Insights from the 2016 Managed Markets Compliance Congress

By Prianka Patel

The recent CBI Managed Markets Compliance Congress revealed many valuable insights, or as conference Chairwoman, Michelle Scharfenberg, put it “pearls of wisdom.”  These insights are critical for manufacturers to ensure compliant business practices in the complex managed markets.

The conference opened with a panel of current and former prosecutors. The discussion was focused on the Anti-Kickback Statute and the False Claims Act, but other lesser known bases for prosecution, such as the Travel Act, were also mentioned.  These relatively diverse bases for prosecution highlight the creativity in enforcement activity. In terms of enforcement areas, speaker programs, copay coupons, off-label communications (written and verbal) and funding to patient foundations were among the areas highlighted.

The panel also noted that smaller manufacturers and medical device companies are more vulnerable to kickback risks as they have fewer resources than “big pharma” to build robust speaker monitoring programs.  Thus, the former may receive increased scrutiny in the upcoming year.

The panelists went on to emphasize the importance of increased accountability across all business units – not just commercial and marketing, but also in medical and clinical affairs. They discussed the rise in recent-off label prosecutions, including Johnson & Johnson, Purdue and Aegerion. In the past several years, the top ten cases involving illegal promotion through the False Claims Act all involved healthcare – with the majority of these being pharmaceutical companies. The panel noted that off-label prosecutions, along with anti-kickback activity, have been dominant focus areas for prosecution.

Other topics included managing focus arrangements and fraud throughout the contracting process. Government scrutiny on focus arrangements is increasing, and consequently, an emphasis on risk-based management practices is vital. In the past few years, fee for service arrangements with customers have taken center stage in many OIG Corporation Integrity Agreements (CIA), including Novartis/Bioscrip in 2015 and Omnicare in 2013.  Earlier this year, CMS passed the Covered Outpatient Drug Final Rule which established a four-part test to establish bona fide service fees (BSFS)that can be excluded from pricing calculations. These requirements combined with the common focus arrangements control expectations from CIAs should serve as a blueprint for managing the complex kickback and false claims risks embedded within these relationships.

Moreover, this new BSFS test combined with the rise in focus arrangements-related CIAs and the reality that these arrangements are critical components of commercial strategies, highlights the importance of prioritizing control mechanisms for these arrangements.  Among other requirements, manufacturers must maintain a centralized tracking system, establish a written review and approval process (including specifying the business need/rationale and determining FMV) and to audit and monitor all focus arrangements.

Conference presenters discussed fraud and abuse in the contracting process.  Some of the tactics related to how companies can mitigate risk through training, monitoring of contracts, and ensuring that any executed contracts are consistent with their stated intent.

Several other “pearls of wisdom” were offered by the conference participants. First, monitoring is crucial.  While a front-end review and approval of focus arrangements and other interactions is important, auditing and monitoring is essential to mitigate risk and ensure that policies and procedures are being carried out in practice and do not just exist on paper. Second, employee training is indispensable. It’s quite simple to read the Anti-Kickback Statute, but it is much more difficult to apply it in a real-world setting. Therefore, it is crucial to leverage compliance and legal teams to ensure that employees are receiving proper training on how to abide by existing laws and regulations.  Lastly, ensure that individuals are driving change and improvement within their own organizations. Policies and procedures need to be reviewed and revised to reflect evolving risk areas, monitoring activities and off-label risks, etc. In an industry where change is constant, companies must continue to reevaluate these frameworks consistently.