Healthcare Compliance: Lessons Learned from Recent Fraud Settlements & Guidance from the DOJ

Healthcare Compliance: Lessons Learned from Recent Fraud Settlements & Guidance from the DOJ

Healthcare fraud relating to kickbacks and false claims continues to be a hot topic. The Department of Justice (DOJ) recovered over $3 billion in 2019 related to fraud and false claims. These cautionary tales are important for life sciences organizations. Paying attention to the trends can help protect from legal and reputational harm. Of that $3 billion, many involved improper incentives for healthcare providers (HCPs), sham speaker programs, and other fraud between manufacturers and providers. So, what lessons can you learn from recent healthcare fraud settlements and guidance from the DOJ? Let's dive in with some context and takeaways.

Recent Settlements

The DOJ appears to be focusing more on healthcare fraud in the life sciences segment. Here are some of the most notable recoveries from 2019 relating to life sciences for violations of the Federal Anti-Kickback law or the False Claims Act. Several cases focused on opioids. The DOJ still has its radar on the opioid industry and fallout from the addiction crisis.

Insys Therapeutics

The company paid $195 million to settle civil allegations regarding kickbacks to providers to prescribe fentanyl to patients. Officials stated these kickbacks involved sham speaker events, jobs for family and friends of practitioners, and exorbitant meals and entertainment.

The company used "speaker programs" as cover for educating prescribers. However, they were merely a means to pay bribes and kickbacks. Many of the prescriptions from incentivized prescribers were medically unnecessary and reckless to the welfare of patients. The DOJ also won criminal convictions against eight executives of the company.

Reckitt Benckiser Group

The organization agreed to pay $1.4 billion, with $500 million to the U.S. The settlement was due to civil and criminal allegations. It directly or via subsidiaries promoted opioid addiction treatment drug Suboxone to physicians writing prescriptions for unsafe, ineffective, and medically unnecessary uses. It's the largest recovery for an opioid case in the U.S.

The company pushed Suboxone as less abusable than other options along with other misleading statements. The drugmaker knew doctors were prescribing the medication without any counseling or support and for uses outside of its legitimate uses. The organization's "Here to Help" program was meant to support opioid addicts. In reality, it connected them with physicians ready to prescribe their drug.

Avanir Pharmaceuticals

Avanir faced charges of kickbacks to physicians to induce prescriptions for its drug Nuedexta. In total, they will pay more than $108 million in criminal penalties and civil damages. In addition to the settlement, former employees and a top prescriber were indicted. The case also included false and misleading marketing of the drug to long-term care (LTC) facilities for dementia cases, although it was not an approved use.

What Can Life Sciences Companies Learn from these Settlements?

Top of mind is that the DOJ is ready to prosecute drugmakers that violate the laws. These cases also demonstrate the strength of whistleblower programs, which were responsible for many of these lawsuits and indictments.

Reporting Financial Relationships Is a Requirement

Pharmaceutical companies are well aware of their healthcare compliance obligations, especially those regarding their financial relationships with providers. The Sunshine Act made the open reporting of these a mandate. However, just because you report them doesn't mean they are compliant.

New Alert on Speaker Programs

Any dealings with providers that involve financial or transfers of value must be above board. It is acceptable to pay practitioners for speaking engagements-they just have to be legitimate. The Office of Inspector General (OIG) published a Special Fraud Alert for Speaker Programs in November 2020.

The bulletin defines speaker programs as events where physicians make speeches or presentations to peers about a drug or medical device. The company typically pays the speaker an honorarium and provides meals to attendees. The report notes that numbers for these services were nearly $2 billion for 2017-2019.

Unfortunately, the OIG and DOJ report many investigations regarding fraudulent programs. The allegations that are most prevalent include:

The alert then reminds organizations they would violate anti-kickback statutes by basing honorarium on top prescribers. They also question the veracity of these programs as educational or beneficial to the medical community. In short, they basically believe most of these programs to be shams and are a channel to reward or induce referrals.

Along with the remuneration in question, the OIG and DOJ are skeptical of these events, especially when they combine entertainment and meals where marketing presentations of a drug or device are part of the program.

Such events were not such a problem in 2020 due to the pandemic. That doesn't mean they won't be back on the schedule post-COVID. They specifically call out what characterizes events that will be under heavy scrutiny:

With a lens on this element of life sciences and provider relationships, this is an excellent time to review your program. You are likely not conducting in-person events but may be hosting virtual ones or have plans to restart them once it's safe to do so. You should work with your legal counsel and compliance partners to ensure that your speaker programs follow the law and don't have attributes that would cause the OIG and DOJ to investigate.

More Advice from the DOJ

Last year, the DOJ also issued updated compliance guidance for healthcare organizations. The Guidance Update invokes healthcare entities to be vigilant about their compliance program and continuously improving it. They recommend ongoing risk assessments based on accurate data as well as training and educational programs for employees on what's legal and how to report misconduct. Further, they urge organizations to use data-driven tools to improve their programs.

How Are You Managing Compliance and Risk?

Compliance is never simple. There are considerable complexities for healthcare, and your compliance program, including Sunshine Act reporting, which are critical to your company's future success and reputation.

We understand the challenges of life sciences healthcare compliance. We have a host of solutions to ensure you're doing more than checking the boxes but tracking and measuring your program. Find out how MedCompli's end-to-end HCP compliance solution can support you. See how it works with a quick demo.