The American Recovery and Reinvestment Act of 2009

By: Dave Rice, CIS Director of Federal Contracting
daverice@cis-partners.com

On February 17, 2009 the President signed PL 111-5, the “American Recovery and Reinvestment Act of 2009” (ARRA)[1]. The ARRA imposes a number of requirements on Executive Branch departments and agencies receiving Recovery Act funds.

Many FSS contract holders have, or will shortly receive, a voluntary bilateral modification from the National Acquisition Center (NAC)[2] to modify their FSS contracts to incorporate new clauses implementing the ARRA[3]. These clauses include the following:

• 52.203-15 Whistleblower Protections Under the American Recovery and Reinvestment Act of 2009
• 52.204-11 American Recovery and Reinvestment Act – Reporting Requirements
• 52.212-4 Contract Terms and Conditions-Commercial Items
• o Changes ( r) to incorporate bulleted clauses above
  o Provides for the Comptroller General of the United States, IG appointed inspector, or authorized representative to have access to and the right to examine any of the Contractor’s or any sub-contractors’ records that pertain to, and involve transactions relating to this contract; as well as the right to interview any officer or employee regarding such transactions.

Compliance with the ARRA reporting requirements is significant. It requires manufacturers to provide quarterly reports, which are due by the 10th day following the end of the quarter. Reporting elements include:

• Jobs created as a result of funding by the ARRA.
• Jobs retained as a result of funding by the ARRA.
• Total Compensation earned by the executive during the past fiscal year (includes salary, bonus, non-equity incentive plans, change in pension value, deferred compensation, and other compensation).
• Contract numbers
• List of all significant services performed or supplies delivered.
• Narrative description of the employment impact of work funded by the ARRA.
• Many additional elements[4].

Acceptance of the Recovery Act modification and its clauses is voluntary. However, if your firm elects not to accept the modification, your firm WILL NOT be eligible to receive or accept orders that are funded, in whole or in part by the Recovery Act.

The ARRA provides over $59 billion in funding for healthcare. The available funding focuses on modernizing the healthcare system, reducing medical errors and improving quality.

Based on our initial review of ARRA material, and discussion with NAC personnel, it appears that the vast majority of the recovery funds will be geared towards equipment and capital items rather than pharmaceutical purchases. Due to the limited opportunities in the pharmaceutical market, the significant reporting requirements, and the change in FSS contract clauses, we would encourage your firm to evaluate your product opportunities relative to the requirements of these new clauses. We understand that if you elect NOT to accept the modification at this time, it does not preclude you from changing that election in the future.

Sources:
[1] http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h1enr.txt.pdf
[2] http://www1.va.gov/nac/
[3] ARRA Amendment of Solicitation: http://gp.cis-pcx.com/federal-programs/veterans_affairs_health_program,5/guidance_documents,325/
[4] ARRA Q&A Document – June 2009: http://gp.cis-pcx.com/federal-programs/veterans_affairs_health_program,5/guidance_documents,325/

CBO Report Hurts Senate HELP Committees Reform Attempts

By: Clarissa Crain, CIS Compliance Director
clarissacrain@cis-partners.com

The week of June 15th through the 22nd proved to be pivotal for the movement forward of the Administration’s attempts to reform the health care system. With both victories and setbacks, the future scope of health care reform remains in question. The Congressional Budget Office (CBO) released findings that showed that the Senate HELP Committee’s proposed “Affordable Health Choices Act” would cost an exorbitant amount of money, far more than the Administration had estimated, and not yield the increase in coverage sought by the Administration.[i] At the same time, the Administration witnessed a huge win when PhRMA members agreed to pay $80 billion towards Medicare Part D over the next ten years (see Katie Lapin’s recent blog article, Good PR for Pharma). The administration is left in the wake of last week battling back against criticism of the current health care reform attempts based on the CBO’s findings, while trumpeting the ‘victory’ in increased financial support by the pharmaceutical industry for Medicare Part D.

From a perspective of understanding where health care reform stands and how the Senate HELP and Finance Committees are doing in their efforts to move legislation through Congress and onto the President’s desk by October, it is important to understand the recent CBO report.[ii] The legislation presented to the CBO by the Senate HELP committee was found to miss the mark both financially and on the Committee’s insured targets. The CBO found that the HELP Committee’s “Affordable Health Choices Act” would only extend health care coverage to an additional 16 million Americans, while costing a higher than expected, $1 trillion, between 2010 and 2019. The CBO’s findings shocked the HELP Committee and left supporters of the Committee’s efforts reeling.

In reviewing the findings of the CBO, it is apparent that the legislation presented to the CBO for review is missing key components that were previously cornerstones of the proposed legislation. Speculation is that these key components: the public plan, the employer mandate, and the individual mandate, were left out of the bill to help gain bipartisan support.[iii] However, by leaving out these components, the HELP Committee left out components that were projected to drive substantial increases in insured persons. Also interesting to note for those in the Medicaid space, there was no mention in the CBO’s report of the increase in the Medicaid Drug Rebate Amount for branded or generic drugs, as outlined by the Senate Finance Committee’s white paper issued in late May.[iv]

As of late last week the Senate HELP Committee was looking to draft and submit updated legislation to the CBO for review, in hopes that the updated legislation would bring them closer to the goals originally outlined by the Administration. Until then, it is likely that the introduction of health care reform legislation will meet strong resistance.

Sources:
[i] http://www.cbo.gov/ftpdocs/103xx/doc10310/06-15-KennedyLetter.shtml
[ii] http://kennedy.senate.gov/newsroom/press_release.cfm?id=1D9CB1D9-42F6-4FA0-81A8-00F645381877&type=archive
[iii] http://voices.washingtonpost.com/ezra-klein/2009/06/did_the_congressional_budget_o.html
[iv] http://finance.senate.gov/sitepages/leg/LEG%202009/051809%20Health%20Care%20Description%20of%20Policy%20Options.pdf

Good PR for Pharma

By: Katie Lapins, CIS Director of Small and Mid-Market Pharma
katielapins@cis-partners.com

Two announcements over the last week have contributed to a bit of positive public relations for the pharmaceutical industry.

The first announcement came from Pfizer; the company announced that it has developed a program called “MAINTAIN” (Medicines Assistance for Those who Are in Need) to provide Pfizer drugs to Americans who have lost their jobs since January. Highlights of the program include:

• The program was initiated by employees who saw family members, friends and neighbors losing their jobs.
• Participants must have been taking Pfizer medications for at least 3 months prior to their unemployment.
• There is no prior income restriction.
• The benefit can last for up to 12 months.

The second announcement came this weekend from Pharmaceutical Research and Manufacturers of America (PhRMA) that the industry has agreed to spend $80 billion towards Medicare Part D over the next 10 years to help defray the cost of President Obama's health care reform. With Medicare Part D, there is a gap in the coverage, often referred to as the “doughnut hole,” where participants must pay for the entire cost of their medications. With the new proposal, drug companies would pay half of the cost of brand-name drugs for seniors who are in the doughnut hole phase.

Health care reform has taken a bit of a back-seat to other issues over the last few months, but the general consensus remains that Americans can see significant changes to the health care system in the near future. I think both of these announcements are indicators that change is on the horizon, and the pharma industry is already adapting to the anticipated environment.

More information on both announcements can be found at:
http://www.pfizer.com/news/press_releases/pfizer_press_releases.jsp?rssUrl=http://mediaroom.pfizer.com/portal/site/pfizer/index.jsp?ndmViewId=news_view&ndmConfigId=1016273&newsId=20090514005582&newsLang=en

http://health.yahoo.com/news/ap/us_health_overhaul.html

Specific information on Pfizer’s MAINTAIN program can be found at:
http://media.pfizer.com/files/pfizer_maintain_fact_sheet_051409.pdf

What did you do last year? The District of Columbia and the State of Maine want to know by July 1

By: Judy Fox, CIS Senior Compliance Manager
judyfox@cis-partners.com

On July 1, pharmaceutical manufacturers are required to disclose their expenditures on Healthcare Practitioners (HCPs) to the State of Maine and the District of Columbia (DC). If you haven’t looked at a calendar lately, July 1 is right around the corner. Scrambling for the correct reportable expenditures? The following is a snapshot of the Maine and DC requirements. Are you ready?

In DC, the reporting requirements apply to manufacturers and labelers of prescription drugs dispensed in the District that employ, direct or utilize marketing representatives in the District. Not only is the report due by July 1, but it must be accompanied by a fee to support, and help offset the cost of, the work of the Department. The content of the annual report is to include a report of the value, nature, purpose and recipient of the expenses for marketing prescription drugs in the District that includes:

o All expenses associated with advertising, marketing and direct promotion of prescription drugs through radio, television, magazines, newspapers, direct mail and telephone communications as they pertain to District residents.
o The aggregate cost of all employees or contractors who engage in advertising or promotional activities including all forms of payment to those employees as it pertains to the District, or to the recipients who are residents or are employed in the District.
o All expenses with regard to any licensed Healthcare Provider or person employed by a Healthcare provider in DC including:

• All expenses associated with educational or informational programs, materials, seminars and the remuneration for promoting or participating in the programs, regardless of whether the manufacturer provides the program or materials.
• All expenses associated with food, entertainment, or gifts for more than $25 or anything provided to an HCP for less than market value. 1

Maine requires an annual report that includes the following information as it pertains to marketing activities conducted within the State in a format that provides the value, nature, purpose and recipient of the expense including:

o All expenses associated with advertising, marketing and direct promotion of prescription drugs through radio, television, magazines, newspapers, direct mail and telephone communications as they pertain to residents of Maine. (Expenses associated with advertising for a regional or national market that includes Maine are excluded).
o The following information for all persons or entities licensed to provide healthcare in the state, including anyone employed by a licensed HCP, health plan and benefits managers, pharmacies, hospitals, nursing facilities and clinics:

• All expenses associated with educational or informational programs, materials, seminars and the remuneration for promoting or participating in the programs, regardless of whether the manufacturer provides the program or materials,
• All expenses associated with food, entertainment, gifts valued at more than $25 and anything provided to a healthcare professional for less than market value,
• All expenses associated with trips and travel,
• All expenses associated with product samples, with the exception of samples that are distributed free of charge to patients,
• The aggregate cost of all employees or contractors of the manufacturer or labeler who engage in the advertising or promotional activities, including all forms of payment to the employees. The cost reported must reflect only the portion of payment to employees or contractors that pertains to activities within Maine or to the recipients of the advertising or promotional activities who are residents of or are employed in the State. 2

On the surface, the reporting requirements may seem straightforward; they can be if a manufacturer has been collecting and recording the required information in a manner that flows easily into an annual report. However, more often than not, that is not the case. The various departments and systems used to handle the collection of information can prove to be challenging when relying on the information to flow accurately into a report.

If you aren’t ready yet, it is time to get busy identifying where and how the necessary information is going to be collected into the July 1 report.

1. DC ST § 48-833.02 and § 48-833.03
2. 22 M.R.S.A.§2698-A

Articles of the Week!

Courtesy of Kerri McCutchin, CIS Compliance Associate
kerrimccutchin@cis-partners.com

1) Process Begins to Define “Meaningful Use” of Electronic Health Records
http://www.hhs.gov/news/press/2009pres/06/20090616a.html

2) Watson to Buy Arrow in Global Drug Bid
http://dealbook.blogs.nytimes.com/2009/06/17/watson-to-buy-arrow-in-global-drug-bid/?scp=1&sq=pharmaceutical&st=cse

3) Pharmaceutical Institute Launches New E-Course Focused on Health Policy http://www.redorbit.com/news/health/1707279/pharmaceutical_institute_launches_new_ecourse_focused_on_health_policy/index.html?source=r_health

4) Drug Firms Jockey for Space Online
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/12/AR2009061203230.html

5) Massachusetts Faces Costs of Big Health Care Plan
http://www.nytimes.com/2009/03/16/health/policy/16mass.html
*

The Beginning Constitutes the End – The Importance of an Accurate Class of Trade Schema

By: Tonya M. Brown, CIS Senior Manager
tonyabrown@cis-partners.com

Those of us in the pharmaceutical industry, specific to Government Programs, are aware that Class of Trade is where the story begins. Class of Trade (COT) is the systematic approach to categorizing a manufacturer’s sales transactions based upon the nature of its business. COT is the Alpha, the Commencement, the Birth of a manufacturer’s compliance in calculating statutorily mandated government rebates.

For many years, the Centers for Medicare and Medicaid Services (CMS), formerly the Healthcare Financing Administration, has published vague definitions of the components that should be included and excluded from the various pricing calculations that ensure Best Price is given to government entities. To further complicate the puzzle, the responsibility has been with the manufacturer to define and defend the nature of each facility in its membership repository. If and when a manufacturer is successful in identifying each of its customers by member type and transaction, it must class each facility to make sure any sales and discounts are captured and accurately reported to the government.

Sound simple? Well, this is merely where the story begins… from there the plot thickens. To further complicate the seemingly insurmountable task of classifying your customers, the inability to correctly identify and class sales transactions by facility could, and in some instances does, create erroneous reporting, contract termination and severe penalties.

Examples of Category Discussions:

• Should Third Party Logistics Providers be considered a Class of Trade or should they be included in the Wholesaler category?
• Should Public Health Service be considered a Class of Trade?

If a manufacturer incorrectly classifies any of its sales transactions, it is at risk of inaccurately calculating its Average Manufacturer Price (AMP), Best Price (BP), Average Sales Price (ASP), and Non-Federal Average Manufacturer Price (Non-FAMP). In addition, Public Health Service (PHS) and Federal contract prices could be incorrectly reported as a result of these inaccurate calculations.

The Deficit Reduction Act (DRA), enacted in 2007, makes an attempt to better define these unclear areas; however, each attempt raises additional questions and the possibility of creating additional layers in a manufacturer’s schema. While the debate goes on from one subject matter expert to the next, we can and do all agree that an accurate COT Schema should be the first step in any manufacturer’s line of defense.

It is imperative that manufacturers have current policies and procedures specific to their COT schema. These policies and procedures should be adhered to, and updated as changes in COT operations and government regulations occur. A customized training program should be put into effect to train employees on their roles and responsibilities, to ensure a successful implementation of COT operations.

The debate is not over, but the reality is that COT designations are somewhat subjective, and will continue to evolve as manufacturers enter and exit the playing field.

Please feel free to contact me to share your thoughts, or to ask questions about creating or revising your Class of Trade Schema, at tonyabrown@cis-partners.com.

Paper Compliance Just Isn’t Enough

By: Meredith Taylor, Esq., CIS Senior Compliance Manager

meredithtaylor@cis-partners.com

In order to have an effective Corporate Compliance Program, it is not sufficient to point to a binder full of Policies and Procedures on your Compliance Officer’s desk. This is a common pitfall for many pharmaceutical companies that do not have a robust Corporate Compliance Program and do not have many resources to implement, monitor, and audit the documents. Without a process in place to monitor and audit employees’ compliance with written Policies and Procedures, the documents are nothing more than words on a page, and they certainly do not constitute a Corporate Compliance Program.

Does this sound at all familiar? Imagine that PharmaCo is a small pharmaceutical company with 10 NDCs. The Compliance Officer is also the VP Finance, with no compliance staff to support him. The Compliance Officer, in an attempt to create an effective Compliance Program pursuant to OIG guidelines, decides that Sales and Marketing and Operational Compliance documents must be drafted. He studies the relevant laws, regulations, and guidance documents; conducts interviews and meets with key stakeholders; and begins to draft the documents. After a year of hard work and long hours, PharmaCo has plethora of Corporate Compliance documents! The Compliance Officer follows his new Document Control SOP, finalizes all of the documents, and ensures that they are signed. Over the course of the next few months, the Compliance Officer holds various training sessions for relevant employees, and all the employees sign off on the documents, pursuant to the new Training SOP. A few months pass, and there are some regulatory and company changes that require him to update his documents. He does this, and holds the appropriate training sessions. This pattern goes on for the next two years.

Seems like PharmaCo is in pretty good shape right? Not quite. PharmaCo failed to monitor and audit its employees’ compliance with the terms of its Policies and Procedures. For all the Compliance Officer knows, the sales reps could be distributing sports tickets to doctors, the Marketing Department could be promoting the Grants Program, and employees could be forgetting to retain documents pursuant to the Document Retention Policy. Just having the documents and training the employees on them is not enough; there is no way to know if the employees are compliant without systematically monitoring and auditing their compliance.

Monitoring and auditing may seem synonymous, but I can assure you they are not. Your Company must conduct both on an annual basis in order to maintain an effective Corporate Compliance Program.

Monitoring
Monitoring is defined as ongoing, real-time checks and balances implemented and executed by a functional/operational group to ensure proactive evaluation, identification, and mitigation of risk.
Monitoring is typically performed by the Corporate Compliance Officer. It is his or her responsibility to determine whether employees are complying with established Policies and Procedures, and whether the documents should be revised. Typically, documents are scheduled for monitoring every quarter, but monitoring can also take place on an ad hoc basis when deemed necessary. The Compliance Officer will review those documents to ensure that they still make sense from a compliance standpoint; he may also seek assistance from the legal department. If he feels there is a need to revise a document, it should be put through the Document Control process. Assuming the document is sound, he will interview a few (not many and not randomly selected) employees, pull training records to ensure employees are being trained, review call notes or other documentation (not many and not randomly selected), etc to see if the employees are following the policies and procedures in those documents. If not, the document should be re-reviewed by the Compliance Officer and another member of senior management, and revised if necessary.

The training materials should also be reviewed and revised if necessary to ensure they are in line with the document. Then, training should be held again for relevant employees. This document should be monitored again at least one year later.

Auditing
Auditing is defined as the routine evaluation of the effectiveness of controls and adherence to laws, regulations, and guidance documents as incorporated in Company Policies and Procedures. Audits should be performed by a party who possesses substantive expertise in the subject matter, but is not affiliated with the functional/operational group or task being audited.

Audits typically assume the legal sanctity of the Policies and Procedures, and test criteria is prepared to test compliance against the requirements in the documents.

The process of auditing compliance with the documents begins by selecting a sample size. This typically should be random, but some subjective decision making may be required. Next, a formal communication should go out to all employees in the sample, and to all audit sponsors, to announce the audit. A document request may also be distributed to the sample size. The employees in the sample size are then interviewed, and may be asked to perform a task. The auditors may then perform the same task, using the Policy and/or Procedure document as a guide, to ascertain if the same result is found. Testing criteria against the Policy and Procedure is typically developed and completed during a review of any documentation. A final Audit Report is prepared with a section for Management Reponses. The key stakeholders have an opportunity to respond and remediate.

Here is a summary chart (courtesy of Clarissa Crain, CIS Compliance Director) to decipher between Monitoring and Auditing:


I cannot stress enough how important it is to systematically monitor and audit compliance with your Policies and Procedures. If the Government ever audits your compliance in this area, it will want to know whether your documents are actually implemented and whether employees are truly complying with them.

Fourth Waver Sighting!

Courtesy of CIS Founding Partner Toni Barsh

tonibarsh@cis-partners.com

Dear Readers,

In the past, Pharma Compliance Blog creator Steven Moore has opined on the legend of the mythical "Fourth Waver" (The Infamous Fourth Wave: The Sasquatch of the GP Compliance World). In spinning his tale, "The Steven" speculated about what these Fourth Wavers might do, IF they existed:

"They would go on stage and play drums and make a dueling piano bar whole. They would get up on tables around town and shake things that shouldn’t necessarily be shaken... They would form circles and have an individual GP dance competition... They would declare that their main goal would be to become the Director of Beer or Director of Goose for a fine establishment..."

These are all amazing, if hypothetical, acts. However, I think Steve may have overlooked one major tenet of Fourth Wavedom: a Fourth Waver would leap onto the stage and dance the crocodile dance to celebrate a birthday, even if it wasn't his (or her) own. Said Fourth Waver would so impress the crowd with his dance moves, that he would be allowed back on stage by popular demand, even after having been kicked off.

Again, this has all been hypothetical behavior... that is until now. Because at the recent CBI conference, a Fourth Waver was sighted committing exactly the kind of acts described above! And CIS captured him on film!

I know that I am breaking the first rule of Fourth Wave (do not talk about Fourth Wave), but we at CIS strive to always keep you informed of breaking developments in the GP space, and I feel I would be remiss in my duties if I did not bring this to your attention.

So without further ado, please head into the weekend with a smile on your face, knowing that you have also seen the mythical FOURTH WAVER!

Photo courtesy of Karin Moore (no relation). Thanks Karin!

Connecticut’s Representatives have Universal Healthcare on Their Minds

By: Amanda Zanetti, CIS Compliance Associate
amandazanetti@cis-partners.com

On May 20th, 2009 Connecticut’s House of Representatives passed two plans that have the potential to dramatically change the state’s healthcare system. “SustiNet (H.B. 6600) would make a new public health insurance choice available to individuals and businesses. The Health Care partnership (H.B. 6582) would open the state employee health insurance plan to municipalities, nonprofits and small employers.”[i]

According to The Hartford Courant, the SustiNet plan is “aimed at achieving universal health care in Connecticut by creating a public insurance pool that anyone could join regardless of their health history.”[ii] While private insurance plans would still exist, this new public insurance pool would create competition between the two. The proposals passed with flying colors through the House (107-35); however, they still have to go through the Senate and Republican Governor M. Jodi Rell.

So what may have caused these proposals to come into play? The New Britain Herald writes, “In Connecticut, the state and most metropolitan areas are considered “highly concentrated” under U.S. Department of Justice guidelines. Consolidation of this kind means an insurer can, without fear of consequences, raise premiums and/or reduce the variety of plans or quality of services offered to customers.” [iii]

This new insurance pool would give residents of Connecticut more options and more freedom when it comes to their insurance plans. In addition, if this proposal is passed, it may slow the rapid increase in health insurance premiums that has occurred all over Connecticut in the past ten years. However, if Connecticut does adopt universal health care, it may be taking on a whole new kind of problem.

For the past two years, Massachusetts has required most of its “residents to have health insurance and provides state-subsidized plans for the poor.”[iv] While the state has the lowest percentage of uninsured residents (2.6%), it has different issues as well. For example, many doctors in Massachusetts are not accepting new patients, or won’t see patients with certain types of insurance, and “rejection rates for low-income adults and those with public insurance were double the rates for higher-income residents and those with private coverage.”[v] This is just one example of the dangers of healthcare reform, but Connecticut’s government may want to proceed with caution when it comes to universal healthcare.

Sources:
[i] http://www.newbritainherald.com/articles/2009/05/25/news/doc4a1b4890543e0170209587.txt
[ii] http://www.chicagotribune.com/topic/hc-2universal-health-care0521.artmay21,0,6516996.story
[iii] http://www.newbritainherald.com/articles/2009/05/25/news/doc4a1b4890543e0170209587.txt
[iv] http://www.nytimes.com/2009/05/28/health/policy/28massachusetts.html?_r=1&ref=health
[v] http://www.nytimes.com/2009/05/28/health/policy/28massachusetts.html?_r=1&ref=health

If You Can’t Take the HEAT…

By: John Avicolli, CIS Senior Compliance Associate
johnavicolli@cis-partners.com

Fact – “Three HealthEast Care System hospitals have agreed to pay the United States $2.28 million to settle allegations that the health care facilities submitted false claims to Medicare.”[1]

Fact – “Regency Nursing and Rehabilitation Centers Inc. nursing home chain will pay the United States $4 million to settle allegations that Regency submitted false claims to Medicare and the Texas Medicaid program.”[2]

Fact – “Executives and employees at WellCare Health Plans Inc. engaged in an elaborate scheme to defraud the Florida Medicaid program and the Florida Healthy Kids Corporation. In order to avoid a health care fraud conviction on these charges WellCare must, among other things, consent to the civil forfeiture of $40,000,000 and pay an additional $40,000,000 in restitution to the Florida Medicaid and Healthy Kids programs to repay proceeds from those programs to which WellCare was not entitled.”[3]

Medicare fraud cases cost taxpayers billions of dollars. Fraud scams run the gamut from phantom billing, performing unnecessary procedures, and providing substandard care then seeking Medicare reimbursement, to offering free services in exchange for Medicare or Medicaid number. These instances illustrate a few of the devious ways health care fraud perpetrators are stealing billions of dollars from the federal government and, ultimately, crippling the long term solvency of the Medicare and Medicaid programs.

In an effort to combat the mounting number of fraud cases, Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius recently announced the creation of a new interagency effort, the Heath Care Fraud Prevention and Enforcement Action Team, which will be known as “HEAT.” Additionally, they announced the expansion of Medicare Fraud Strike Force (MFSF) team operations, already being run in Los Angeles and South Florida, to Detroit and Houston. The MFSF team in South Florida with enjoyed measured results; it has already convicted 146 defendants and secured $186 million in criminal fines and civil recoveries.

“The HEAT team will include senior officials from the Department of Justice (DOJ) and HHS who will build upon and strengthen existing programs to combat fraud while also investing new resources and technology to prevent fraud, waste and abuse before it happens,” reported HHS.[4] HEAT and MFSF utilize a “data-driven” approach to identify unexplainable billing patterns with respect to investigating fraudulent activity. Part of this data driven approach is steeped in examining claims and identifying facilities that appear to be producing more claims than would be expected, given the demographic makeup of a surrounding area.

Although recouping millions of dollars in fraudulent billings is a primary concern for HEAT, there is a significant emphasis placed on prevention and ensuring front end compliance within the system. HEAT is committed to “improving data sharing between the Centers for Medicare & Medicaid Services and law enforcement so additional patterns that lead to fraud can be exposed,” “strengthening program integrity activities to monitor and ensure compliance,” and “increasing training for providers on Medicare compliance and supplying the knowledge and resources for providers to identify and prevent fraud.”[5]

Sources:
[1] http://www.usdoj.gov/opa/pr/2009/May/09-civ-497.html
[2] http://www.usdoj.gov/opa/pr/2009/May/09-civ-498.html
[3] http://medicare-fraud.net
[4] http://www.hhs.gov/news/press/2009pres/05/20090520a.html
[5] http://www.hhs.gov/news/press/2009pres/05/20090520a.html

Health Care Reform – Forging Ahead

By: Grete Dudek, CIS Compliance Associate
gretedudek@cis-partners.com

With Congress in session, it seems like every day there are new reports in the news of discussions and agreements taking place over what changes to make to the country’s health care system. The reports range from insurers and employers being able to reward people for healthy behavior, the idea of taxing people with costly health insurance to fund insurance for those who are currently without, and healthcare providers agreeing to cut healthcare costs.

Although President Obama is urging Congress to enact health care reforms before the end of 2009, it might not be until the next session of Congress that any changes start to occur. The one thing that everyone seems to agree on is that the current system isn’t doing enough for enough people. But what is the best course forward? With Medicare “expected to run out of money in 2017, two years sooner than projected last year1,” and healthcare costs projected to rise at 6.2 percent a year2, President Obama is calling on industry leaders to commit to slowing the increase. Industry leaders wrote President Obama a letter last month, expressing their commitment to slowing the increase of healthcare costs.

“The letter was signed by executives of the Advanced Medical Technology Association, a lobby for medical device manufacturers; the American Hospital Association; the American Medical Association; America’s Health Insurance Plans, a trade group for insurers; the Pharmaceutical Research and Manufacturers of America; and the Service Employees International Union2.” They committed to reducing over-use and under-use of health care, reducing hospitalization, and better management of chronic diseases.

The letter also acknowledges that there are “factors driving health care costs that are beyond the control of the delivery system alone,” and specifically mentions focusing on obesity prevention as one way to fight rising costs. This could be done by employers, since “Congress is planning to give employers sweeping new authority to reward employees for healthy behavior, including better diet, more exercise, weight loss and smoking cessation4.” President Obama’s plan for a healthy America, which is committed to lowering health care costs and providing health care for all, and the current financial situation make this the perfect time for change, but it will take some time before anyone knows for certain what those changes will be.

Sources:
1. http://www.nytimes.com/2009/05/13/us/politics/13health.html
2. http://www.nytimes.com/2009/05/11/health/policy/11drug.html
3. http://graphics8.nytimes.com/packages/pdf/politics/20090511_HealthGroups_Letter.pdf
4. http://www.nytimes.com/2009/05/10/health/policy/10health.html

A Transcript of my CBI Cocktail Hour Speech On Dreams

By: Steven Moore, CIS Director of Business Development

stevenmoore@cis-partners.com

In thinking about how I wanted to recap this past CBI Medicaid conference --- which was littered with good times, good laughs, great food, friends and, of course, Diet Cokes --- I realized that some of my favorite friends were not present this year. I know with the economy the way it is, and budgets being tight, that a conference may be sacrificed here or there. I wanted you to know that you were all missed and I thought it would be a nice idea to make you ‘feel’ as if you were there. In addition, I wanted to get this out there for those who were sleeping or had already ducked out of the conference at this time (or were already at the bar).

Therefore, I decided to provide a transcription of my cocktail hour speech about dreams. It was in PowerPoint with magic wands and movement (Yes, CIS pays me for this), so some of it will be lost, but I think the pictures should give you the gist.

Here’s to hoping I’ll see y’all at the next conference - especially IIR in September in the beautiful Windy City! (I’m an equal opportunity conference sponsor sponsor - Welcome to the Department of Redundancy Department.)

“Hello, my name is Steven Moore and I’m a proud member of the Compliance Implementation Services (better known as CIS) team.

This is a speech about dreams. It’s about picturing what you want and doing everything you need to do to get it.

Before I get started, I’m going to lay out the golden rule for this speech. I realize that I am, in fact, the last person standing between you and that first drink --- notice I said first. Therefore, I will do everything I can to keep this brief. If anyone knows me well enough, they'll also know that I'm standing between myself as well.

So, as we think about dreams, let’s start with this young man. Any thoughts out there? This young man dreamed of playing professional baseball --- but his dream was way more specific. He dreamed of being the best player and the captain of the greatest sports franchise this earth has ever seen - the New York Yankees. Of course, I’m talking about Derek Jeter. He is the Yankee captain, has won four world series titles, and has more hits than any player in baseball in the last 10 years (and- I don’t think - he does steroids like ex-Boston Red Sox like Manny Ramirez).

Since Derek realized his dream, I thought, in the spirit of Disney, that we’d make another dream come true. Ladies and gents, allow me to present CIS’ Chris Cobourn. (I do have copies of my resume handy --- as most of you know Chris is a die hard Red Sox fan)

Next there is this little fella. Any thoughts? He dreamed big. He dreamed of shattering every golfing record there is and he’s well on his way. Of course, I’m talking about none other than Tiger Woods. He is the winner of 14 major championships and over a hundred tournaments worldwide. He’s also well on his way to becoming the first “billion dollar athlete.”

Again, since Tiger realized his dream, let’s grant one more wish for CIS’ newest kid on the block: Bill Baxter.

Finally, there is this young man. His dreams were a bit different and a bit larger than the others. He was a bit awkward and people had trouble understanding why he called his mother’s father AMPa. He dreamed of the legends in the industry.

I’m proud to say that this young man is Me. Steven Moore. A proud GP Geek.

Finally, I will not make this a commercial, but will tell you that I couldn’t imagine a better place to work or a better group of people. I encourage you to stop by our booth and introduce yourself.

We’ve had a great year at CIS and, as a thank you to those who have helped make it happen and those who will help us come back even stronger next year, the drinks are on CIS tonight. Thank you.”

New Draft Guidance on Presentation of Risk Information

By: Chris Didizian, CIS Senior Associate
chrisdidizian@cis-partners.com

Preface: Based on the title you may already know the contents of this blog entry, but it must be said that the following is not a full summary of the guidance. For the full document (and it is worth the read!) please click here.

On May 26, 2009 the FDA issued a draft guidance titled Presenting Risk Information in Promotion. In the past, manufacturers relied on Warning and Untitled Letters to determine the most current “focus” areas regarding promotional materials. In other words, it is safe to say that manufacturers often had to “guess” whether a promotional piece would be approved or not. While the actual process is more complicated than that, the lack of guidance was costing companies a significant amount of money, and forcing them to incessantly request some sort of direction in an effort to save money and remain compliant. This absence of this type of guidance for the past few years begs the question: how consistent is the FDA in assessing the accuracy/completeness of a promotional piece without “standard” guidelines? Undoubtedly, the draft is a step in the right direction toward providing the manufacturer with specific guidelines and ensuring a sense of consistency in the approval process. But is the guidance comprehensive?

The twenty-seven page draft details exactly the level of information (and even formatting) that will be approved, while also highlighting the standard for reviewing advertisements. This “reasonable consumer standard” maintains efforts to protect the safety of the consumer by providing the appropriate information in an educational manner. However, while much of the guide is useful, it fails to address unique technical issues concerning the Internet, which houses a significant amount of promotional material. These situations are unique because, for example, information that appears on one browser/computer may not show on another browser/computer. It goes without saying that there are a number of problems with the previous example, but to find a solution the agency will have to delve deep into this advertising technology, so it is understandable that this guidance does not yet address that type of issue.

As stated, the guidance is just a step in the right direction. By not addressing the technical issues for advertising via the internet, the FDA is leaving out a huge area of advertising/promotion. In any event, the guidance will be far more useful to manufacturers than reading warning and untitled letters in order to figure out a standard for what to (and not to) advertise.
*

The Promoting Innovation and Access to Life-Saving Medicine Act

By: Scott Hoffman, CIS Associate
scotthoffman@cis-partners.com

As I am sure everyone reading this is aware, one of the key goals of the Obama administration is to bring affordable healthcare to all Americans, and the administration is currently working on a variety of initiatives to ensure that goal comes to fruition. One of the initiatives being brought to the floor is the “Promoting Innovation and Access to Life-Saving Medicine Act,” which is sponsored by Representatives Henry Waxman, Frank Pallone, Nathan Deal, and Jo Ann Emerson. The overall goal of this bipartisan act is to allow the Food and Drug Administration (FDA) to approve affordable copies of biotech drugs, as the FDA currently lacks clear authority to approve generic versions of these products, allowing companies to charge monopoly prices even after all patents have expired [1]. Rep. Deal stated,

While biologics are highly effective medications in the treatment of a host of
debilitating and life-threatening medical conditions, biologic drugs often cost
on average 22 times more per daily dose than chemical medications, the most
expensive of which costs well over $100,000 per year. It is expected
approximately 50% of all drugs approved in 2010 will be a biopharmaceutical, a
projection which only underscores the need for this legislation as the strain on
state and federal governments grows [1].

Under the current rules, biotech producers are able to make minor structural changes to their existing patented products, allowing them to obtain additional periods of exclusivity, which in turn allow the producers to continue to charge “monopoly prices” [1]. This process, referred to as evergreening, is addressed in this act by allowing generic manufacturers to produce “biosimiliar” products. A biosimiliar product is considered to have no clinically meaningful difference between the biological product and the original product in terms of the safety, purity, and potency [2]. However, in order for the FDA to approve a biosimiliar product, the application must demonstrate the following:

• The product is highly similar in structure to the original product;
• No clinically meaningful differences between the products are expected;
• The two products have the same mechanism of action, if known;
• The proposed product label carries one or more of the approved indications for the original product;
• The route of administration, dosage form, and strength, are the same as the original product; and
• The controls used in manufacturing the product are adequate to assure identity, strength, quality, and purity [2].

The act contains an additional stipulation for FDA approval of a biosimiliar drug; it must also be interchangeable, which means the risk of switching the patient one or more times between the original product and the biological product can be expected to be not significantly greater, in terms of safety or diminished effectiveness, than the risk of continuing to use the original product without such switching [2]. In order to prevent delays in the FDA approval of biosimiliar products, the act stipulates that the FDA must approve or disapprove the application for a comparable biological product within ten months after submission, or 180 days after the application is accepted for filing by the FDA, whichever is earlier, unless the final action date is extended by joint agreement of the applicant and the FDA [2].

Currently, the bill has a wide range of support from consumer groups, businesses, unions, patient groups and payers. Additionally, there is an expected companion Senate bipartisan bill being introduced by Senators Chuck Schumer, Susan Collins, Sherrod Brown, and David Vitter [1]. As this bill comes to vote on the floor it will be interesting to see how both the House and the Senate vote, as this legislation could set a framework for future bills on generic chemical drugs, as well as potential stem cell based drugs, in the future.

Sources:
[1] http://energycommerce.house.gov/index.php?option=com_content&task=view&id=1528&Itemid=1
[2] http://energycommerce.house.gov/Press_111/20090311/hr1427_detailedsummary.pdf

Final Rule for Over-the Counter Pain Relievers and Fever Reducers

By: Amanda Zanetti, CIS Compliance Associate
amandazanetti@cis-partners.com

Manufacturers of over-the-counter pain relievers and fever reducers may need to revise their labeling practices within the next year, due to the April 28th Final Rule[i] issued by the Food and Drug Administration requiring manufacturers to prominently display active ingredients and include warnings of potential safety risks associated with taking pain relievers and fever reducers.[ii] According to Matthew Holman, the FDA's Deputy Director for the Division of Nonprescription Regulation Development, those at the FDA “believe the new labeling requirements will add information concerning severe adverse effects of over-the-counter pain relievers and fever reducers that many consumers may not be aware of.”[iii]

The final rule targets acetaminophen, which is found in brands like Tylenol, and nonsteroidal anti-inflammatory drugs, which include aspirin, ibuprofen, naproxen, and ketoprofen. Products containing acetaminophen and NSAIDS must warn customers of the potential risks which include stomach bleeding (NSAIDs) and severe liver damage (acetaminophen). In addition, manufacturers must include a warning on products containing acetaminophen, instructing consumers to ask a doctor before taking the blood thinning drug Warfarin.[iv]

So how is this rule going to impact pharma companies? To start, while some manufacturers have taken the initiative to voluntarily change labeling to include safety warnings for their products, in most cases, these new labels do not address all of the requirements issued in the FDA’s new rule. This means that within the next year, manufacturers are going to have to revise their current labels, costing them considerable time and money. In addition, the new warning labels have the potential (which I feel is unlikely but still, it could happen) to deter potential consumers. For some, the safety warning may cause consumers to shy away and choose a more natural substitute.

Sources:
[i] http://edocket.access.gpo.gov/2009/pdf/E9-9684.pdf

[ii] http://www.fiercepharma.com/story/fda-requires-stronger-otc-pain-med-labels/2009-04-28
[iii] http://www.reuters.com/article/healthNews/idUSTRE53R4Z020090428
[iv] http://www.fda.gov/bbs/topics/NEWS/2009/NEW02004.html