Fraud and Abuse in the Sale and Marketing of Drugs ACI 10 th National Forum
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1 PHYSICIAN PAYMENTS: Building a Dynamic Aggregate Spend Program That Complies with and Accounts for the Disparities Between Current and Pending State Legislation Fraud and Abuse in the Sale and Marketing of Drugs ACI 10 th National Forum March 25, 2010 Colin J. Zick Foley Hoag LLP czick@foleyhoag.com (617) Foley Hoag LLP. All Rights Reserved. 1
2 How You Spend Your Dollars to Doctors Is A National Law Enforcement Issue Suits Allege Medical-Device Makers Paid Physicians to Use Their Products in Off-Label Applications: Earlier this month, in an article called Surgical-Device Firms Walk Fine Line, the Wall Street Journal reported that former employees of certain medical-devicemakers allege in lawsuits unsealed in a Texas federal court that the companies paid kickbacks to heart surgeons to get the doctors to use their products in an off-label application: to treat atrial fibrillation. The suits name at least four companies whose products are among those used in surgery to treat the heart condition, including AtriCure, Medtronic, St. Jude Medical, and Boston Scientific. The companies are accused of taking part in a "'fraudulent marketing and inducement campaign,' involving kickbacks to doctors and hospitals," which "resulted in excessive charges to the Medicare insurance program." The cases against Boston Scientific, Medtronic, and AtriCure also allege that these companies marketed surgical ablation equipment as a treatment for atrial fibrillation even though it was not approved by the Food and Drug Administration to treat that condition Foley Hoag LLP. All Rights Reserved. Presentation Title 2
3 An Increasing Number of States Have Enacted Gift Limits and Reporting States include: Massachusetts California Vermont Minnesota Nevada Maine Louisiana West Virginia District of Columbia Key elements of these statutes: Gift limits and prohibitions Individual and aggregate reporting obligations Foley Hoag LLP. All Rights Reserved. Presentation Title 3
4 Summary of Current State Laws Foley Hoag LLP. All Rights Reserved. Presentation Title 4
5 Several Other States Are Considering Gift Limits and Reporting Other States Considering Gift Limits Include New York, New Jersey, Hawaii, Iowa, Ohio, Arizona, Colorado, Virginia Industry Action Taken to Date: AdvaMed Code PhRMA Code IFPMA Code AMA Code and ban on gifts by Wisconsin Medical Society Institutional policies (e.g., Partners Healthcare and Johns Hopkins) Foley Hoag LLP. All Rights Reserved. Presentation Title 5
6 Federal Legislation Patient Protection and Affordable Care Act, passed by the Senate last year and by the House on March 21, and signed by President Obama on March 23. Key elements: Applies physicians and teaching hospitals Applies to manufacturers in the United States Covered drugs/devices/biologics/medical supplies are those for which Medicare, Medicaid or SCHIP pays Applies to wide variety of payments and transfers of value Some pre-emption of state payment reporting, but also new subjects to report Reporting thresholds Penalties for failure to report Foley Hoag LLP. All Rights Reserved. Presentation Title 6
7 Sunshine Act: Questions and Answers When will we know the procedures for federal reporting? October 1, When does federal pre-emption start? January 1, When are the first federal reports due? March 31, What must be reported? Transfers of $10 or more and physician ownership interests. What is excluded? Product samples and discounts/rebates. Does the law allow for the aggregation of expenditures for purposes of federal reporting? No. What does federal pre-emption cover? State laws that require disclosure of these types of payments or transfers Foley Hoag LLP. All Rights Reserved. Presentation Title 7
8 Will the Federal Regulation (and Pre-emption) Come to Your Rescue? On reporting, this outcome resembles the federal health privacy regulations under HIPAA: the federal law will serve as a floor, but will not supersede more stringent state laws on reporting. The new federal law leaves virtually untouched state rules limiting types and amounts of payments and other industry interactions with health care professionals. What should you do in the stub period in which you still have to comply with state rules before they are pre-empted? Foley Hoag LLP. All Rights Reserved. Presentation Title 8
9 Massachusetts: The Single Most Challenging Physician-Industry Environment in the U.S. The Massachusetts rules went into effect July 1, 2009 Massachusetts is probably the most challenging regulatory environment in the U.S. because: The AG is trying to show she is tough after losing the Senate race, trying to improve her reputation, and going after drug and device companies is an easy way to do that. Massachusetts has a large number of physicians who are in key product markets Massachusetts rules are so strict: one of the broadest definitions of sales and marketing of any state; Massachusetts prohibits certain payments to providers by pharmaceutical and medical device manufacturers; and Massachusetts makes disclosure of data part of the public record Foley Hoag LLP. All Rights Reserved. Presentation Title 9
10 What Questions Must You Answer Going Forward? What promotional activities do you want to do and what can you still do? Assuming you continue your relationship with physicians, determine: Who you want to interact with; Why you need them; Whether you are willing to have the relationship public; How much you want to pay them; and How will you keep track of those interactions? How do you make your compliance efforts in one state mesh with your efforts in other states? Foley Hoag LLP. All Rights Reserved. Presentation Title 10
Physician Payments Disclosure and Aggregate Spend:
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living Alaska 00 47,808 21,213 44.4 Alabama 01 20,661 3,288 15.9 Alabama 02 23,949 6,614 27.6 Alabama 03 20,225 3,247 16.1 Alabama 04 41,412 7,933 19.2 Alabama 05 34,388 11,863 34.5 Alabama 06 34,849 4,074
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