Industry stakeholders must carefully examine every detail of drug adherence programs to ensure compliance with the Anti-Kickback Statute.
ONE OF THE MOST HEAVILY FOLLOWED CASES in the specialty pharmacy (SP) space during the last couple of years involved Novartis and the alleged offering of improper reimbursements for recommended uses of the drugs Exjade and Myfortic.
The case concluded in November 2015 when Novartis agreed to pay $390 million to resolve the claims. In the aftermath of the settlement, there was much attention given to SP/manufacturer service programs. Industry players scoured the various court documents, searching for practices and facts that might motivate future prosecutions of such drug adherence programs.
Although there is still much debate and ambiguity surrounding the particulars of these adherence programs, one aspect of the Exjade/Myfortic litigation provides straightforward practical guidance, but has received little consideration: the addendum to Novartis’ Corporate Integrity Agreement (CIA).
The CIA recites requirements for SP service programs, specific contract requirements, contract process procedures, and training specifics for Novartis. The CIA should not be disregarded, as it provides workable guidance for SPs structuring a pharma-contracting and services compliance program.
The CIA does not create an exhaustive legal compliance framework, and an individual legal analysis of each arrangement is essential. The CIA does, however, provide a checklist to help ensure compliance with the Anti-Kickback Statute (AKS), which makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive anything of value, in cash or in kind, to induce or reward referrals of items or services reimbursable by federal or state health care programs (eg Medicare, Medicaid, Tricare, etc).
As a reminder, the Exjade/Myfortic litigation involved Novartis’ Exjade Patient Assistance and Support Services (EPASS) program, which included 3 network SPs (among other things). At one point in the business relationship, referrals from the Novartis hub were allocated based on patient adherence.
Among the allegations were:
Defendants BioScrip and Accredo, settled earlier in the litigation for approximately $15 million and $60 million, respectively.
Service Arrangement Basics
One set of the CIA requirements outlines basic compliance tenets of SP services provided on behalf of manufacturers. Employees responsible for developing, contracting, implementing, and auditing these programs should be aware of these basics.
During the negotiation and development stages, these essential guideposts should be considered:
The Contracting Basics
As discussions of service arrangements mature into contracts, there are certain contract terms and elements of review that should be present for each arrangement. The framework below is a basic structure generally applicable to SP/manufacturer service agreements.
Also, the contracting process should be more than just an exercise of passing paper between the parties. The CIA outlines processes to ensure that material stakeholders are appropriately engaged in the development of service programs:
Contracting Compliance Program
The CIA highlights that structuring arrangements in compliance with the AKS and drafting contracts that properly reflect the arrangement are only part of AKS compliance. Arrangements must remain in compliance.
Often, modifications to operations processes occur as service programs morph to fit changing market dynamics or to hone operational efficiencies. These modifications are too frequently informal and not vetted appropriately.
A compliance program is an essential tool to ensure that service programs do not migrate into offerings that are no longer in compliance with applicable law:
All employees should be trained annually on federal program requirements, internal policy requirements, individual responsibilities for complying with applicable regulations, sanctions associated with violations, and examples of improper practices.
The training should include components specific to the individual’s job function. Implementing a structure for vetting manufacturer service programs and revisiting through regular compliance reviews offer an excellent mechanism for mitigating risks associated with manufacturer service programs.
Through a formal process, all material stakeholders become involved and required sign-offs ensure certain basic compliance elements are met. The CIA offers practical guidance on building such compliance programs and should not be overlooked by SPs and industry stakeholders. SPT
About the Author
Michael R. Hess is a member of Bass, Berry & Sims PLC and leads its specialty pharmacy, pharma services and distribution practice, and is based in the firm’s Memphis, Tennessee, 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 220 attorneys representing numerous publicly traded companies and Fortune 500 businesses. The firm has three offices in Tennessee (Nashville, Memphis, Knoxville) and one in Washington, DC.
Shannon L. Wiley is an associate of Bass, Berry & Sims PLC in its specialty pharmacy, pharma services and distribution practice, and is based in the firm’s Memphis, Tennessee, office. Bass, Berry & Sims PLC has more than 220 attorneys representing numerous publicly traded companies and Fortune 500 businesses. The firm has three offices in Tennessee (Nashville, Memphis, Knoxville) and one in Washington, DC.