Last week, the Vermont Attorney General (VT AG) posted its second enforcement action of 2015, this time against a dental products manufacturer. You can read about the first 2015 enforcement action here. According to the Assurance of Discontinuance, Heraeus Kulzer, LLC provided allowable expenditures and/or permitted gifts to Vermont health care professionals in fiscal year 2010, fiscal and calendar year 2011, and calendar years 2012 and 2013, and failed to submit required reports with the VT AG for those years in violation of the state’s Prescribed Products Gift Ban and Disclosure Law, 18 V.S.A. §§ 4631a, 4632. Heraeus Kulzer agreed to pay the state $45,000 and otherwise comply with the Prescribed Products Law.
All covered entities that discovered security breaches under the Health Insurance Portability and Accountability Act (“HIPAA”) in 2014 should be aware of an upcoming reporting deadline. Specifically, breaches that affected fewer than 500 individuals and were discovered in 2014 must be reported to the U.S. Department of Health and Human Services (“HHS”) by March 1, 2015. Notices should be submitted using forms provided by HHS on its website. While notices of all breaches affecting fewer than 500 people may be submitted on the same day, each breach must be reported on its own form. Information requested includes information about the reporting company, details about the breach itself, and facts regarding corrective actions and individual notifications. Continue reading
The U.S. Food and Drug Administration (FDA) released draft guidance titled Investigating and Reporting Adverse Reactions Related to Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps) Regulated Solely under Section 361 of the Public Health Service Act and 21 CFR Part 1271. The draft guidance is applicable to a wide range of non-reproductive HCT/Ps “containing or consisting of human cells or tissues that are intended for implantation, transplantation, infusion, or transfer into a human recipient.” HCT/Ps excluded from the guidance include reproductive HCT/Ps; whole human organs; certain whole blood, blood components or blood derivative products subject to listing under 21 C.F.R. parts 207 and 607; secreted or extracted human products; minimally manipulated bone marrow HCT/Ps derived from animals; and in vitro diagnostic products. When finalized, the draft guidance will supplement section XXII of the Guidance for Industry: Current Good Tissue Practice (CGTP) and Additional Requirements for Manufacturers of Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps) (December 2011) and replace Guidance for Industry: MedWatch Form FDA 3500A: Mandatory Reporting of Adverse Reactions Related to Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps) (November 2005). Comments to the draft guidance should be submitted by April 21, 2015 for FDA consideration.
On February 13, 2015, the U.S. Department of Health and Human Services’ Office of Inspector General (OIG) posted an advisory opinion regarding the effect of exclusion from Medicare, Medicaid and other federal health care programs.
Pursuant to a criminal plea and a civil False Claims Act settlement to resolve allegations of health care fraud, the requestor was excluded from participation in Medicare, Medicaid, and all other federal health care programs for twenty (20) years and was required to divest all ownership in his or her medical practice.The requestor and his or her practice performed services, and submitted claims for those services to federal health care programs, prior to the exclusion’s effective date. However, the claims were not paid by the federal health care programs until after the exclusion’s effective date and were, therefore, paid to the buyer of the medical practice. The requestor and the medical practice’s buyer contemplated an arrangement in which the buyer would transfer these payments to the requestor. The parties sought the OIG’s opinion as to whether the contemplated arrangement would violate the terms of the requestor’s exclusion and result in the imposition of administrative penalties. Continue reading
Congress Eyes Pharmaceutical Company Settlement Agreements as Source for Additional FDA & NIH Funding
Senator Elizabeth Warren (D-MA) recently introduced legislation that, if passed, would require certain pharmaceutical companies that enter into settlement agreements with the Department of Justice or other governmental agencies to pay a supplemental amount, based on revenue, that would provide an additional funding source for the U.S. Food and Drug Administration (FDA) and National Institute of Health (NIH). The Medical Innovation Act, Senate Bill 320, would require manufacturers of a “covered blockbuster drug” with a reported net income of at least $1,000,000,000 that entered into a “covered settlement agreement” during the five year period immediately preceding the date on which the payment is assessed to pay an amount equal to 1 percent of the net income for the previous calendar year multiplied by the number of covered blockbuster drugs of the covered manufacturer for that year. Senator Warren describes this assessment as a “swear jar” for “drug companies that break the law.”
Although this legislation is receiving criticism from industry organizations, such as PhRMA and MassBio, and others as unrealistic, the key takeaway for pharmaceutical companies of any size is that the government is interested in aggressively pursuing enforcement actions and looking for ways to put additional pressure on industry when fraud is identified. Government enforcers are utilizing a significant number of tools to combat fraud, including expansion of the successful HEAT program and exclusion of corporate executives under the Park doctrine, while government legislators are actively pursuing ways to combat fraud in the health care industry, as evidenced by this 2013 report. It is critical for health care companies to take steps to implement effective corporate compliance programs that prevent, detect and fix potential issues before they result in a government action.
As discussed here and here, the Vermont Office of the Attorney General (“VT AG”) previously published several enforcement actions taken against manufacturers of pharmaceutical, biological and medical devices for failing to comply with the state’s Prescribed Products Gift Ban and Disclosure Law, 18 V.S.A. §§ 4631a, 4632. Last week, the VT AG posted another enforcement action against LifeNet Health. According to the Assurance of Discontinuance, LifeNet Health reported to the VT AG in January 2014 that it may have provided allowable expenditures and/or permitted gifts to Vermont health care professionals in fiscal year 2010, fiscal and calendar year 2011 and calendar year 2012, and failed to submit required reports with the VT AG for those years. LifeNet Health agreed to pay the state $7,750 and otherwise comply with the Prescribed Products Law.
Not wanting to be left out of the digital heath conversation, the Federal Trade Commission (FTC) has increased its level of activity. On January 27th, the FTC released its Internet of Things (IoT) report and last week the Commission entered into a consent agreement with a software developer who claimed its product treated ADHD. These actions serve notice to digital health software developers that the FTC is watching the space closely and will bring enforcement actions when they deem them appropriate.
With respect to the IoT Report, the FTC focused on wearables and connected devices. The Commission acknowledged the benefits of the growing digital health space, but pointed to several risks. For example, the report states that for diabetic patients who used connected glucose monitors that transmitted data to physicians, those physicians were “five times more likely to adjust medications resulting in better disease management and substantial financial savings for patients.” On the other hand, the report cited instances where two types of connected insulin pumps were able to be hacked so they stopped delivering medicine.