.14 of the Principles contains seven (7)
provisions specifically addressing pharmaceutical and
medical products.45 Section III.14(a) reminds the industry
that individual EU Member State Laws are applicable prior
to transferring data to the United States and once data is
transferred to the US, the Privacy Shield Principles control.
Thus, “[d]ata used for pharmaceutical research and other
purposes should be anonymized when appropriate.”
Section III.14(b) discusses future scientific research in
relation to consent.
Section III.14(f) provides clarity on product safety and
efficacy monitoring. For example, if adherence to the
Principles interferes with a company’s compliance
with regulatory requirements related to product safety
and efficacy monitoring activities (e.g., adverse event
tracking and reporting), then companies do not need
to adhere to the Shield’s provisions related to Notice,
Choice, Accountability for Onward Transfer, and Access
Principles. Lastly, Section III.14(g) provides that key-
Specifically, where data from medical or pharmaceutical
research for one purpose may be used for a different
purpose (e.g., new insights on data collected previously),
companies may use the data provided notice and choice
are provided in the first instance. If it is unclear how or if
future data will be used, companies can state in the notice
of future unanticipated uses. However, if the use of the
data is not related for the original purpose it was collected,
then new consent must be obtained. Similar to Section
III.14(b), Section III.14(c) mentions that data regarding
subjects who withdrawal from a clinical trial may still be
processed, provided appropriate notice is given at the
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42 EFPIA Disclosure Code: Your Questions Answered, EFPIA (Mar. 2016),
http://transparency.efpia.eu/uploads/Modules/Documents/efpiadisclosure-code-your-questions-answered-march-2016.pdf.
43 Id. (alteration added).
44 Id.; see also Veronique Monjardet, “EFPIA: All Roads Lead to
Consent,” POLARIS (Jan. 15, 2016), http://polarismanagement.com/
efpia-all-roads-lead-to-consent/ (highlighting how EFPIA disclosure
requirements will need to conform to individual EU member state data
privacy regulations) (last accessed Dec. 14, 2016).
45 Privacy Shield Framework, supra n.9 at 51054.
46 See Privacy Shield Framework, supra n.9 at 51047 (providing the
Shield’s Principles related to Notice and Choice).
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TABLE 1: Key Terms
(see Privacy Shield Framework, supra n.9 at 51047, unless otherwise noted)
Charitable Donations
• Any information relating to an identified or identifiable natural person (‘data subject’); an identifiable person is one
who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more
factors specific to his physical, physiological, mental, economic, cultural or social identity. Data Protection Directive
95/46, art. 2(a), 1995 O.J. (L 281) 31-50 (E.C.).
“Personal data” and “personal information”
• Data about an identified or identifiable individual that are within the scope of the Directive, received by an
organization in the United States from the European Union, and recorded in any form.
“Processing” of personal data
• Any operation or set of operations which is performed upon personal data, whether or not by automated
means, such as collection, recording, organization, storage, adaptation or alteration, retrieval, consultation,
use, disclosure or dissemination, and erasure or destruction.
“Controller”
• A person or organization which, alone or jointly with others, determines the purposes and means of the
processing of personal data.
coded data (i.e., research data anonymized and only held
by the researcher/principle investigator) is not subject to
the Privacy Shield Principles.
the Privacy Shield will continue to be carried out as agreed
upon.50 For now, the Privacy Shield remains, companies
can continue to self-certify, and transfer personal data
from the EU to the U.S. without issue. Nevertheless, the
upcoming year will test the strength of the Shield.
Is the Privacy Shield Indestructible?
One of the first things that comes to mind (at least mine)
when thinking about the Privacy Shield is Captain America
and his shield. Similar to the false belief that his shield
is indestructible,47 so to may be the case for the Privacy
Shield. Right out of the gate, the Article 29 Working Party
issued a press release expressing that it still had concerns
with transfers of a data to the U.S., but it would review its
options during the first annual joint review.48 In a matter
of a few months, Germany’s Hamburg data protection
authority (“DPA”), Johannes Caspar, announced the DPA
will challenge the Shield believing the adequacy decision
is insufficient and does not meet the legal requirements
for the EC to grant the decision, while French and Irish
privacy rights groups have filed suit, separately, against
the EC making similar arguments.49 The EU will also be
closely watching Washington’s new leadership under
President-Elect Donald J. Trump, though it is very likely
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47 See Mansoor Mithaiwala, 15 Characters Who Have Broken Captain
America’s Shield, SCREENRANT (July 4, 2016), http://screenrant.com/
characters-broken-captain-americas-shield/?view=all (last accessed
Nov. 30, 2016).
48 Article 29 Working Party, Article 29 Working Party Statement on the
decision of the European Commission on the EU-U.S. Privacy Shield
(July 26, 2016), http://ec.europa.eu/justice/data-protection/article-29/
press-material/press-release/art29_press_material/2016/20160726_
wp29_wp_statement_eu_us_privacy_shield_en.pdf.
49 David Meyer, Hamburg’s DPA aiming to challenge Privacy Shield,
IIAP (Aug. 4, 2016), https://iapp.org/news/a/hamburgs-dpa-aimingto-challenge-privacy-shield/; Julia Fioretti & Dustin Volz, Privacy
group launches legal challenge against EU-U.S. data pact, REUTERS
(Oct. 27, 2016, 11:15 A.M.), http://www.reuters.com/article/us-eudataprotection-usa-idUSKCN12Q2JK; Julia Fioretti, EU-U.S. personal
data pact faces second legal challenge from privacy groups., REUTERS
(Nov. 2, 2016, 1:30 P.M.), http://www.reuters.com/article/us-eudataprotection-usa-idUSKBN12X253.
50 Stephen Gardner, EU to Closely Monitor Trump on Data Transfer
Compliance, BLOOMBERG BNA (Dec. 2, 2016), https://www.bna.com/
eu-closely-monitor-n73014447979/; Stephanie Bodoni, Trump Victory
Shouldn’t Threaten Agreement on EU Privacy Shield, BLOOMBERG
(Nov. 9, 2016, 7:59 A.M.), https://www.bloomberg.com/news/
articles/2016-11-09/trump-victory-shouldn-t-threaten-agreement-oneu-privacy-shield.
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CHIP, providing medical coverage for adults and children
in certain statutorily defined categories.
Planning for the Future
- HHS OIG’s 2017
Work Plan
Medicare Parts A and B
On Part B, the Medicare Claims Processing Manual
provides policy, effective January 1, 2017, tracking
the amount of reimbursed waste of Part B drugs and
biologicals in single-use vials through the use of a new
Medicare “JW” claims modifier. Under a new Work Plan
initiative, the OIG will use this data to determine the
amount of waste for the twenty single-use-vial drugs with
the highest amount paid by the program.51
By Kaitlin Fallon Wildoner, Esq.,
Senior Staff Writer, Life Science Compliance Update
Abstract: Health and Human Services Office of Inspector
General has released their 2017 Work Plan. The updated work
plan includes some new and revised audits and evaluations, as
well as some older audits and evaluations that OIG continues
to focus on. This article goes through many of the items focused
on the drug and device world and discusses what compliance
officers should do with this Work Plan.
The OIG will also calculate the amount the government
could collect from drug manufacturers if Medicare Part B
had an inflation-indexed rebate program similar to that
of Medicaid.52 As part of this audit, the OIG will review
50-100 Part B drugs and calculate the potential savings
under various scenarios. Another long-term Part B drug
audit relates to payments for immunosuppressive drug
claims with “KX” modifiers.53 All three initiatives are
likely to lead to decreased government revenue for drug
manufacturers as CMS looks to reduce drug costs.
For the life science compliance professional, the issuance
of the Office of Inspector General’s (“OIG”) Annual Work
Plan is a highly anticipated event. It offers a window for
manufacturers, providers, and payers into the primary
areas of concern for the Department of Health and
Human Services (“HHS”) on both a programmatic and
enforcement level. As we have seen over the years, some
of the areas of concern reflect persistent and concerning
vulnerabilities that OIG has highlighted many times.
However, the annual Work Plan also includes new and
emerging issues that HHS will face in the upcoming year
– and beyond.
On the hospital front, OIG will review Medicare outlier
payments to hospitals to determine whether CMS
performed necessary reconciliations promptly to enable
Medicare contractors to achieve final settlement of the
hospitals’ associated cost reports. OIG will also determine
whether the Medicare contractors referred all hospitals
that meet the criteria for outlier reconciliations to CMS.54
The OIG Work Plan is an evolving document that is
updated throughout the year. The version under
discussion in this article describes OIG audits and
evaluations that are either currently underway or planned,
and certain legal and investigative initiatives that are
continuing. It also notes items that have been completed,
revised, and removed, and includes new items that have
been started or planned since April 2016.
OIG also plans to review the Two-Midnight Rule,
determining how hospitals’ use of outpatient and
inpatient stays changed under Medicare’s two-midnight
rule by comparing claims for hospital stays in the year
before and the year following the effective date of that
rule. OIG will also determine the extent to which the use
of outpatient and inpatient stays varied among hospitals.55
Organizationally, the Work Plan is divided into numerous
subcategories, with issues grouped by the relevant
participants/stakeholders. For example, issues relevant
to hospitals may be listed under Medicare Parts A and B,
Medicare Parts C and D, Medicaid, and other categories.
51 See HHS OIG, 2017 Work Plan, p. 22 available at https://oig.hhs.gov/
reports-and-publications/archives/workplan/2017/HHS%20OIG%20
Work%20Plan%202017.pdf
52 See HHS OIG, 2017 Work Plan, p. 22 available at https://oig.hhs.gov/
reports-and-publications/archives/workplan/2017/HHS%20OIG%20
Work%20Plan%202017.pdf
53 See HHS OIG, 2017 Work Plan, p. 23 available at https://oig.hhs.gov/
reports-and-publications/archives/workplan/2017/HHS%20OIG%20
Work%20Plan%202017.pdf
54 See HHS OIG, 2017 Work Plan, p. 10 available at https://oig.hhs.gov/
reports-and-publications/archives/workplan/2017/HHS%20OIG%20
Work%20Plan%202017.pdf
Centers for Medicare & Medicaid Services
(“CMS”)
CMS accounts for more than eighty percent of HHS’
budget, with programs such as Medicare, Medicaid, and
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CMS has previously expressed concern about the impact
of replacement devices for recalled medical devices,
including ancillary costs, on Medicare payments for
inpatient and outpatient services. OIG will review
Medicare claims to identify the costs to Medicare resulting
from the additional use of medical services associated
with defective or recalled medical devices.56
OIG plans to review and revise CMS’ oversight of E1
transactions processed by contractors and determine
whether the E1 transactions were created and used for
intended purposes. OIG will also examine E1 transactions
to assess the validity of the data.62
Medicaid Program
People Medicaid, a program funded jointly by the Federal
Government and the States, provides medical assistance
to certain low-income individuals and people with
disabilities. Medicaid programs vary widely from state to
state and protecting an expanding Medicaid program from
fraud, waste, and abuse takes on a heightened urgency as
the program continues to grow in both spending and in
the number of people it serves.
Prior OIG reviews determined that Medicare Administrative Contractors made improper payments to hospitals
for inpatient and outpatient claims for replaced medical
devices. OIG will continue reviewing whether Medicare
payments for implanted medical devices that require
replacement because of defects, recalls, mechanical complications, etc., were made by Medicare requirements.57
Medicare Parts C and D
OIG will review state’s contracts with MCOs to provide
Medicaid Services and determine whether MCO capitation
payments included reimbursement for drugs that are
not covered under the Medicaid program.63 OIG will also
determine how States define specialty drugs, how much
States paid for specialty drugs, how States determine
payment methodologies for specialty drugs and the
differences in reimbursement amounts for these medicines
among the States.64
Medicare Part C offers Medicare beneficiaries a managed
care option through Medicare Advantage (“MA”) plans,
which are administered by MA organizations. Beneficiaries
usually pay monthly premiums and copayments that are
often less than the coinsurance and deductibles under the
original Medicare Part A and Part B. Medicare Part D is a
Federal program that subsidizes the cost of prescription
drugs and prescription drug insurance premiums for
Medicare beneficiaries.
Open Payments
The Work Plan notes that the Physician Payments
Sunshine Act (“PPSA”) requires that manufacturers
disclose payments made to physicians and teaching
hospitals to CMS. Manufacturers and group purchasing
The 2017 Work Plan describes a new rebate-related
initiative with Part D. Currently, manufacturers do not
typically pay rebates for Part D prescriptions filled at
340B covered entities and contract pharmacies because
the manufacturers are already providing a discount on the
purchase price of the drug. However, the Part D program
does not share in these purchase discounts. The OIG will
review the savings that would result if Medicare Part D
adopted rebate requirements similar to Medicaid’s. 58
55 See HHS OIG, 2017 Work Plan, p. 4 available at https://oig.hhs.gov/
reports-and-publications/archives/workplan/2017/HHS%20OIG%20
Work%20Plan%202017.pdf
56 See HHS OIG, 2017 Work Plan, p. 5 available at https://oig.hhs.gov/
reports-and-publications/archives/workplan/2017/HHS%20OIG%20
Work%20Plan%202017.pdf
57Id.
58 See HHS OIG, 2017 Work Plan, p. 29 available at https://oig.hhs.gov/
reports-and-publications/archives/workplan/2017/HHS%20OIG%20
Work%20Plan%202017.pdf
59Id.
60 See HHS OIG, 2017 Work Plan, p. 28, p.30 available at https://oig.
hhs.gov/reports-and-publications/archives/workplan/2017/HHS%20
OIG%20Work%20Plan%202017.pdf
61 See HHS OIG, 2017 Work Plan, p. 30 available at https://oig.hhs.gov/
reports-and-publications/archives/workplan/2017/HHS%20OIG%20
Work%20Plan%202017.pdf
62Id.
63 See HHS OIG, 2017 Work Plan, p. 33 available at https://oig.hhs.gov/
reports-and-publications/archives/workplan/2017/HHS%20OIG%20
Work%20Plan%202017.pdf
OIG will also review and identify pharmacies (and
associated prescribers) with questionable Part D billing
for compounded topical drugs. 59 Another new audit
relates to Part C and Part D payments for service dates
after beneficiaries’ dates of death.60 Continuing Part D
audits include those related to price increases for brandname drugs, pharmacy enrollment, and documentation
of pharmacies’ drug event data.61
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organizations (“GPOs”) must also report ownership and
investment interests held by physicians. OIG plans to
analyze 2015 data extracted from the Open Payments
website to determine the number and nature of financial
interests.65 At this point, it is not clear what OIG expects
to learn from this analysis or how it will affect the Open
Payments program in the future.
of interest in cases and settlements, and that with the
Open Payments database, it is likely only to get worse.
She suggested for compliance departments to think more
broadly – to reflect on both payments and transfers of
value. She also noted that compliance needs to pay
attention to speaker programs again: how many are
being held, where are they being held, who selects the
speakers, and what drugs or devices are being discussed
(new versus old).69
OIG will also determine how much Medicare paid for
drugs and durable medical equipment, prosthetics,
orthotics, and supplies (“DMEPOS”) ordered by physicians who had financial relationships with manufacturers
and GPOs. OIG plans to determine the volume and total
dollar amount associated with drugs and DMEPOS ordered
by these physicians in Medicare Parts B and D for 2015.
The expected issue date of a “Data Brief on Financial
Interests Reported Under the Open Payments Program”
is FY 2017.66
She also noted the fact that individual accountability
is just now starting to become a hot topic and that
compliance will start to grapple with: think about
submitting certifications for Board of Directors and
management, require compliance as a component of
employee evaluations, and reward those who abide by
compliance rules and discipline those who do not.70
Conclusion
How Does This Match Up with OIG’s Recent
Public Statements?
The 2017 Work Plan includes numerous new and
revised topics related to hospitals, nursing homes,
hospice, laboratories, medical devices, supplies and
pharmaceuticals. Any of the aforementioned issues
found in the 2017 Work Plan will likely be subject to
additional government scrutiny, thereby creating the
potential for increased exposure. Therefore, providers
should ensure that their compliance works plans, and
scheduled audit activities, consider the pertinent risk
areas that have been identified by the OIG.
At the Seventeenth Annual Pharmaceutical Compliance
Congress, Mary E. Riordan, JD, Senior Counsel at the Office
of Counsel to the Inspector General at the Department
of Health and Human Services, gave her annual keynote
speech.
As we wrote in the December issue, Ms. Riordan discussed
recent enforcement activity as it relates to the False
Claims Act (i.e., Novartis, Warner Chilcott, Acclarent,
and Wyeth/Pfizer) and Civil Monetary Penalties (“CMP”)
settlements, (i.e., Nephron Pharmaceuticals Corporation
and Cipher Pharmaceuticals US, LLC).67
It is still too soon to tell what impact the Trump
administration will have on OIG’s enforcement activities.
Various laws and regulations continue to require the
prompt return of overpayments and create the risk of
potential False Claims Act liability, exclusion, and civil
monetary penalties.
In her speech, Ms. Riordan also publicly admitted that the
OIG has a longstanding preference – and mandate in the
CIAs – that the compliance function is entirely separate
from the legal function. Failure to do so may result in
things being “cloaked in privilege,” and can also result
in a conflict of interest between what should happen on
the compliance side and what the legal advisors of the
company are doing.68
64Id.
65 See Thomas Sullivan, OIG Releases FY 2017 Work Plan, POLICY AND
MEDICINE (Nov. 14, 2016), at http://www.policymed.com/2016/11/oigreleases-fy-2017-work-plan.html
66Id.
67 See Kaitlin Fallon Wildoner, Esq., The Seventeenth Annual PCC: Day One
Highlights, LIFE SCIENCE COMPLIANCE UPDATE (Dec. 2016)
http://www.skillsyouneed.com/ips/active-listening.html
68Id.
69Id.
70Id.
Suggestions from OIG
Ms. Riordan suggested compliance officers maintain a
strict focus on kickback issues, as it is a continued area
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Volume 3.1 | January 2017
The Legal Issue
Co-Payment &
Deductible Waivers as
Illegal Inducements
As might be expected, the use waivers is not without
problems. This is especially true in the case of the False
Claims Act (“FCA”) and the Anti-kickback Statute (“AKS”).
The increasing problem for health care providers who
are actively engaged in the practice of using waivers to
maximize profits, lower administrative costs, and expedite
the claims is that although the practice makes sound
economic sense, “providers must exercise caution because
offering discounts to patients can implicate various
federal and state laws.”74 In fact, some States, including
Ohio and Texas, now explicitly prohibit the practice and
make it illegal for health care providers and physicians
to waive a patients’ obligations to pay for co-payments,
coinsurance, and deductibles. 75 Running afoul of the
federal laws also is a significant possibility, especially for
a provider who routinely discounts or waives a patient’s
copayment or deductible obligations. These providers
“can run afoul of the federal anti-kickback statute, 42
U.S.C. § 1320a7b, or be accused of false billing by private
insurance carriers not receiving the discount.”76
By Robert N. Wilkey, Esq.,
Staff Writer for Life Science Compliance Update
Abstract: Health insurance providers and out-of-network
providers, have found themselves in murky water by providing
waivers of co-payments, coinsurance, and deductibles to patients
treated by out-of-network laboratories and other providers,
where commercial insurers continue to seek legal reimbursement
actively, recovery and collection claims against such providers,
alleging in pertinent part False Claims Act (“FCA”), Anti-Kickback
Statute Violations (“AKS”), and other legal claims. Such efforts
are requiring Courts to identify, determine, evaluate, and when
waivers of co-payments, coinsurance, and deductibles, constitute
such FCA and AKS violations.
It is no secret that health insurance is getting more expensive, especially as insurance payers seek to shift more of
the cost burden to patients. This burden shifting exercise
has caused waivers of co-payments, coinsurance, and deductibles to be more in vogue than ever before. However,
use of waivers is not a new practice but historically, and
more so in recent years, it has been an effective means
to address the “difficult economic environment [where]
many health care providers are actively trying to increase
cash flow and reduce administrative expenses.”71
Because of this risk, healthcare providers engaging in
the widespread use of waivers practice are becoming
71 See Mark K. Cohen, Health Care Providers May Waive Patients’
Copayments Obligations, But …Health Law Alert Newsletter, Issue No.
1, 2014, available at http://www.ober.com/publications/2472-healthcare-providers-may-waive-patients-copayment-obligations-but
72Id.
73Id.
74 Id.
75 See, e.g., Ohio Rev. Code. Ann. § 4731.22(B)(28)(a) and (b)(setting
forth that the State Medical Board may limit, revoke, or suspend an
individual’s certificate to practice medicine or otherwise discipline
a physician if the physician waives “the payment of all or any part
of a deductible or copayment that a patient, pursuant to a health
insurance or health care policy, contract or plan that covers the
individual’s services, otherwise would be required to pay if the waiver
is used as an enticement to a patient or group of patients to receive
health care services from that individual”; Ohio Rev. Code Ann. §
4731.22(B)(28)(a) and (b) (stating a physician may also be disciplined
for “advertising that [he or she] will waive the payment of all or any
part of a deductible or copayment that a patient, pursuant to a health
insurance or health care policy, contract, or plan that covers the
individual’s services, otherwise would be required to pay”; see also Tex.
Ins. Code Art. 21-24-4(c) (stating that “the payment of benefits under
an assignment does not relieve the covered person of any contractual
responsibility for the payment of deductibles and copayments [and] a
physician or other health care provider may not waive copayments or
deductibles by acceptance of an assignment.”
76 See Mark K. Cohen, Health Care Providers May Waive Patients’
Copayments Obligations, But …Health Law Alert Newsletter, Issue No.
1, 2014, available at http://www.ober.com/publications/2472-healthcare-providers-may-waive-patients-copayment-obligations-but
For those providers who are out-of-network, the waivers
can make all the difference. The rationale is that by
extending a discount to patients who pay out of pocket
at the time of service or seek reimbursement from
their insurance company at a later date, “a provider
can reduce the administrative costs associated with
processing insurance claims as well as the uncertainty
and delay of billing and collecting for services rendered.”72
Consequently, health care providers, in particular among
lower socio-economic populations, are increasingly
seeking to utilize waivers as a means to maximize profits,
lower administrative costs, and expedite the claims and
coverage process.73
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concerned about their potential liability. In particular,
where “commercial insurers are aggressively pursuing outof-network providers who fail to collect amounts owed by
their members under a variety of statutory and common
law theories” including alleging violations of FCA, AKS,
and even debt-collection relates laws.77
hardship should be used “occasionally to address the
special financial needs of a particular patient.”83
The OIG also explicitly identified that waiver practice
tied to marketing, advertising, and other solicitations
is an indicator of potentially unlawful conduct. The
OIG even went so far as to provide specific examples.
Examples of prohibited advertisements include those
which state: ``Medicare Accepted As Payment in Full,’’
``Insurance Accepted As Payment in Full,’’ or ``No OutOf-Pocket Expense.”84 The OIG also counseled that any
advertisements which promise that “discounts” will be
given to Medicare beneficiaries may also be unlawful.85
In response to their new found risk recognition, many
health care providers have established internal policy
guidelines, detailing “the situations in which [the practice]
may waive or reduce that portion of the patient bill
which is the direct responsibility of the patient” and by
adopting a formal standard that “[the practice] may not
routinely waive or reduce copayments, coinsurance, or
deductibles for Federal health care program patients.”78
Consequently, their health care providers have identified
relevant circumstances and financial need situations,
where such waivers may be appropriate, thereby ensuring
that such waivers are not being offered as part of an
advertisement or solicitation.79 Furthermore, health care
companies are recognizing the need for the development
and implementation of specific policy guidance by which
to govern such waiver practices.80
The OIG has expressed concern that a health care
provider’s routine use of financial hardship forms may
invoke unlawful waiver practice, particularly when there
is no “good faith” attempt to determine the beneficiary’s
actual financial condition.86 The OIG also determined
that targeting groups or classes of individuals for waiver
practice may be problematic, for instance, collection of
copayments and deductibles only where the beneficiary
has Medicare supplemental insurance; where charges
to Medicare beneficiaries are higher than those made to
other persons for similar services and items; and failure
to collect copayments or deductibles for a specific group
of Medicare patients for reasons unrelated to indigence. 87
The Grey Area When are Waivers Permissible?
Clearly, the waiver landscape is evolving and remains
somewhat uncertain. However, there are several
substantive guidelines to assist health care providers in
navigating and otherwise determining whether waivers
may be deemed permissible.
Finally, the OIG has identified as problematic the use
of so-called “insurance programs” that charge only a
77 See Karen S. Lovitch, Lessons Learned from FCA Settlement Involving
Waiver of Medicare CoinsuranceAmounts, The National Law Review,
December 10, 2016, available at http://www.natlawreview.com/article/
78 See e.g. Tenet Health, Regulatory Compliance Policy, No. COMPRCC 4.02, effective date Feb. 11, 2016, available at https://www.
tenethealth.com/docs/default-source/policies/policies---dcbc/comprcc_4-02_reduction_or_waiver_of_copayments_and_deductibles.
pdf?sfvrsn=6
79 Id. at § B(4).
80Id.
81 See OIG, HHS, Federal Register, Publication of OIG Special Fraud
Alerts, Dec. 19, 1994, available at https://oig.hhs.gov/fraud/docs/
alertsandbulletins/121994.html
82 See Karen S. Lovitch, Lessons Learned from FCA Settlement Involving
Waiver of Medicare Coinsurance Amounts, The National Law Review,
December 10, 2016, available at http://www.natlawreview.com/article/
83 Id.
84 See OIG, HHS, Federal Register, Publication of OIG Special Fraud
Alerts, Dec. 19, 1994, available at: https://oig.hhs.gov/fraud/docs/
alertsandbulletins/121994.html
85Id.
86Id.
87Id.
In 1994, the Office of Inspector General (“OIG”) for the
U.S. Department of Health and Human Services (“HHS”)
issued a comprehensive Fraud Alert, stating that “routine
waiver of deductibles and copayments by charge-based
providers, practitioners or suppliers is unlawful because
it results in (1) false claims, (2) violations of the antikickback statute, and (3) excessive utilization of items
and services paid for by Medicare.”81
Despite this extremely broad statement, the OIG
recognized that there might be circumstances and
situations where routine waivers are not unlawful. For
example, it is permissible in instances where there is
“genuine financial hardship of the particular patient.”82
The caveat here is that such waivers based on financial
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nominal amount which covers copayments or deductibles
only for items or services provided by the entity offering
the insurance. These programs typically involve an
insignificant ``insurance premium’’ paid by the beneficiary
and can be as low as $1 a month or even $1 a year. Per the
OIG, such programs are prohibited where “the premiums
are not based upon actuarial risks, but instead are a sham
used to disguise the routine waiver of copayments and
deductibles.”88
Conclusion
Recent Court Cases
Consequently, health care providers need to be acutely
aware of not only the remaining regulatory pitfalls
associated with engaging in such waiver conduct but must
also consistently be fine-tuning their internal compliance
policies and processes. Therefore, healthcare providers
should:
Although the OIG’s regulatory guidance concerning the
prohibited waiver activities of health care providers dates
back to 1994, today, providers remain highly vulnerable
to the uncertainty, especially where recent Court cases
will likely continue to refine the circumstances in which
waivers by health care companies may violate the FCA
and AKS.
There are a few recent Court cases that are providing
further clarification regarding circumstances in which
health care providers use of waivers may be deemed
prohibited conduct under the FCA and AKS.
In the case of U.S. v. Hudson Valley Associates, R.L.L.P.,
it was alleged by the U.S. Department of Justice (“DOJ”),
that the health care provider
1. develop substantive guidelines, documentation
practices, and standards for waiver practices
2. put in place regulatory compliance and oversight
methods, and
1. routinely waived Medicare beneficiaries’ copayments without an individualized documented
determination of financial hardship or exhaustion
of reasonable collection efforts, and
3. remain cognizant that waiver practice in any
respect, may lend itself to violations of both state
and federal law.92
2. engaged in a billing Medicare for the waived copayments, resulting in higher reimbursement amounts
from Medicare than the health care provider was
entitled to.89
For the life science compliance professional, he or she
should remain vigilant to situations that suggest a
healthcare provider is using waivers inappropriately.
While we have seen no instances where a manufacturer
has been implicated by these scenarios, if a manufacturer’s
product became linked to such a scheme or the company
underwrote the practice, there could be reputational and
possible legal fallout. In short, it pays to be careful.
The case recently settled, and the health care provider
agreed to pay a $5.31 million civil settlement and
acknowledge that the waiver practices were prohibited.90
In the case of U.S. v. Berekley Heartlab, Inc., the DOJ
along with several state Attorney Generals, filed a similar
lawsuit, alleging that the health care providers engaged in
various prohibited waiver practices, resulting in violations
of both the FCA and AKS. According to the allegations,
the health care providers “provided remuneration to
physicians and physician groups to induce the referral
of federal beneficiaries to Berkeley. Such remuneration
was in the form of sham processing and handling fees
and the waiver of copays and deductibles.”91 Although
the case is still pending, the case, as with the Hudson
Valley Associates continues to define the Court’s scope
of prohibited waiver activities further by health care
providers.
Contents
88 Id.
89 See U.S. Department of Justice, U.S. Attorney’s Office, Southern District
of New York, Press Release, Manhattan U.S. Attorney Announces $5.31
Million Civil Settlement Against Hematology-Oncology Medical Practice
For Submitting False Claims To Medicare And Medicaid, Oct. 21, 2016,
available at https://www.justice.gov/usao-sdny/pr/manhattan-usattorney-announces-531-million-civil-settlement-against-hematology
90Id.
91 See U.S. v. Berekley Heartlab, Inc., et. al., U.S. Dist. S.C. 2015, Case No.
9:14-cv-00230, available at http://richmondbizsense.com/images/
Tonya-Mallory-civil-suit.pdf
92 See Karen S. Lovitch, Lessons Learned from FCA Settlement Involving
Waiver of Medicare Coinsurance Amounts, The National Law Review,
December 10, 2016, available at http://www.natlawreview.com/article/
lessonslearnedfcasettlementinvolvingwaivermedicarecoinsurance
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instance, Medicare patients were admitted to facilities
when it was unnecessary. Those same patients also
received care from clinics and hospitals that they did
not need.
Nursing Facilities &
Kickbacks - Is the DOJ
Shifting Away from
Pharma?
Additionally, the Network focused on beneficiaries who
were addicted to narcotics by continuing to provide the
narcotics, so that the patients would remain in Esformes
Network facilities, allowing the cycle of alleged fraud to
continue.
By Kaitlin Fallon Wildoner, Esq.,
Senior Staff Writer, Life Science Compliance Update
As a result of the Network’s actions, the Esformes team
turned a profit on the care facilities and the unneeded
procedures paid for by the Medicare program. 95 The
Government alleges that Medicare lost over one billion
dollars in this case. According to the DOJ, the billion
dollars allowed Esformes to fund a lavish lifestyle with
private jets, a $600,000 watch, meetings with escorts in
hotel rooms, and a private basketball coach for his son.
Abstract: DOJ may have a new focus for Anti-Kickback Statute
violations: care facilities and their owners. This year alone, at
least two high-profile cases have emerged where a care facility
wound up in high-profile enforcement actions involving antikickback violations. This article examines the cases and explores
why life science compliance professionals should pay attention
to them.
For many years now, the United States Department of
Justice (“DOJ”) has focused its anti-kickback attention
on the pharmaceutical industry. We have seen scores
of enforcement actions targeting salespeople paying
kickbacks to physicians in exchange for prescribing
specific drugs, and executives charged for allegedly
overseeing improper medical device promotion practices
within their company. However, recently, the DOJ has
recently started branching out. Now the DOJ is applying
the anti-kickback laws in earnest to long-term care facility
owners.
Unfortunately, this isn’t the first time that Esformes has
run afoul of the DOJ. In 2006, Esformes paid $15 million
dollars to settle civil charges for unnecessarily admitting
patients to hospitals and receiving kickbacks for doing so.
In the ten years since that settlement, the same conduct
reemerged allegedly using a more sophisticated process
to cover-up the fraud.96
Assistant Attorney General Leslie Caldwell stated, “This
is the largest single criminal health-care fraud case
ever brought against individuals by the Department of
Justice, and this is further evidence of how successful
data-driven law enforcement has been as a tool in the
ongoing fight against health-care fraud.” 97 It also is
a further indication that the Government is serious
about prosecuting individual bad actors per the Yates
memorandum. But, Esformes is not the only recent case
involving long-term care facilities.
Esformes Network
The United States Attorney’s office based in Miami
recently criminally charged three individuals with a
variety of Medicare fraud charges stemming from allegedly
fraudulent admissions to a network of nursing homes and
intensive care nursing facilities. The individuals, Philip
Esformes, Odette Barcha, and Arnaldo Carmouze, all held
high-level positions within the facilities.93 Esformes ran
the Network, which manages the thirty (or more) nursing
homes and facilities at issue; while Barcha and Carmouze
worked in hospital and physician administration.94
93 See United States of America v. Philip Esformes et al., Case No. 1620549 (So. Dist. FL)
94Id.
95Id.
96 See Department of Justice, Miami Hospital Pays $15.4 Million
to Resolve Fraud Case for Kickbacks & Medically Unnecessary
Treatments, (November 30, 2006), at https://www.justice.gov/archive/
opa/pr/2006/November/06_civ_803.html
97 See Dan Mangan, $1 billion alleged Medicare fraud, money laundering
scheme leads to Florida arrests (July 22, 2016), at http://www.cnbc.
com/2016/07/22/1-billion-alleged-medicare-fraud-money-launderingscheme-leads-to-florida-arrests.html
The unsealed indictment shows that the three were
charged with overseeing a massive fraud scheme centered
around the provision of unnecessary services. In one
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Life Care Centers of America, Inc.
Division, “[t]his resolution is the largest settlement with a
skilled nursing facility chain in the Department’s facility.”
He continued, noting, “It is critically important that we
protect the integrity of government health care programs
by ensuring that services are provided based on clinical
rather than financial considerations.”103
In late October, Life Care Centers of America, Inc., and
its owner Forrest L. Preston agreed to pay $145 million to
resolve a lawsuit alleging that Life Care violated the False
Claims Act (“FCA”). Life Care owns and operates more
than 220 skilled nursing facilities across the country. The
Life Care settlement represents the largest settlement
with a skilled nursing facility chain in the history of the
DOJ, and the largest civil False Claims Act resolution
in the Eastern District of Tennessee. The settlement
also requires Life Care to implement a five-year chainwide Corporate Integrity Agreement (“CIA”) with the
Department of Health and Human Services Office of
Inspector General (“HHS-OIG”).98 The settlement also
resolves allegations made in a separate case that Preston,
as the sole shareholder of Life Care, was unjustly enriched
by Life Care’s fraudulent scheme.
U.S. Attorney Wifredo A. Ferrer believes that the
settlement “demonstrates the commitment of the U.S.
Attorney’s Office to aggressively pursue providers who
utilize fraudulent practices to knowingly put their
financial self-interest over a duty to patients.” Ferrer
noted, “It is imperative that providers make health care
decisions based upon a patient’s need for services rather
than a self-serving desire to maximize financial profit.”104
Conclusion
Although the DOJ clearly is focusing its anti-kickback
enforcement efforts on long-term care facilities, it does
not mean that the pharmaceutical industry can rest
easy. As Mary Riordan stated in her recent talk at the
Pharmaceutical Compliance Forum, the OIG is continuing
its enforcement focus on the pharmaceutical industry.
These cases are important to compliance professionals
because (1) they show that the DOJ is starting to move
into investigating and prosecuting care facility fraud, and
individuals involved, as an expansion of its Medicare fraud
prosecutions and (2) it highlights the DOJ’s new level of
sophistication in ferreting out fraud patterns.
The suit alleged that Life Care violated the FCA by
knowingly causing skilled nursing facilities to submit
false claims to Medicare and TRICARE for rehabilitation
therapy services that were not reasonable, necessary, or
skilled.99 From January 1, 2006, and February 28, 2013,
Life Care was charged with submitting false claims for
rehabilitation therapy using a systematic effort to increase
its Medicare and TRICARE billings.100
Apparently, Life Care instituted corporate-wide policies
and practices designed to place as many beneficiaries
in the highest reimbursement category for therapy
regardless of the patients’ clinical need. These policies
and practices resulted in Life Care providing unreasonable
and unnecessary treatment to many beneficiaries that
the federal programs paid for.101 Life Care also sought
to keep patients longer than was necessary, so that they
could continue to bill for rehabilitation therapy, even
after the treating therapists felt that treatment should
be discontinued. Life Care took great care to track the
minutes of therapy provided to each patient, and the
number of days in therapy, to ensure that as many patients
as possible reached the highest level of reimbursement
for the longest possible period.102
In both cases highlighted here, the Government was
quick to point out that it used forensic accounting in
investigating the case, and given the results, it seems
likely that the DOJ will continue to use the accounting
sophistication in future healthcare-related investigations.
98Id.
99 See Department of Justice, Life Care Centers of America Inc. Agrees
to Pay $145 Million to Resolve False Claims Act Allegations Relating
to the Provision of Medically Unnecessary Rehabilitation Therapy
Services (October 24, 2016), at https://www.justice.gov/opa/pr/lifecare-centers-america-inc-agrees-pay-145-million-resolve-false-claimsact-allegations
100Id.
101 Id.
102Id.
103Id.
104Id.
105 See Kaitlin Fallon Wildoner, The Seventeenth Annual PCC: Day 1
Highlights, 2.12 LIFE SCIENCE COMPLIANCE UPDATE (December 2016).
According to Principal Deputy Assistant Attorney General
Benjamin C. Mizer, head of the Justice Department’s Civil
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the provisions “specify various payment and business
practices that would not be treated as criminal offenses
under the anti-kickback statute, even though they may
potentially be capable of inducing referrals of business
under the Federal health care programs.”109
Not All Discounts Are
Equal: Evaluating
When Discounts May Be
Construed as Unlawful
The net result is that the Safe Harbor regulations provide
health care providers some level of certainty that certain
transactions will not run afoul of AKS, exposing companies
to penalties, fines, and in most extreme situations,
criminal prosecution.110 Under the current regulations, a
Safe Harbor exists for discounts.
By Robert N. Wilkey, Esq., Staff Writer and
Dr. Seth B. Whitelaw, Editor for Life Science Compliance Update
Abstract: Discounts within the health care industry are
historically viewed as not being subject to the U.S. Federal
Anti-Kick Back Statutes (“AKS”). Recently, the U.S. Department
of Justice (“DOJ”) and U.S. Courts have sought to clarify, refine,
and otherwise limit the scope of the discount “safe harbor”
provision, putting the life sciences and health industry on
notice that not all discounts are necessarily immune from AKS
violations. As a result, companies are no longer blindly able to
rely on “safe harbor” protections and need to re-evaluate their
discount programs.
For the past decade, health care providers including
medical equipment suppliers, pharmaceutical companies,
and medical device manufacturers, have actively relied
on the discount Safe Harbor as a “legitimate means
of attracting patients and commercial clients without
running afoul of the federal anti-kickback statutes
(“AKS”).”111 The ability of health care providers to offer,
use, and promote the use of discounts is largely the policy
product of the U.S. Congress “encouraging discounts that
are properly disclosed as a means of reducing overall
health care costs.”112
The life sciences industry widely acknowledges that
the federal anti-kickback statute (“AKS”) makes doing
business with customers more challenging than for other
sectors. This challenge is due in part to the fact that the
law makes it illegal to “exchange (or offer to exchange),
anything of value, in an effort to induce (or reward) the
referral of federal health care program business.”106
106 See 42 U.S.C. § 1320a-7b
107 See Michael Gennett, When a Discount May be a Kickback, JD Supra
Business Advisors, Sept. 13, 2016, available at http://www.jdsupra.
com/legalnews/when-a-discount-may-be-a-kickback-42090/; see also
Thomas S. Craine, The Scope of Permissible Anti-Kickback Discount
Arrangements, Presentation, Fraud and Compliance Forum, Oct. 6-7.
2014, available at https://www.healthlawyers.org/Events/Programs/
Materials/Documents/FC14/c_crane_slides.pdf (discussing that
policies to “encourage providers to seek discounts as a good business
practice which results in savings to Medicare and Medicaid program
costs”).
108 See U.S. Department of Health and Human Services, Office of
Inspector General (“OIG”), Safe Harbor Regulations, available at
https://oig.hhs.gov/compliance/safe-harbor-regulations/
109 See Medicare and State Health Care Programs: Fraud and Abuse;
Revisions to Safe Harbors Under the Anti-Kickback Statute, and Civil
Monetary Penalty Rules Regarding Beneficiary Inducements and
Gainsharing. Federal Register, Vol. 79, No. 192, Oct. 3, 2014. 110 See Michael Gennett, When a Discount May be a Kickback, JD Supra
Business Advisors, Sept. 13, 2016, available at http://www.jdsupra.
com/legalnews/when-a-discount-may-be-a-kickback-42090/
111 See 42 U.S.C. § 1320a-7b
112 ee Michael Gennett, When a Discount May be a Kickback, JD Supra
Business Advisors, Sept. 13, 2016, available at http://www.jdsupra.
com/legalnews/when-a-discount-may-be-a-kickback-42090/; see also
Thomas S. Craine, The Scope of Permissible Anti-Kickback Discount
Arrangements, Presentation, Fraud and Compliance Forum, Oct. 6-7.
2014, available at: https://www.healthlawyers.org/Events/Programs/
Materials/Documents/FC14/c_crane_slides.pdf (discussing that
policies to “encourage providers to seek discounts as a good business
practice which results in savings to Medicare and Medicaid program
costs”).
The purpose of the AKS is to prevent manufacturers
from unduly influencing the prescribing decisions of
medical professionals, which in turn drives overutilization
and higher costs.107 On its face, the statute, which the
Government and Courts construe broadly, prohibits the
provision of discounts to customers.
However, it also is widely recognized that encouraging
discounts is a means of reducing overall health care costs.
As a result of, and in an effort to rationalize these diverse,
competing interests, the Government included discounts
in the “Safe Harbor” provisions in 1991.
Established by the Office of Inspector General (“OIG”)
for the U.S. Department of Health and Human Service,
the Safe Harbor regulations set forth various exceptions
whereby “various payment and business practices [may]
potentially implicate the Federal anti-kickback statute,
are not treated as offenses under the statute.”108 Thus,
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The Basics of the Discount Safe Harbor
in a federal case,117 seeking to further define the scope of
the safe harbor provisions and to “state its position on
the confines of the ‘discount’ exception to the AKS, 42
U.S.C. § 1320a-7b(b)(3)(A).”118
As with all regulatory interpretations, the underlying
statute is the starting point. The AKS embodies a
statutory exemption where a discount is not an unlawful
inducement provided:
At issue in Coloplast case is compensation provided by
Coloplast to the customer, CCS Medical (“CCS”). The qui
tam relators in the case argued that the price reductions
provided to CCS by Coloplast violate the False Claims Act
(“FCA”) because the price reductions offered by Coloplast
do not “qualify as discounts under the discount exception
or safe harbor” and therefore subject to the AKS.119
the discount or other reduction in price obtained by
a provider of services or other entity under [Medicare
or Medicaid] if the reduction in price is properly
disclosed and appropriately reflected in the costs
claimed or charges made by the provider or entity
under [Medicare or Medicaid].113
The price reductions allegedly failed to qualify under
the discount Safe Harbor, because Coloplast conditioned
the payment of the cost reductions “’in exchange for
conducting conversion and marketing campaigns to
induce patients to try Coloplast Products or to switch from
a competitor’s ostomy and/or continence care products
to Coloplast-brand Products.’”120
The regulations go on to define a discount as “a reduction
in the amount a buyer (who buys either directly or through
a wholesaler or a group purchasing organization) is
charged for an item or service based on an arms-length
transaction.”114 Finally, the regulations state that a rebate
is “any discount the terms of which are fixed and disclosed
in writing to the buyer at the time of the initial purchase
to which the discount applies, but which is not given at
the time of sale.”115
The Government in its Statement of Interested agreed
with the relators, contending that “if a price reduction
is conditioned on more than the purchase of a product,
then it is not a mere discount and it is irrelevant whether
that price reduction was properly disclosed.”121 Therefore,
disclosure is not sufficient to cure the defect in this case.
The regulations also expressly provide that the following
are not discounts:
• Cash payment or cash equivalents, and
In explaining its position, the Government stated that
“remuneration to health care providers for switching
patients from one product to another, and for other
efforts to increase a product’s utilization do not qualify
as protected price reductions, even if the parties label the
remuneration as “rebates” or “discounts.”122 Therefore, a
price reduction conditioned on promotional or conversion
campaign activities is not a “discount” within the
• Supplying one good or service without charge or at a
reduced charge to induce the purchase of a different
good or service, unless the goods and services are
reimbursed by the same Federal health care program
using the same methodology and the reduced charge
is fully disclosed to the Federal health care program
and accurately reflected where appropriate, and as
appropriate, to the reimbursement methodology [e.g.,
“bundling”].116
113 See 42 U.S.C. § 1320a-7b(b)(3)(A) (“The Statutory Discount Exception)
and 42 C.F.R. § 1001.952(h) (“The Regulatory Discount Safe Harbor”).
114 Id.
115Id.
116 See 42 C.F.R. § 1001.952(h)(5)
117 See U.S. v. Coloplast, Corp. et. al. No. 11-12131-RWZ (D. Mass. 2016).
118 See U.S. v. Coloplast, Corp. et. al. No. 11-12131-RWZ (D. Mass. 2016),
United States’ Statement of Interest Regarding Plaintiff’s Motion for
Reconsideration of the Court’s Dismissal of CCS, available at http://
www.fdalawblog.net/Coloplast%20-%20US%20SOI.pdf
119 Id. at p. 2.
120Id.
121Id.
122 Id. at p. 5.
It has been on this basis that pharmaceutical and medical
device manufacturers have operated until now.
The Coloplast Case
The advent of the Coloplast case provided the Government
with a significant opportunity to refine the now wellestablished discount Safe Harbor further. In fact, in
Coloplast, the Government filed a Statement of Interest
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statutory and regulatory meaning of a “discount” and a
price reduction that is contingent on the recipient taking
affirmative steps to generate additional business for the
seller does not foster price competition that inures to the
benefits of the federal health care system.123
of products or services, if not safe harbored, the intent
requirement of the AKS would be satisfied, and such
arrangements would essentially be per se violations of
the AKS.”128
Conclusion
The District Court, in August, taking into consideration’s
the Government’s Statement of Interest agreed, holding
that CCS had not met the second elements of either the
statutory discount exemption or the regulatory safe harbor
for discounts. CCS failed to show that the discounts were
“‘appropriately reflected in the costs claims or charges
made’ to a federal health care program, or that CCS has
provided certain information concerning the discounts to
a governmental agency pursuant to its request.”124
With the Coloplast and Banigan cases, the life sciences
industry finds itself at the crossroads of two competing
societal policies: cost containment and the prevention of
improper abuse of federal health insurance. It is unclear
how this will play out, especially with the significant
sweep by the GOP in the November elections. While
we believe it is very possible that cost containment will
triumph, compliance professionals need to keep a very
close eye on developments in this space; in particular
between now and inauguration day
Therefore, according to the Coloplast court, discounts can
not be conditioned on anything more than the purchase
of a product to fall under the Safe Harbor protection. This
limitation is particularly the case where the condition
involves product conversion or “switching.”
Briefly Noteworthy
The Impact of Coloplast
Ex-Insys Execs Charged in Kickback Scheme
The impact of the Coloplast decision is already being
felt. For example, in the recent case of United States ex
rel. Banigan v. Organon USA, Inc., et al. Case 1:07-cv12153-RWZ, the court in deciding whether Omnicare’s
business activities constituted pro-competitive discount
activities within the discount Safe Harbor and thus,
did not constitute an unlawful kickback relied on the
Government’s position in Coloplast.125 Like the Coloplast
court, the court in Banigan denied Organon’s motion to
dismiss the case, determining that like CCS, that Omnicare
failed to satisfy the elements of either the AKS statutory
discount exemption or the regulatory safe harbor for
discounts.126 Six former executives of Insys Therapeutics were arrested
and charged with racketeering in early December 2016.
The charges, filed in Massachusetts federal court, alleged
that the executives were conspiring to bribe doctors to
prescribe the company’s highly potent fentanyl-based
pain medication, Subsys.129 According to the allegations,
the executives participatied in a conspiracy in which
bribes were disguised as marketing events and speaker
fees. Going beyond the bribes, the indictment also alleges
that two of the six created a scheme to mislead insurers,
123 Id. at p. 7.
124 See Serra J. Schlanger, Another Blow to the Discount Safe Harbor in
Massachusetts District Court, FDA Law Blog, Sept. 29, 2016, available
at: http://www.fdalawblog.net/fda_law_blog_hyman_phelps/2016/09/
another-blow-to-the-discount-safe-harbor-in-massachusetts-districtcourt.html
125 Id.
126Id.
127 See Stephanie Trunk, Is the Discount Safe Harbor No Longer “Safe?”
September 20, 2016, Healthcare Counseling Blog, available at http://
healthcarecounselblog.com/articles/discount-safe-harbor-no-longersafe
128Id.
129 See Reuters, Ex-Insys executives arrested for bribing U.S. doctors to
prescribe painkiller, at http://www.reuters.com/article/us-insys-courtidUSKBN13X27M
Both the Coloplast and Banigan cases represent a
significant refinement in the scope of the discount Safe
Harbor provision. In fact, some legal scholars believe
that the Banigan case presents a substantive precedent
that potentially exposes “all pharmaceutical discount and
rebate arrangements to anti-kickback liability.”127 They
contend this is true in discount cases “since discounts
and rebates are by design intended to induce the purchase
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Life Science Compliance Update U.S. Edition
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who were reluctant to pay for Subsys for patients without
cancer. We have previously written about whether Insys
is a Warner Chilcott repeat, with the resurfacing of sham
educational events and lunches.130
must demonstrate any misrepresentations were “material”
to statutory, regulatory, or contractual requirements such
that any breach made the manufacturer’s representations
about the goods or services misleading.
The former employees arrested were:
Recently, an Eighth Circuit case became the first test of
the Supreme Court’s enhanced materiality test.134 The
case, which is not in life sciences, involved a college and
its allegedly false promise to maintain accurate records
surrounding student eligibility for federal education
support.135
Briefly Noteworthy
• Insys CEO Michael Babich,
• Vice President of Sales Alec Burlakoff,
• Vice President of Managed Markets Michael J. Gurry,
• National Director of Sales Richard Simon, and
According to the plaintiffs, Heritage College, a for-profit
college, contracted with the Department of Education
(“DOE”) to receive federal financial assistance. A
requirement of that contract was that Heritage would
maintain accurate student records related to student
eligibility for federal funds. Eighth Circuit originally
found that the recordkeeping requirement was material
and that there was a question whether Heritage intended
not to keep accurate records. After Escobar, the Supreme
Court directed the Eighth Circuit to review the case again
considering the new standards articulated in Escobar.
• Regional sales directors Sunrise Lee and Joseph A.
Rowan.
These arrests add to a lengthy list of cases involving Insys.
In 2015, a Connecticut nurse pled guilty to accepting
$83,000 in kickbacks from the company. In 2016, a former
Insys sales representative in Alabama pled guilty to
anti-kickback laws and two former Insys employees were
arrested for their role in a kickback scheme in New York.
In August, the Illinois Attorney General filed suit against
the company for deceptively marketing Subsys for uses
outside its approved labeling, such as treating back and
neck pain.
Even with the second review, the Eighth Circuit held to its
original position that the recordkeeping was material. To
support, its contention of materiality, the Eighth Circuit
determined that:
FBI agent Harold Shaw stated, “As alleged, top executives
of Insys Therapeutics, Inc. paid kickbacks and committed
fraud to sell a highly potent and addictive opioid that can
lead to abuse and life threatening respiratory depression,”
adding that the actions “contributed to the growing opioid
epidemic and placed profit before patient safety.”131 The
former employees also are charged with setting up a
“reimbursement unit” with the goal of increasing sales
by boosting the percentage of prior authorizations from
insurers and pharmacy benefit managers who did not
want to pay for the drug when prescribed to non-cancer
patients.132
a false statement is material if (1) a reasonable
person would likely attach importance to it, or (2)
the defendant knew or should have known that the
government would attach importance to it. With
130 See Kaitlin Fallon Wildoner, Esq., History Repeating – Is Insys a
Warner Chilcott Clone?, LIFE SCIENCE COMPLIANCE UPDATE (July
2016) at http://www.lifescicompliance.com/history-repeating-is-insysa-warner-chilcott-clone/
131 See Michael Mezher, Former Insys Executives Arrested on
Racketeering Charges, RAPS (December 8, 2016) at http://www.
raps.org/Regulatory-Focus/News/2016/12/08/26342/Former-InsysExecutives-Arrested-on-Racketeering-Charges/
132Id.
133 See R. Wilkey, A Mixed Bag – Implied Certification in False Claim Act
Cases after the Escobar Decision, 2.8 LIFE SCIENCE COMPLIANCE
UPDATE (August 2016).
134 See John P. Bueker and Kirsten Mayer, Eighth Circuit Considers
Materiality Under the FCA Following the Supreme Court’s Escobar
Decision, LEXOLOGY (Dec. 7, 2016) at http://www.lexology.com/
library/detail.aspx?g=6e3659ec-eec2-4718-ae1f-c7d0f5e41323.
135 United States ex rel. Miller v. Weston Educational, Inc, No. 14-1760,
2016 WL 6091099 (8th Cir., Oct. 19, 2016).
Defining “Materiality” in a FCA Context
We have been following the Escobar decision and its
implications for quite some time.133 To briefly recap, the
U.S. Supreme Court held that False Claims Act (“FCA”)
claims can proceed on an implied false certification theory.
However, to proceed, the claimants alleging FCA violations
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Life Science Compliance Update U.S. Edition
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Escobar as requiring a holistic assessment of many
factors relevant to materiality, including whether the
requirement was a condition of payment, whether the
requirement went to the “essence of the bargain,”
whether the violation was minor or insubstantial,
and whether the government took action when it had
actual knowledge of similar violations.137
respect to Heritage, the court found that materiality
“depends on whether Heritage’s promise to maintain
accurate grade and attendance records influenced the
government’s decision to enter into its relationship
with Heritage.”136
Since this is the first road test of the Supreme Court’s
materiality standard, it is unclear how important a
precedent the case is. However, it is worth noting that
the Government filed an amicus brief in the case arguing:
Time will tell whether the Government’s position is right.
In the meantime, we will continue monitoring the Escobar
children.
that Escobar did not adopt a heightened materiality
standard. Instead, the government characterized
136 See, Bueker and Mayer, supra.
137Id.
Board Corner
Marc Eigner
This month we feature Marc Eigner,
Senior Partner and Co-founder of Polaris.
As a co-founder of Polaris Solutions and head of the technology
practice, Marc Eigner is considered one of the founding fathers
of pharmaceutical commercial-compliance technology and the
leading expert this field, particularly in HCP/HCO spend automation
and aggregate spend systems. Before joining Polaris, Marc worked
for Andersen Consulting / Accenture and IBM. Marc holds a BS
and MS in Computer & Systems Engineering and an MBA focused
on Technology Entrepreneurship, all from Rensselaer Polytechnic
Institute. Marc has participated in several executive education
programs at the Harvard Business School, including ‘Leading
Professional Services Firms.
1. What do you see as the most significant challenge facing life science compliance
professionals today?
I believe the biggest challenge is trying to find a way to combine business process improvements
with compliance, so that it’s built into a process, rather than a ‘taxation’ on the process.
2.What role/need do you see Life Science Compliance Update filling?
LSCU is the only publication that is completely focused on our specific area. I see it as a much needed
forum for the busy professionals in this space to keep up with the changing landscape, and I can
see it grow into a brand that will also encompass networking, conferences, etc.
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Life Science Compliance Update U.S. Edition
Volume 3.1 | January 2017
Editorial Board
THANK YOU for subscribing to Life Science Compliance
Update, a monthly compliance resource for pharmaceutical,
biotechnology, and medical device companies. Each issue offers
attorneys and compliance professionals a one stop shop for
up-to-date, accurate compliance news and analysis. With input
from industry experts and featured articles from leaders across
the healthcare sphere, Life Science Compliance Update is a
must-read for those operating in the increasingly important
Terry Chang, MD, JD
Associate General Counsel and Director
Legal & Medical Affairs
AdvaMed
Ian Clark
Director Corporate Training
BioMarin
David Davidovic
President Path Forward
Former VP and Global Head Commercial Services
Roche and Genentech
Marc Eigner
Senior Partner
Polaris
Nicodemo (Nico) Fiorentino, JD
Senior Advisor, Research & Compliance
G&M Health, LLC
and ever-evolving compliance field.
Abraham Gitterman, JD
Life Science Compliance Update is accepting submissions for
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Toby Ann Holetz
FDA/Healthcare Associate
Arnold and Porter
To submit an article or for question about the submission
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Compliance Officer
Biogen
Maureen J. Lloyd
Director, Life Sciences Governance,
Risk Management, and Compliance
PwC
John Kamp, JD, PhD
Executive Director
Coalition for Healthcare Communications
Meryl Katz, JD
ACA Auditor
Independence Blue Cross
All materials in Life Science Compliance Update are for general information purposes
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shall be created through the purchase of Life Science Compliance Update or the use
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you should seek professional legal advice.
Kari K. Loeser, JD
Senior Director & Senior Compliance Counsel
Jazz Pharmaceuticals
Chad A. Morin
Director Compliance
ARIAD Pharmaceuticals
John A. Murphy, JD
Deputy General Counsel
Biotechnology Innovation Organization
John Patrick Oroho, JD
Partner
Porzio
Kristin Rand, JD, MA
Vice President and Compliance Officer
Seattle Genetics, Inc.
Marc J. Scheineson, Esq.
Partner, Life Sciences
Alston & Bird LLP
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Managing Director & Practice Leader
Huron Life Sciences
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AVP & Responsible Executive for Clinical Research
Hospital Corporation of America
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