The Department of Justice (DOJ) recently intervened in a False Claims Act (FCA) case that raises a variety of interesting allegations, including payment of kickbacks by a compounding pharmacy to contracted marketing companies in the form of percentage-based compensation, to TRICARE beneficiaries in the form of copayment waivers, and to physicians who submitted prescriptions without seeing patients. According to the complaint, Patient Care America (PCA), a Florida compounding pharmacy, implemented a scheme to manipulate the compounding formula for pain and scar creams that resulted in the submission of false claims to TRICARE. The complaint also names two of PCA’s senior executives (one of which has since left the company) as well as the private equity firm that owns a controlling interest in PCA. Continue Reading DOJ Intervenes in False Claims Act Case Against a Compounding Pharmacy and a Private Equity Firm
Please join Mintz Levin for a webinar discussing health care fraud enforcement in the pharmacy and pharmaceutical industry on October 26, 2016 at 1 pm (ET). My colleagues Theresa Carnegie, Larry Freedman, and Ellyn Sternfield, members of Mintz Levin’s Health Law and Health Care Enforcement Defense practices, will discuss enforcement trends facing the industry.
The webinar will cover topics relevant to virtually all sectors of the health care and life sciences industries, especially pharmaceutical manufacturers, pharmacies, pharmacy benefit managers (PBMs), and health insurers as well as those who invest in the health care and life sciences industries.
During the webinar, my colleagues will discuss:
- Litigation, investigations, and settlements involving pharmaceutical manufacturers, PBMs, specialty pharmacies, and health care providers;
- Federal (including the Department of Justice and the Office of Inspector General) and state enforcement focus on the financial relationships among the companies and providers involved in the pharmaceutical supply chain; and
- Emerging trends in government enforcement and what is fueling them.
The webinar is approved for CLE credit in California and New York.
You can register for the webinar here.
The pharmacy industry is under increasing scrutiny from all angles. Whether at the legislative or agency level, Washington as well as many states seem intent on addressing perceived issues surrounding drug pricing, reimbursement, and program integrity.
In light of the significant changes in the pharmacy industry in 2015, Mintz Levin/ML Strategies is bringing together stakeholders and thought leaders from across the industry to share knowledge and insight on this rapidly shifting landscape at the 2016 Mintz Levin/ML Strategies Pharmacy Industry Summit.
The Summit will be on May 10 at the Mintz Levin Washington DC office. Event details can be found here.
Session topics will include:
- State of the Industry – Drug Pricing Challenges and Opportunities
- The New Wave of Value-Based Pricing and Contracting
- The Repeal of Medicare Part D Non-Interference – Practical Realities
- Federal and State Drug Transparency Initiatives
- Implications of the Final AMP Rule
Space is limited so please register now.
Last week, pharmacy benefit manager (PBM) and independent pharmacy representatives provided testimony to the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law in a congressional hearing examining the state of competition in the pharmacy and PBM marketplace. You can watch the hearing and read the filed testimony here. This was the third in a series of congressional hearings examining competition in healthcare markets. While the focus was on PBMs and pharmacies, some panelists and committee members recognized that a full discussion of certain issues, like drug pricing, needs to involve other players in the prescription drug supply chain.
The witness panel included 2 PBM industry representatives, an independent pharmacy owner, and an antitrust attorney who represents the interests of independent pharmacies:
- Amy Bricker, Vice President of Retail Contracting & Strategy, Express Scripts
- Natalie A. Pons, Senior Vice President and Assistant General Counsel, CVS Health
- Bradley J. Arthur, Owner, Black Rock Pharmacy
- David A. Balto, Law Offices of David Balto
Each panelist gave testimony aligned with his or her role in the debate and voiced well entrenched opinions regarding the role PBMs play in the health care industry. Ms. Bricker and Ms. Pons each focused on their PBM’s ability to use scale to keep prescription drug costs down for patients and their clients, and stressed that they rely on independent pharmacies to participate in their networks. Mr. Arthur focused on the scale of the PBMs compared to his independent pharmacy, while Mr. Balto pointed to market trends, like rising profit margins, to claim that the entire PBM marketplace is broken and needs regulation to require more transparency. Continue Reading Congressional Hearing Examines Competition in the PBM Industry
Written by: Ellyn L. Sternfield
Once again, a pharmacy employee has filed a qui tam involving a drug discount program, alleging that the failure of the pharmacy to use the discounted pricing as the “usual and customary” price in Medicaid and Medicare Part D billings resulted in falsely inflated claims to those programs. And once again, the qui tam case has survived a Motion to Dismiss.
In September of 2013, I blogged about qui tams based on usual and customary billings. That blog post was prompted by a ruling in U.S. ex rel. Garbe v. K-Mart, that a qui tam Complaint alleging the chain pharmacy’s failure to use discounted pricing as the “usual and customary” price for medications in government program claims, was sufficient to pass muster under Rules 9(b) and 12(b)(6).
Pharmacy claim forms contain a required field for the pharmacy to submit its “usual and customary” price for the billed medication. That price is often factored into the reimbursement formula for government-funded health care programs. However, government programs each define how “usual and customary” price is determined, and when it comes to Medicaid, each state is free to define the term differently. In some instances the term may be defined as inclusive of any discount offered (akin to a most-favored-nation clause), in other instances the term may be defined as an average charged to or paid by any payor, or in still other instances the term may be defined as the amount charged to or paid by any cash-paying customer.
Written by: Brian P. Dunphy
The United States Court of Appeals for the Seventh Circuit affirmed the dismissal of a False Claims Act (“FCA”) case against Shopko Operating Stores, LLC, in which a former Shopko pharmacist asserted Medicaid billing violations. The Seventh Circuit agreed “with the district court that [relator’s] legal theory is not viable no matter how detailed his factual allegations.” Importantly, the appeals court also found that Shopko was “permitted to bill in the fashion that it did.” My colleagues from Mintz Levin’s health law and litigation practice areas, Tom Crane, Ellen Janos, and Bret Leone-Quick, along with other members of the firm’s health law and litigation groups, represented Shopko before both the district court and the Seventh Circuit.
The Connecticut State Senate recently passed a bill that would impose additional disclosure and consent requirements on retailers offering pharmacy rewards programs to consumers. If the bill passes the Connecticut House and becomes law in its current form, violations would expose retail providers of such programs to suit under the state’s consumer protection laws as soon as July 1, 2014.
The bill would require a retailer, prior to enrolling a consumer in a pharmacy rewards program, to provide the consumer with a plain language summary of the terms or conditions of the program. If a HIPAA authorization is required to participate in the program, the summary must include a “conspicuous notice, in bold font” of what constitutes a HIPAA authorization. HIPAA requires an authorization for uses and disclosures of PHI for all marketing communications, except for face-to-face encounters and communications involving a promotional gift of nominal value (such as pens and notepads).
On January 10, the Centers for Medicare & Medicaid Services published proposed rules labeled as “policy and technical” changes to the Medicare Advantage (Part C) and Medicare Prescription Drug Benefit (Part D) Programs. If adopted as drafted, these rules will significantly impact how Medicare Advantage organizations and Part D Prescription Drug Plan sponsors operate and interact with their contractors, beneficiaries, and the government. The rules will also significantly impact the operations of all health care entities involved in providing drug products under Medicare Parts C and D, including pharmacy benefit managers, pharmacies, and physicians.
Additionally, we are hosting a webinar on January 29, 2014 at 1:30 pm EST. During the webinar we will discuss the practical implications of the proposed rules, provide a forum for an interactive discussion among interested parties, and answer questions. The Advisory and webinar will be of particular interest to the following parties:
- Plans that provide Medicare Parts C and D services;
- PBMs, TPAs and other entities that provide services to Medicare Advantage and Medicare Part D plans;
- Pharmacies, in particular pharmacies that provide Medication Therapy Management Services to Medicare beneficiaries;
- Physicians and other health care providers who write prescriptions for drugs covered by Medicare Part D; and
- Long term care facilities with financial arrangements involving the administration of Medicare Parts C and D covered drugs.
Register for the webinar here.
Written by: Ellyn L. Sternfield
Recently, a federal judge held that a qui tam relator’s allegations that a pharmacy routinely reported falsely inflated “usual and customary” prices for generic medications in claims submitted to federally funded health care programs, was sufficient to state a cause of action under the federal and certain state false claims acts. In an order denying the pharmacy’s Motion to Dismiss, the Court found that while the relator had not proven his allegations, he had plead with sufficient particularity the who, what, when and why of the alleged fraud.
Last Friday, the Office of Inspector General (OIG) issued Advisory Opinion No. 12-19 approving three of four proposed arrangements involving a pharmacy’s provision of free or below market items and services to community homes where the pharmacy’s patients reside.
Under two of the proposed arrangements, the pharmacy would provide free pre-populated medication administration records (MARs), physician order forms, and treatment sheets to community homes that have residents who obtain prescriptions from the pharmacy. The documents would be provided either in paper format or via an interoperable web-based software program.
Under the third arrangement, any community home within certain states could purchase a sublicense from the pharmacy for a web-based software program different from the software program at issue under the second arrangement. The pharmacy would charge the community home a price that is below the price the software developer would normally charge the community homes for such a sublicense. The software would allow the community homes to perform certain administrative functions and to maintain electronic MARs. The pharmacy stated that the software program is not “interoperable” within the meaning of the electronic health records regulatory safe harbor.
Under the fourth arrangement, the pharmacy would provide a sublicense for the same web-based software program as under the third arrangement free of charge to community homes for use only in connection with residents who obtain prescription medications from the pharmacy. The company certified that the cost of providing the free sublicenses would be significant. Continue Reading OIG Approves Pharmacy’s Provision of Free or Below Market Value Items in Limited Circumstances