Manufacturer Reimbursement Support Programs Raise Legal Questions For Specialty Pharmacies

Specialty Pharmacy TimesJanuary/February
Volume 10
Issue 1

Navigating insurance coverage for specialty drugs has always been a complex and fundamental part of the specialty drug distribution chain.

Navigating insurance coverage for specialty drugs has always been a complex and fundamental part of the specialty drug distribution chain. Manufacturers and specialty pharmacies have processes designed to quickly shepherd a prescription through an insurance coverage determination. One current trend in coverage determination is the use of drug manufacturer reimbursement specialists (MRS). These MRS are employees of the drug manufacturer and work as intermediaries between the prescribers, specialty pharmacies, and payers during the process.

The use of MRS implicates several regulations, including the federal Anti-Kickback Statute (AKS), the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and the federal False Claims Act (FCA). To further complicate matters, manufacturers and specialty pharmacies often have different legal concerns related to the use of MRS and MRS programs take on varied forms that each trigger unique legal concerns.

Although specialty pharmacies are not often involved with the development of MRS programs, there are some contracting and operational tactics that a specialty pharmacy can employ to mitigate the risks associated with the use of MRS.

Practice in the Field

Some manufacturers use sales force employees to perform reimbursement support while others create a firewall between the MRS and all sales and marketing activity, using only clinically trained staff as MRS. Certain manufacturers only allow MRS to perform activities for patients who have provided a HIPAA authorization. Other manufacturers do not require HIPAA authorization for MRS interaction, instead relying on certain HIPAA exceptions, such as patient treatment. In other arrangements, the MRS and the prescribing physician’s office may be required to sign a document attest- ing that the MRS will comply with the privacy policies of the prescriber or the manufacturer may become the business associate of the prescriber.

Further complicating the legal analy- sis, specialty pharmacies are asked to communicate with MRS in varied formats. For example, specialty pharmacies may be asked to communicate patient-specific information directly to MRS, provide data reports to manufacturers for MRS use, or upload patient information to computer portals to which the MRS has access. There may be formalized channels for communication with MRS of patient information or the MRS may call or text specialty pharmacy employees on an ad hoc basis asking for patient information. Specialty pharmacies may be asked to work with MRS to populate and submit prior authorizations (PAs), insurance appeals, and other documents. These variations may make it difficult for specialty pharmacies to navigate contracting with pharmaceutical manufacturers for such programs and training employees on appropriate interactions with MRS.

Relevant Laws

The 3 primary laws implicated by MRS activities are HIPAA, the AKS, and the FCA. Generally speaking, under HIPAA, a covered entity—such as a physician, a pharmacy, or an insurance company and the business associate agents working on the covered entity’s behalf—may use or disclose patient information for the treatment of a patient or to obtain payment for a patient’s treatment. MRS may be viewed as third parties not covered by the treatment and payment exceptions. For this reason, patients may be required to provide a HIPAA authorization permitting the use and disclosure of their protected health information. There may be other legal mechanisms through which an MRS may access and use patient information, but those are often complex and require close legal review.

Under the AKS, it is a felony to offer, pay, solicit, or receive anything of value to induce the ordering or arranging of items or services for which payment may be made, in whole or in part, by any government payer program. If a specialty pharmacy’s activities have a fair market value, the parties should enter into a written agreement outlining the services to be provided and establishing a fair market value fee for the services. Services should only include those that are commercially reasonable in an arm’s length transaction. In addition, the PA support to the physician could be deemed as providing value to the physician, implicating the AKS. Additionally, if a regulator finds that the MRS programs are designed to induce the prescribing or overutilization of the manufacturer’s drug, the specialty pharmacy could be brought in by the broad sweep of the associated prosecution.

Under the FCA, anyone who knowingly submits or causes the submission of a false claim to the federal government is liable for damages of up to 3 times the erroneous payment, plus civil penalties. If PAs or other insurance claims information are inaccurate, the submission can be considered a false claim. Furthermore, if other laws, such as the AKS, were violated in submitting the claim, then FCA violations are likely.

Applying the Laws

Manufacturer employees accessing patient information have been the focus of several recent prosecutions, which highlight some of the risks and legal pitfalls associated with MRS use. In October 2015, Warner Chilcott Sales LLC paid $125 million and several employees pleaded guilty to health care fraud to resolve criminal and civil liability arising from, among other things, its PA-related support. It was alleged that Warner Chilcott’s sales employees violated HIPAA by accessing protected health information (PHI) without patient authorization in order to assist with PA submission and violated the FCA by submitting inaccurate clinical information in support of PAs. In a related case, a physician was convicted of HIPAA violations in May 2018 for providing a Warner Chilcott sales representative with access to the PHI of patients with certain health conditions for facilitation of PAs for Warner Chilcott products.

In September 2017, Aegerion Pharmaceuticals Inc pled guilty and agreed to pay more than $35 million to resolve allegations that HIPAA and the FCA were violated when employees assisted cardiologists in identifying patients for treatment with Juxtapid. Specifically, the government alleged that Aegerion obtained patients’ PHI without authorization, including instances in which non-English-speaking patients were given authorization forms in English, and then used and disclosed the PHI for the purposes of marketing Juxtapid. In February 2018, a pediatric cardiologist pleaded guilty to criminal HIPAA charges arising from his providing access to his electronic medical records and prescription forms with Aegerion without patient authorization.

As these cases highlight, manufacturer involvement in the reimbursement process can raise legal concerns. When a specialty pharmacy is asked to communicate patient information to an MRS or otherwise participate in a program involving manufacturer reimbursement support, legal guidance should always be sought. The following general principles provide a basic framework for a first review of MRS programs:

  • Patient HIPAA authorization specifi- cally permitting a specialty pharmacy to disclose patient medical information to the MRS program, such as diagnosis and insurance information, should be obtained. The authorization should be reviewed by legal counsel to ensure it meets HIPAA requirements. The specialty pharmacy should receive a copy of the authorization and require that the pharmacy receive notice of any patient revocation of the authorization.
  • The specialty pharmacy should only communicate patient information through protected channels, such as encrypted and secure data report transmission. Text messages, ad hoc written communications, and faxes should be avoided. Specialty pharmacy employees should be trained on the appropriate forms of communication.
  • Use of MRS should be transparent. Payers and prescribers should be made aware of the role of the MRS.
  • Specialty pharmacies should analyze the communications with the MRS and the tasks required to facilitate those communications to determine whether a service fee should be paid for the activities.
  • Communications with an MRS and related programs should be governed by written contracts. Specialty pharmacies should consider contract terms related to compliance with law and liability for the acts of MRS carefully.
  • Communications with an MRS that have sales force roles should be avoided.

These guidelines provide a basic framework for the legal considerations for a specialty pharmacy to work with an MRS but should not be used to deter- mine whether a program complies with applicable law. Legal counsel should be consulted in each instance.

Shannon L. Wiley is an associate of Bass, Berry & Sims PLC in its Specialty Pharmacy & Pharmaceuticals Practice and is based in the firm’s Memphis, Tenn., office.

Michael R. Hess is a member of Bass, Berry & Sims PLC and leads its Specialty Pharmacy & Pharmaceuticals Practice, and is based in the firm’s Memphis office. He is the former chief counsel and vice president of Strategic Development at Accredo Health Group and assistant general counsel for Accredo’s parent, Medco Health Solutions. Bass, Berry & Sims PLC has more than 280 attorneys representing numerous publicly traded companies and Fortune 500 businesses. The firm has 3 offices in Tennessee (Nashville, Memphis, Knoxville) and 1 in Washington, D.C.

Jeanne Marie Evans is an associate of Bass, Berry & Sims PLC in its Healthcare Practice and is based in the firm’s Nashville, Tenn., office.

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