AHLA's Speaking of Health Law

Fraud and Abuse: Takeaways from Recent Fraud Settlements Involving Patient Assistance Programs

February 11, 2020 AHLA Podcasts
AHLA's Speaking of Health Law
Fraud and Abuse: Takeaways from Recent Fraud Settlements Involving Patient Assistance Programs
Show Notes Transcript

In this episode of our monthly series on fraud and abuse issues, Matthew Wetzel, Senior Counsel, Akin Gump Strauss Hauer & Feld LLP and Kevin Raphael, Partner, Pietragallo Gordon Alfano Bosick & Raspanti LLP talked about several recent settlements involving Patient Assistance Programs. The speakers discuss practical takeaways from the settlements, and why the government has made PAPs an enforcement priority. The podcast is moderated by Shana Goetz, Director, Marketing and Business Development, BRG. From AHLA's Fraud and Abuse Practice Group. Sponsored by BRG.

To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.

Speaker 1:

The following message and support for A H L A is provided by Berkeley Research Group, a global consulting firm that helps organizations advance in the areas of disputes and investigations, corporate finance and strategy and operations. B R G helps clients stay ahead of what's next. For more information, visit think brg.com.

Speaker 2:

Welcome everyone to the second edition of the a HLA Fraud and Abuse Practice Group podcast. My name is Shawn Gates, and along with my co-host Matt Weszel and Kevin Rayfield, we will provide you with a monthly update on hot topics and key stories about the most pressing healthcare fraud and abuse issues in the United States. Each month, we will discuss trends in enforcement, critical updates in the law, and other important topics, and we will provide you with core insights on critical issues and how the government enforces the fraud and abuse laws, potential legislations that could impact how healthcare companies operate in regulatory developments that may have an impact on your business or your client's businesses. We also hope to share with you practical considerations for companies seeking to comply with the law. Before we start our second podcast today, I'd like to start with introductions again. I'm Shauna Gates, director of Business Development for the Healthcare Disputes and Investigations and compliance team at brg. On behalf of B r g, would like to thank Kevin, Matt, and the A H L A for the opportunity to sponsor and support this podcast initiative. My co-presenter, Matt Wetzel, served as vice chair for educational programming for the American Health Lawyers Association's practice group. He recently left private practice in DC to join Diagnostic Testing Company Grail as associate general Counsel and compliance officer. He's now based in Silicon Valley, and he told me today he just completed the CrossCountry Drive from DC to Palo Alto on Monday. So, congratulations, Matt, on this new, an exciting chapter,<laugh> Kevin Rayfield in the Philadelphia. You're welcome. Kevin Rayfield is a partner in the Philadelphia office of Peto Gordon Elano. Bosek, Andi. For over two decades, Kevin has represented hospitals, licensed providers, home healthcare agencies, and other healthcare entities and commercial litigation, government investigations and enforcement actions, false claims act investigations and litigation, internal investigations and private and government payer overpayment demand. Kevin also works with corporations and entities in other industries, including food and drug and higher education. Kevin also serve as an adjunct professor of health law and rights, and speaks extensively on healthcare and white collar matters. Kevin, I'll turn it over to you now to lead our discussion today about enforcement and recent settlement and re related to patient assistance program.

Speaker 3:

Thank you, Shauna and Matt, thanks for joining us today. Congratulations. Well, thank you very much. I appreciate it. So, Matt, I wanted to ask you today about patient assistant programs, and just to start, um, there have been several settlements recently regarding patient assistance programs. Can you briefly describe what a PAP is and why the government has made them an enforcement priority over the past several years?

Speaker 4:

Sure, absolutely. Thanks so much, Kevin, and thanks Shauna for the really great introduction. I'm happy to be here for a second, second month in a row, and hopefully, uh, many more to come. But, uh, to answer your question, so patient assistance programs and patient, uh, advocacy groups, patient assistance funds, uh, we, you know, these are the types of entities that we're gonna be talking about today for a little bit. And for those of you who are unfamiliar, these are really nonprofit organizations set up to provide education for patients on different disease states and treatments. Oftentimes very specialized. And, you know, many of these groups can also advocate before regulatory bodies and medical groups on behalf of patients who are suffering from or afflicted with specific disease states or conditions. Others might provide, excuse me, some sort of financial support for patients in need, whether that's covering a portion of the patient's insurance, copay or premium are providing other financial support to cover things like, uh, in-home care or transportation costs. And, you know, really, I think, uh, uh, as we think about, uh, why the government has made this an enforcement priority or an area of increased interest, you know, what you have at issue here are vulnerable and oftentimes financially needy patients who are, uh, uh, uh, frequently Medicare beneficiaries, uh, or beneficiaries of government programs who may have a specialized or narrow disease state that has a significantly expensive treatment or cost associated with it. And, uh, the government, uh, itself has provided, uh, guidelines and rules, restrictions for how industry drug makers, device makers, et cetera, can interact with these as, uh, these organizations, these associations, uh, uh, primarily because of that, uh, vulnerable patient population and the increased risk for, uh, potential kickbacks.

Speaker 3:

Right. So, as I understand it, the, the big concern about the PAP is it allows pharmaceutical companies or device manufacturers to, um, use charitable PAs to, uh, pay for copays, which then allows the bill, the companies to bill Medicare for the remainder of the high cost treatments. Is that, is that fair summary?

Speaker 4:

I think that's a, I think that's an accurate overview of the risk that the government sees with this area.

Speaker 3:

Right. And it seems that since 2017 or so, there have been a number of settlements that have been announced regarding, uh, patient assistance programs. Uh, could you just describe briefly the settlements that have come out in the last several years and the takeaways for, uh, PAP and pharmaceutical companies from those settlements?

Speaker 4:

Absolutely. And, and, uh, your assessment is spot on, Kevin. So, uh, even just, uh, as recently as a few weeks ago, at the end of January, 2020, uh, there was a patient, uh, uh, fund or group called Patient Services Inc. Uh, that agreed to pay 3 million to DOJ to settle allegations that it had funneled, uh, illegal kickbacks from pharmaceutical companies to patients. Uh, that, uh, patient Services Inc's website describes itself as a nonprofit organization that provides financial support and guidance for qualified patients with specific and rare chronic diseases. And in short, the organization provides premium and co-pay assistance and other types of, uh, financial support and in-kind support for vulnerable, uh, patients. What the government had alleged here was that patient services operated as a vehicle for drug company kickbacks. In other words, um, the nonprofit coordinated with, uh, uh, and DOJ alleges three drug companies here, isis, Gerian and Alexian, to enable them to pay for Medicare patients copays associated with their drugs, which we know is impermissible coming out of oig, advisory Opinion, special, uh, fraud alerts, bulletins, et cetera. And according to the government, uh, what Patient Services Inc did or alleged to have done is alleged to have done, is to design and operate certain, uh, funds with these companies that were designated specifically to cover costs associated with patients taking these companies specific drugs. So this minimized the chance for the company's contributions to go towards patient treatment or patient costs associated with competitor's drugs, but simultaneously, it undermined the contribution status as bonafide donations. So this is really the latest in the Anti-Kickback statute in False Claims Act enforcement in the area. But even, uh, just a few months ago, October, 2019, we see the Patient Access Network Foundation agreed to a 4 million settlement with c OJ for very similar allegations here, that it paid kickbacks to Medicare patients, um, who were purchasing specific medications. Similarly, a patient group called Good Days, formerly known as the Chronic Disease Fund, settled very similar allegations for 2 million. And in both instances, um, the government alleged the same type of, uh, conspiracy or, or conspiring with drug makers to funnel kickbacks. Here DOJ alleged that Good Days had worked with Novartis, dendrion, uh, Astellas, Onyx, and questor, and, uh, the, uh, patient Assistance or Patient Access Network Foundation rather, uh, had worked with, uh, Bayer, Estella, DDR and Amgen. Now, interestingly, and and I, I learned this as I was researching or doing a little bit of research for the podcast today, um, both of these organizations were included on a list in 2019 of the largest 100 charities in the United States with, uh, PEMF reporting revenues of 540 million, ranking it as number 38 on that list. Uh, and Good Days is number 89 with a revenue of 240 million. So, in other words, we're talking about organizations that have some serious firepower and deep pockets when it comes to the ability to assist patients. And the government viewed its interactions with drug manufacturers, specifically the ones that I referenced as being a little too, uh, close and a little too focused on driving those patients towards, uh, the donors, uh, products. So both of these organizations entered three year corporate integrity agreements with, uh, oig, and they require them to implement measures designed to ensure that they operate independently, their arrangements and interactions with manufacturers and other donors comply with the effect statute. And, you know, in short, that they have the right firewalls in place between the donations that they receive and the support that they provide to vulnerable patients.

Speaker 3:

And Matt, you, you've discussed some settlements with the PAs themselves. Are there similar settlements, uh, uh, records of settlements with the pharmaceutical companies who are donating the money to the PAs?

Speaker 4:

Yes, absolutely. Great question, Kevin. Thank you. So, uh, in, uh, early 2019, we saw several, uh, settlements with drug companies here, uh, jazz Pharmaceuticals, Lundbeck and Alexion, uh, and these three in early 2019 agreed to pay a total of 122.6 million to resolve these sorts of allegations, uh, essentially that they have paid, uh, copays for their drugs through the copay assistance foundations. Here, jazz and Lundbeck, uh, also entered five-year corporate integrity, corporate integrity agreements that require controls that monitor and promote independence, uh, from patient assistance programs. Essentially, the companies need to put together internal controls that firewall, commercial operations from charitable giving, uh, and patient assistance and support, and also to relinquish all control over their independent third party patient group's use of independent contributions. In other words, uh, they, they can't have their hands on the funds once they, uh, once they, uh, uh, provide them to the, uh, patient assistance funds. And, and these requirements in the CIAs really do line up with the corporate integrity agreements for the, uh, the, uh, patient assistance funds themselves. So in those CIAs, what you'll see is a requirement to comply with all OIG req all, all OIG guidance on patient assistance programs. Specifically citing, uh, and this might be of note for those of you listening, uh, special advisory bulletins issued, uh, in November, 2005 and later updated in May, 2014. Uh, the fact that they're referenced in the corporate integrity agreements are a real, uh, serves as a real signal, uh, to, uh, to groups paying attention to this issue that those might be some special advisory bulletins, uh, to read and understand. Uh, uh, the CIAs also require, uh, autonomy over the creation and establishments of establishment of funds, patient disease funds, including use of donor contributions, uh, the funds, um, uh, under these corporate integrity agreements can't limit support to high cost and specialty drugs only. Uh, in other words, the fund has to support all drugs that FDA has approved for treatment of the specific disease state, or even a broader band of treatment. It just can't be a narrower band of treatment than what FDA has approved. Uh, in addition, uh, funds can't, uh, provide donors with a link or information or data that would correlate the use of contributions to the use of donor product. And funds have to assist all eligible, uh, financially needy patients on a first come first serve basis, uh, with a uniform process for screening those patients. In other words, preference can't be given to those patients that might already be on a particular donor's drug or might, uh, better qualify for a particular donor's drug. In other words, leaving the, uh, leaving the, um, the medical decision making to, uh, the physician. Um, you know, in addition to, uh, the, uh, May, 2014 and November 25th, 2005, special advisory bulletin, I'd also point readers to, um, a favorable advisory opinion that Patient Services Inc had received in 2002, and that was later modified by OIG in 2017. And this advisory opinion really creates, um, the similar restrictions or establishes similar restrictions on how the charity can, uh, create and operate it funds, as we see in the corporate integrity agreement. So as you review all of the related, uh, legal documents associated with this issue, you'll see some very common themes about establishing clear bright line rules between donor involvement, uh, and, uh, fund selection of patients, uh, as well as screening requirements for patients, uh, and, and, and the need to for, um, for donors to be really quite hands off, uh, once they've decided to make a charitable contribution.

Speaker 3:

So it seems to me one of the big takeaways is that you, the charities can't share information with the donors about which of the patients they helped use that particular donors, uh, pharmaceuticals. Um, is there also a, a sense that the charities need to, uh, ensure that they're donating money to a wide variety of patients with that same disease state to use a wide variety of drugs or cures? Uh, yes,

Speaker 4:

That's, that's correct. In other words, uh, the fund itself needs to support a broad range of treatment. In fact, if you are a patient that has, uh, or is afflicted with a particular disease, state or condition, and if FDA has approved, let's say, and, and this is entirely hypothetical here, but let's say FDA has approved, uh, 10 drugs, uh, to treat that condition, uh, uh, the fund must support all 10 drugs, uh, and copays associated with those drugs, not just one or two of those approved treatments that might be offered by, uh, a donor or contributor to the fund.

Speaker 3:

So that raises interesting point. If there's only one FDA-approved drug for a particular disease state, does that preclude, uh, p a p from forming to assist those patients?

Speaker 4:

I don't believe so. I, I, you know, I, I, I think I, I, I, uh, I'd point to the corporate Integrity Agreement requirements and the requirements of the special advisory bulletin to demonstrate that the, you know, the real que the real key requirements here are that once a donor has provided funds, it has to be hands off, uh, that the fund itself is, is selecting patients who would benefit, is establishing the funds and operating the funds independently and autonomously from those donors. Uh, and, um, and so, uh, while I don't think that would necessarily preclude it, I think it just really emphasizes the fact that funds in those positions would need to, uh, ensure that their controls are, uh, short up, uh, uh, solidly and, uh, are applied consistently across the board.

Speaker 3:

Great. And I guess the last question I have for you today, Matt, then, is, uh, do you see or foresee that the PAP will remain an enforcement priority in the, in the, uh, going forward?

Speaker 4:

I do, and I think on a couple of different fronts. So, um, there have been several attempts at regulatory oversight of patient advocacy and support groups relationships with industry. Uh, in 2011, Senator Grassley, uh, and later in, uh, 2008, Senator McCaskill, uh, sought to apply certain transparency requirements to these groups. For example, in 2011, Grassley uh, uh, requested that key patient support and even medical advocacy groups, um, provide information on donations and contributions from drug makers. Uh, if, if, uh, many of you might recall that, uh, you know, 10 years ago or so, uh, there was a, a couple of years where Senator Grassley had sent, uh, and, and Senator BAAs had sent, uh, several requests on, uh, information about industry relationships. Uh, and that converted later into the Sunshine Act, as we all know. Um, and McCaskill in 2018 sought to revise the Sunshine Act to require industry disclosure of donations to patient assistance groups and even medical specialty societies. That effort was unsuccessful. Uh, but I think that, uh, it demonstrates that, uh, lawmakers do have an interest in the area. Uh, I think that if, you know, if, if we're thinking about some sort of practical takeaways, uh, uh, uh, from this issue, it will continue to be an area of focus. Uh, and, and I think it, it, it will, it will even become even more so as we look at creative value-based solutions and value-based collaborations among different providers in the industry. But if you represent a medical products company, you should be aware of the Tick Back and False Claims Act risks associated with these groups. And, and, and, and, and don't be fooled into thinking that healthcare fraud can't be facilitated by non-profit organizations focused, uh, uh, ostensibly on patient rights, treatment and care. And, uh, and, and, and just be sure to have doesn't important internal controls in place. And then, of course, if you represent patient advocacy groups or patient support groups, you should establish those clear compliance protocols and controls for how you handle donations, how you solicit donations, uh, and be careful to eliminate bias or sway one way or the other. And then, of course, keep the organization's non-profit and patient driven mission at the center of operations, and I think they'll, that, that you'll be in good shape. But yes, I, I do envision this as being a continuing area of interest, not only for the government, but for the fraud and Abuse practice group.

Speaker 3:

And Matt, finally, with the bilateral support for, uh, legislation to reduce prescription drug costs, um, and the concept that that's a priority in the coming year or two, do you see that that legislation will have any impact on regulating, uh, patient assistance programs?

Speaker 4:

Uh, I think it certainly could, especially as, uh, regulation of drug pricing, uh, requires drug manufacturers, pharmacy benefits managers, uh, pharmacists, uh, providers, you know, everyone's sort of in that chain of care to really reassess how they price and establish the value of different, uh, drug products and related services that certainly could have an impact on a specific patient's copay or premium or, uh, or other type of, uh, payment needs. And so, uh, so it certainly could have an impact. I think it remains to be seen at this point, but, uh, all the more reason to, uh, keep the issue on, on everybody's radar screen.

Speaker 3:

Well, Matt, thank you very much for sharing your insights with us today, and we wish you all the best luck and success in your new position. And on behalf of Matt and I and the HLA Shauna, and we would like to thank you and b r g for your continued support of these podcasts.

Speaker 2:

It's our pleasure. Thank you. And thank you to our listeners. Please stay tuned for next month's podcast for questions. Please access the group.