On June 30, 2015, a mere day before the product tracing deadline for dispensers was to go into effect, FDA published a compliance policy guidance that delays enforcement of the applicable product tracing requirements until November 1, 2015 (Compliance Policy). As we previously discussed, pursuant to the Drug Supply Chain Security Act, most pharmacies in the U.S. are required to have systems in place by July 1, 2015, to receive so-called “3T information” (that is, Transaction History, Transaction Statement, and Transaction Information) regarding the prescription drugs they purchase from suppliers.
In the Compliance Policy, FDA notes that dispensers have expressed concern that electronic systems used to exchange, capture, and maintain product tracing information will not be operational by the original July 1 deadline. Although the agency acknowledges that paper-based transmission may be acceptable in some cases, FDA also notes that many dispensers intend to utilize electronic systems to capture and maintain the 3T information. Accordingly, the Compliance Policy concedes that dispensers may need additional time beyond July 1, 2015 to work with their trading partners to ensure that the 3T information is captured and maintained as required by the DSCSA.
Consequently, FDA does not intend to take action prior to November 1, 2015, against dispensers who, in either case: (i) accept ownership of a covered drug product without receiving the 3T information; or (ii) do not capture and maintain the 3T information provided by the dispenser’s trading partner. Continue Reading
Last week, FDA announced that more than 1,050 websites had illegal drugs and devices seized or received warning letters as part of the Eighth Annual International Internet Week of Action (IIWA). IIWA is an international effort of law enforcement, customs, and regulatory bodies (including FDA, the U.S. Department of Homeland Security, and INTERPOL) that fights against illegal online sales of drugs and devices, which are potentially counterfeit and could be harmful to consumers.
Representatives from over 115 countries came together for this year’s effort, called “Operation Pangea VIII,” which ran from June 9th to 16th. The goal of Operation Pangea VIII was to identify the manufacturers and distributors of illegal drugs and medical devices sold online and eliminate those products from the marketplace. Continue Reading
Health care is big business in Massachusetts, and it is a highly regulated business. But Governor Charlie Baker hopes to simplify the Massachusetts regulatory regime. This past March, Governor Baker initiated a year-long review of each and every regulation under the Executive Department’s jurisdiction, which includes the regulations falling under the primary oversight agency for health care in Massachusetts – the Executive Office of Health and Human Services.
As the Secretary of Health & Human Services, Marylou Sudders leads the largest executive agency in Massachusetts – there are nearly twenty departments and divisions under her oversight, including the Department of Public Health, Department of Mental Health, and the Division of Health Care Finance and Policy. These agencies (and others) promulgate health care rules and regulations about licensing and certification, quality and data reporting, clinical, recordkeeping, operational and facility requirements, and more – leaving providers and payors to wind through a labyrinth of legal requirements.
Enter Executive Order 562.
The 340B Drug Discount Program has operated for more than 20 years with just a few governing regulations codified in 42 CFR Part 10. Through the Affordable Care Act (“ACA”), Congress adopted several amendments to the 340B Program. One of those amendments required the Department of Health and Human Services (“HHS”) to impose a maximum $5000 civil monetary penalty on participating manufacturers for each instance in which the manufacturer knowingly and intentionally charged a participating 340B entity a purchase price for a 340B drug that exceeds the statutory ceiling price. Congress specifically authorized the Health Resources and Services Administration (“HRSA”) to promulgate regulations implementing this requirement within 180 days of the ACA enactment, i.e. by September 2010.
And in fact, in September 2010 HRSA published an Advance Notice of Rulemaking on this requirement, seeking stakeholder input on the requirement.
Finally, on June 17, 2015, HRSA issued proposed rules to implement that requirement. What took so long? HRSA’s commentary to the proposed rules, combined with the recent history of the 340B Program, provide the answers. These proposed rules may be the first steps, but not the last, in what may be major changes to the 340B Program. Continue Reading
As we discussed yesterday, the Medicare Fraud Strike Force’s eighth annual nationwide takedown resulted in charges in 17 districts against 243 individuals for approximately $712 million in false billings.
It is the most significant of the Strike Force’s nationwide takedowns to date. By way of comparison, as we noted in our January 2015 year-in review, in 2013, the Strike Force brought charges in eight districts against 89 individuals for approximately $223 million in false billings, and in 2014, the Strike Force brought charges in six districts against 90 individuals for approximately $260 million in false billings. The number of individuals charged and the total amount of false billings alleged this year has nearly tripled. Indeed, the takedown this year in the Southern District of Florida (Miami) alone involved charges against 73 individuals for approximately $263 million in false billings — results on par with the entirety of each of the 2013 and 2014 takedowns. Additionally, 46 of the individuals just charged were doctors, nurses or other licensed medical professionals, as compared to 27 last year. Moreover, the Strike Force’s efforts have expanded beyond the districts that are part of the Strike Force to the District of Alaska, the Southern District of California, the District of Connecticut, the Southern District of Georgia, the Western District of Kentucky, the District of Maryland, and the Northern District of Ohio.
What is responsible for the vastly increased scope of this year’s takedown? It certainly is not due solely to reporting the results of 13 rather than 12 months of law enforcement and regulatory efforts. It may be due generally speaking to having the new U.S. Attorney General, Loretta E. Lynch, officially in place for six weeks now and having the current Assistant Attorney General in charge of DOJ’s Criminal Division, Leslie R. Caldwell, on the job for a year.
More specifically though, it may be due to specific efforts that AAG Caldwell noted in speaking about the latest takedown:
Every day, the Criminal Division is more strategic in our approach to prosecuting Medicare Fraud,” said Assistant Attorney General Caldwell. “We obtain and analyze billing data in real-time. We target hot spots – areas of the country and the types of health care services where the billing data shows the potential for a high volume of fraud – and we are speeding up our investigations. By doing this, we are increasingly able to stop schemes at the developmental stage, and to prevent them from spreading to other parts of the country.
There are other strategies that AAG Caldwell noted in a speech last September, perhaps most importantly the new procedure that qui tam complaints would be shared by the Civil Division with the Criminal Division as soon as cases are filed. Whether that was at play here is not yet clear, but we should expect it given the invigorated efforts of DOJ and its partners not to mention the financial benefit.
Earlier today, Attorney General Loretta Lynch announced the largest coordinated crackdown in the Medicare Fraud Strike Force’s eight-year history. The government brought charges against 243 individuals for approximately $712 million in alleged Medicare fraud.
The government alleges a wide array of misconduct ranging from conspiracy to commit health-care fraud, violations of the Anti-Kickback Statute, money laundering, and aggravated identity theft. The individuals charged include doctors, nurses, patient recruiters, home health care providers, pharmacy owners, and other license medical professionals. Notably, almost 50 of these individuals were charged with fraud related to the Medicare prescription drug benefit program (“Part D”).
On Friday, Mintz Levin published an advisory on CMS’s proposed Medicaid Managed Care rules. This advisory provides contextual background, a helpful overview of the rule’s contents, and an in-depth discussion of some of the rule’s key provisions.
The 653-page rule is the first major overhaul of the Medicaid managed care system since the inception of the rules in 2002. CMS’s proposals affect 39 states (plus the District of Columbia) that use managed care organizations (“MCOs”) to administer Medicaid benefits, which cover approximately 70% of all Medicaid enrollees. Comments to the proposed rule are due by July 27, 2015.
Many of the changes are focused on aligning Medicaid managed care with regulatory requirements for Medicare Advantage and private insurance plans. Among many provisions, this includes proposed medical loss ratio (MLR) requirements, updates to the appeals processes, and additional marketing rules. Other changes include additional required contract provisions, minimum network adequacy standards, and updates to quality improvement programs.
The advisory discusses the impact of key provisions in detail. In addition to the contracting provisions discussed in the advisory, we provide here an overview of a few other noteworthy proposed changes: Continue Reading
On Monday, during the annual meeting of the American Medical Association (AMA) House of Delegates, the delegates voted to table a proposed measure to adopt ethical guidelines for physicians who provide telemedicine services. The proposed guidelines, which were based on recommendations by the AMA’s Council on Ethical and Judicial Affairs (CEJA), focused on issues such as ensuring patient privacy and educating patients on the limitations of telemedicine.
Last week, Mintz Levin attorneys Bruce Sokler and Timothy Slattery published an advisory regarding the Second Circuit’s highly anticipated decision in State of New York v. Actavis PLC.
In this case, the Second Circuit upheld a preliminary injunction against Actavis PLC and its wholly owned subsidiary Forest Laboratories, LLC and found that Actavis’s “hard switch” strategy to launch an extended-release version of an Alzheimer’s therapy and delist the immediate-release version would likely violate Section 2 of the Sherman Act. The court reasoned that because generic competition depends so much on state drug substitution laws that allow pharmacists to substitute generics for brand-name products, the combination of launch and product removal was an anticompetitive “product hop” that would likely impede generic competition of the original immediate-release version of the drug.
You can read the full advisory here.
In a fraud alert released today, the OIG warns that physician compensation arrangements, such as medical directorship compensation, may potentially violate the anti-kickback statute. The fraud alert reiterates the “one purpose” doctrine (a compensation arrangement may violate the anti-kickback statute if even one purpose is to compensate a physician for past or future referrals of Federal health care program business). While this concept is hardly headline news to providers or health law attorneys, the OIG issued the fraud alert after recently reaching settlements with 12 individual physicians who entered into “questionable” arrangements. The fraud alert cites a variety of issues that made these arrangements questionable, including taking into account the volume or value of referrals, payments that were inconsistent with fair market value for services to be performed and failure of physicians to actually perform the services. Some of the arrangements included payment by an affiliated health care entity of the physicians’ front office staff, constituting improper remuneration to the physicians. The fraud alert notes that the OIG determined that the “physicians were an integral part of the scheme and subject to liability under the Civil Monetary Penalties Law.”
Medical directorship and other arrangements with physicians often make good sense and reflect bona fide physician services that further the goals of coordination of care, improvement of quality, and cost savings. This fraud alert serves as a not-so-gentle reminder to remember the basics in structuring, documenting and monitoring these arrangements to assure initial and ongoing compliance with the anti-kickback statute. It also highlights that the OIG will not hesitate to pursue individual physicians in these cases.