Seventh Circuit Court of Appeals Declines Kmart’s Bid to Toss False Claims Act Suit

PS 3 Indest-2009-2By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

On May 27, 2016, the U.S. Seventh Circuit Court of Appeals rejected Kmart Corporation’s arguments in a False Claims Act (FCA) suit in Illinois. The court ruled against Kmart in the whistleblower action.  Kmart was arguing that the prices it charged through its generic drug discount programs should not be counted in determining what its “usual and customary” prices were for purposes of Medicare Part D reimbursement.

What is the “General Public?”

The appeals court in this case held that the “general public” included customers in its discount programs, which were not selective and had “almost nonexistent” barriers to join.

“Regulations related to ‘usual and customary’ price should be read to ensure that where the pharmacy regularly offers a price to its cash purchasers of a particular drug, Medicare Part D receives the benefit of that deal,” the appeals court said.

The Whistleblower.

The decision affirmed the U.S. District Court’s denial of Kmart’s bid for summary judgment in a July 2008 qui tam suit. The relator, James Garbe, a pharmacist previously working for Kmart,  alleged that Kmart submitted inflated bills to federal and state programs participating in Medicare Part D.  He alleged it did this while charging cash-paying customers far less for prescription drugs through its so-called retail maintenance program.  Medicare has a “most favored nations” requirement for its drug suppliers.  Under Medicare regulations Kmart is supposed to give the Medicare Program the lowest prices.  If it actually gives cash paying customers a lower price, then, DUH! it violates those regulations.  To read more on this, click here.

Fraud Enforcement and Recovery Act.

Much of the panel’s ruling hinged on the application of the Fraud Enforcement and Recovery Act (FERA), a 2009 amendment to the FCA that relaxed the requirement that a false claim be presented to “an officer or employee of the United States government or a member of the Armed Forces of the United States” in favor of the requirement a “false record or statement” be “material to a false or fraudulent claim.”

The Seventh Circuit said the whistleblower had sufficiently alleged that for any FCA claims pending on or after June 7, 2008 — FERA’s effective date of retroactivity — he could rely on the amendment to carry his FCA suit safely past the summary judgment stage.

“FERA had the effect of bringing within the FCA’s ambit false claims to intermediaries or other private entities that either implement government programs or use government funds,” wrote Circuit Judge Diane P. Wood for the panel. “There is little doubt that much of the money paid to Kmart under Medicare Part D came from government coffers.”

The Conclusion.

According to the appeals court, the relator successfully alleged that to the extent Kmart made false claims, they were material because those claims were the basis of the federal monies it received.

Lastly, the appeals court held Kmart’s lowest prices for which its drugs were widely and consistently available to the general public through its discount programs should have been counted in its calculation of usual and customary prices for the drugs. To read the court’s appeal in its entirety, click here.

Contact Health Law Attorneys Experienced with Health Care Fraud and Qui Tam or Whistleblower Cases.

The Health Law Firm’s attorneys routinely represent physicians, dentists, orthodontists, medical groups, clinics, pharmacies, assisted living facilities (AFLs), home health care agencies, nursing homes, group homes and other healthcare providers in Medicaid and Medicare investigations, audits and recovery actions.

Attorneys with The Health Law Firm also represent health care professionals and others who may desire to file a qui tam, False Claims Act or whistleblower suit. We work with physicians, nurses and other professionals to investigate, document and file such cases. We have developed relationships with recognized experts in health care accounting, health care financing, utilization review, medical review, filling, coding and other services that assist us in such matters. We have represented number of doctors and other licensed health professionals as relators in bringing qui tam or whistleblower cases. Our attorneys are also available to defend physicians, medical groups and health care providers in qui tam or whistleblower cases.

To contact The Health Law Firm, please call (407) 331-6620 or visit our website at www.TheHealthLawFirm.com.

Sources:

“Seventh Circuit Rules Against Kmart in Whistleblower Action.” AHLA. (May 27, 2016). Web.

Suevon, Lee. “7th Circ. Allows Kmart FCA Suit Over Medicare Payments.” Law360. (June 2, 2016). Web.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

KeyWords: False Claims Act (FCA), Whistleblower suit, Seventh Circuit Court, Kmart FCA suit, Medicare Part D reimbursements, Fraud Enforcement and Recovery Act (FERA), fraudulent billing, overbilling, submitting false claims, health law defense attorney, fraud defense lawyer, legal representation for False Claims, health law, The Health Law Firm

The Health Law Firm” is a registered fictitious business name of George F. Indest III, P.A. – The Health Law Firm, a Florida professional service corporation, since 1999.
Copyright © 2016 The Health Law Firm. All rights reserved

Miami Medicare Fraud Ring Busted By FBI: Many Suspects arrested, Some Flee to Cuba

6 Indest-2008-3By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law
On April 28, 2016, agents from the Federal Bureau of Investigations (FBI) arrested 21 suspects on charges of operating Miami-Dade pharmacies as fronts to steal $17 million from the Medicare program. Four additional suspects are believed to have fled to Cuba, where Medicare fraud fugitives have found refuge for years. The immediate question is that with political relations with Cuba easing up, how much longer are crooks going to be able to do this? Hopefully, not much longer.

String of Local Pharmacies Used as a Front.

In September 2015, FBI agents showed up at Hialeah dental office looking for the alleged ringleader of the Medicare fraud scam. He managed to slip away before authorities could make an arrest and he and three others are believed to have escaped to Cuba.

But on April 28, 2016, 18 other members of his network were not so lucky. They were arrested and charged with operating the Miami-Dade pharmacies as a front to defraud the Medicare program of $17 million.

Federal agents and special agents of the Department of Health and Human Services (HHS) Office of Inspector General (OIG) spread out to arrest the suspects. The suspects who were arrested are also charged with conspiring to defraud the federal health insurance program by paying off recruiters to reel in Medicare beneficiaries so they could use their ID numbers to file false claims for prescription drugs, according to authorities.

Multi-Million Dollar Scheme.

Authorities state that the suspects were able to pull off the multi-million dollar scheme by forging doctors’ signatures for medication that was either unnecessary or not provided. Because of a longstanding problem of lax oversight by federal health care regulators, Medicare and private insurers failed to detect the fraud after paying out millions. “Unfortunately, South Florida remain ground zero for these types of scams,” said William Maddalena, assistant special agent in charge of the FBI’s Miami office.

A Longstanding Problem.

Pharmacy fraud has become increasingly common in Florida, the nation’s perennial capital of Medicare fraud. In several recent cases, pharmacy owners paid kickbacks to patients or patient recruiters to generate a steady stream of false Medicare claims and bilk the Part D program. To read one of my prior blogs on a similar case of fraud in Florida, click here.

Fleeing Criminals Take Our Taxpayer Money to Foreign Countries.

This seems to be a recurring theme. In every big arrest of multiple conspirators and Medicare fraudsters, there seems to be a bunch who have fled oversees. Even in our dealings with pain management clinics, it is often discovered theat millions of dollars have been sent by the nonphysician owners overseas, beyond government reach. In Florida, the fugitives’ haven seems to be Cuba more often than not. It is our hope that the U.S. is making headway in its thawing of relations with Cuba, to reach an agreement with Cuba to be able to extradite these fugitives and seize their assets. While Cuba remains a poor, embargoed country, this is unlikely to happen. When it can see billions in tourist and investment dollars at stake, it will be a different story. Why should we allow criminals to sit 90 miles offshore with their stolen millions and thumb their noses at the rest of us, when the “good” criminals would rather live in federal prison than live in Cuba?

Don’t Wait Until It’s Too Late; Consult with a Health Law Attorney Experienced in Medicare and Medicaid Issues Now.

The attorneys of The Health Law Firm represent healthcare providers in Medicare audits, ZPIC audits and RAC audits throughout Florida and across the U.S. They also represent physicians, medical groups, nursing homes, home health agencies, pharmacies, hospitals and other healthcare providers and institutions in Medicare and Medicaid investigations, audits, recovery actions and termination from the Medicare or Medicaid Program.

For more information please visit our website at www.TheHealthLawFirm.com or call (407) 331-6620 or (850) 439-1001.

Source:

Weaver, Jay. “FBI agents bust Miami Medicare ring while some suspects flee to Cuba.” Miami Herald. (April 28, 2016). Web.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

KeyWords:Medicare fraud, Centers for Medicare and Medicaid Services (CMS), pharmacy, Florida pharmacy investigation, false claims, Office of Inspector General (OIG), Department of Health (DOH), U.S. Department of Health and Human Services (HHS), pharmacy raid, defense attorney, defense lawyer, pharmacist defense, Medicare fraud defense lawyer, Legal counsel for pharmacists, Florida pharmacy defense attorney, Florida health care attorney, Florida health care lawyer

The Health Law Firm” is a registered fictitious business name of George F. Indest III, P.A. – The Health Law Firm, a Florida professional service corporation, since 1999.
Copyright © 2016 The Health Law Firm. All rights reserved

New Jersey Pharmacy Agrees to Pay $1.9 Millions to Settle Allegations of Medicaid Overbilling

7 Indest-2008-4By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law
A pharmacy in New Jersey, Cross Roads Pharmacy, agreed to pay over $1.9 million to resolve allegations of its overbillling the Medicaid Program. According to the Office of the State Comptroller, more than 3,800 claims were submitted by the pharmacy without records to back up the claims.

A Three Year Investigation.

After a three-year investigation by the office’s Medicaid Fraud Division, it revealed that Cross Roads Pharmacy submitted 3,887 claims for pharmaceutical products. These products were allegedly given to Medicaid patients, but the pharmacy did not have purchase records for them, leading up to nearly $3.1 million in overpayments.

It was also revealed that Narendar Yasa, the owner of the pharmacy, did provide documentation for some of the claims, reducing the overpayment total by almost $1.2 million. According to the division, “It is essential for all Medicaid providers to keep proper documentation in order to be reimbursed by Medicaid. The agreed upon corrective action plan provides a roadmap for Cross Roads to come into compliance.”

The Settlement.

According to the settlement, the division conducted an inventory analysis for the pharmacy during 2011 to 2014. It revealed many instances where the pharmacy billed Medicaid and managed care organizations without having the supporting documentation of wholesaler invoices. State law requires Medicaid providers to retain supporting documents in order to receive reimbursement from the Medicaid Program.

The agreement also included a corrective action plan, laying out areas wherein the pharmacy didn’t comply with Medicaid requirements and detailing ways to resolve those issues. Additionally, Cross Roads is required to designate a coordinator to monitor compliance with the plan to ensure that proper documentation is retained.

To read the settlement in this case, click here.

Click here to read one of my prior blogs on a similar case of Medicaid overbilling.

Medicaid Fraud is Serious.

When a pharmacy receives an audit notice or a subpoena for records, it is crucial that they immediately retain an experienced heal lawyer to assist them in responding so as to help avoid the type of situation in the report.

If the state Medicaid Fraud Control Unit (MFCU) shows up with a subpoena or a search warrant, then it is even more serious because then you know that a criminal investigation is being conducted.

Contact Health Law Attorneys Experienced in Handling Medicaid Audits, Investigations and other Legal Proceedings.

Medicaid fraud is a serious crime and is vigorously investigated by the state MFCU, the Agency for Healthcare Administration (AHCA), the Zone Program Integrity Contractors (ZPICs), the FBI, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (DHHS). Often other state and federal agencies, including the U.S. Postal Service (USPS), and other law enforcement agencies participate. Don’t wait until it’s too late. If you are concerned of any possible violations and would like a confidential consultation, contact a qualified health law attorney familiar with medical billing and audits today. Often Medicaid fraud criminal charges arise out of routine Medicaid audits, probe audits, or patient complaints.

The Health Law Firm’s attorneys routinely represent physicians, dentists, orthodontists, medical groups, clinics, pharmacies, assisted living facilities (AFLs), home health care agencies, nursing homes, group homes and other healthcare providers in Medicaid and Medicare investigations, audits and recovery actions.

To contact The Health Law Firm, please call (407) 331-6620 or (850) 439-1001 and visit our website at www.TheHealthLawFirm.com.

Source:

Posses. Shayna. “NJ pharmacy pays $1.9M for alleged Medicaid overbilling.” Law360. (March 22, 2016). Web.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

KeyWords: Medicaid, Medicaid fraud, Medicaid investigation, Medicaid claims, compliance, the Office of the State Comptroller, Cross Roads Pharmacy, submitting false claims, Medicaid overbilling, defense attorney, defense lawyer, Medicaid fraud defense attorney, Medicaid fraud defense lawyer, Medicaid audit, Medicaid audit defense attorney, Medicaid termination, OIG exclusion list, health law, The Health Law Firm
“The Health Law Firm” is a registered fictitious business name of George F. Indest III, P.A. – The Health Law Firm, a Florida professional service corporation, since 1999.
Copyright © 2016 The Health Law Firm. All rights reserved.

Miami Medicare Fraud Fugitive Returns After Hiding in Cuba

6 Indest-2008-3By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law
On Friday, a Miami pharmacy owner charged in a Medicare fraud scheme, surrendered to U.S. authorities after hiding in Cuba for over two years. Sandy De La Fe, was charged in 2013 with unlawfully pocketing $2.8 million in taxpayer-funded Medicare payments through his former business Goldenway Pharmacy Discount.

False Claims for Prescription Drugs.

According to the indictment, De La Fe submitted false claims for prescription drugs by using Medicare beneficiaries’ ID numbers. He also forged doctors’ signatures for medication that was either unnecessary or not provided at all. The scheme ran between 2011 and 2013, and according to the U.S. Attorney, is hardly unique. The U.S. Attorney’s Office has increasingly made cases against South Florida Pharmacy offenders who steal from the Medicare Part D drug program. To read a previous blog I wrote on the fraud and abuse plaguing the Medicare Part D program, click here.

Goldenway Pharmacy Discount Scheme.

De La Fe is also charged with conspiring with his business associates Jose Teijeiro and Michael Gonzalez Cabral, to pay recruiters to bring in Medicare beneficiaries. Both business associates have already plead guilty to fraud charges and are serving nine-year and five-year jail sentences. De La Fe had his first court appearance on Monday, since turning himself in. The prosecutor in the case plans to recommend no bail, arguing the defendant is a flight risk. Click here to read a previous blog I wrote on a similar case of Medicare fraud.

Voluntary Surrender.

In the case of Medicare fraud and fugitives, an estimated 150 South Florida defendants are at large in Cuba, Mexico and other countries. Normally, fugitives are stopped on federal arrest warrants or upon trying to enter the United States. A defendant voluntarily surrendering is highly unusual in cases like this. Apparently, De La Fe didn’t like life on the lam, and sources say that he missed his young son whom he left behind in the states.

De la Fe purchased his own plane ticket to Miami International Airport, where U.S. Marshall’s apprehended him.

Is Cuba No Longer a Safe Haven for Medicare Thieves?

We have defended physicians and other health professionals who have had their Medicare numbers and identities stolen by those seeking to use them to submit false bills to Medicare. Often in such cases, at least here in Florida, the perpetrator of such crimes has fled with the illegal proceeds. We suspect, in many cases, that they have gone to Cuba. With the relaxation of the relationship between the U.S. and Cuba, this may mean that Cuba is no longer a safe haven for such criminals. It is yet to be seen whether Cuba is likely to allow the extradition of such criminals or cooperate with government officials in the return of stolen funds. However, such may well be the case.

Don’t Wait Until It’s Too Late; Consult with a Health Law Attorney Experienced in Medicare and Medicaid Issues Now.

The attorneys of The Health Law Firm represent healthcare providers in Medicare audits, ZPIC audits and RAC audits throughout Florida and across the U.S. They also represent physicians, medical groups, nursing homes, home health agencies, pharmacies, hospitals and other healthcare providers and institutions in Medicare and Medicaid investigations, audits, recovery actions and termination from the Medicare or Medicaid Program.

For more information please visit our website at www.TheHealthLawFirm.com or call (407) 331-6620 or (850) 439-1001.

Comments?

As a pharmacy owner, pharmacy employee or health care facility owner, what do you think of the increased effort to find fraud? Do you think all facilities, not just pharmacies, are under the microscope? Please leave any thoughtful comments below.

Sources:

“Miami Pharmacy Owner Charged in Medicare Fraud Scheme Returns After Hiding in Cuba.” AHLA. (January 14, 2016). Web.

Weaver, Jay. “Miami Medicare-fraud fugitive returns from Cuba.” Miami Herald. (January 14, 2016). Web.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

KeyWords: Medicare fraud, Centers for Medicare and Medicaid Services (CMS), pharmacy, Florida pharmacy investigation, false claims, Office of Inspector General (OIG), Department of Health (DOH), U.S. Department of Health and Human Services (HHS), pharmacy raid, defense attorney, defense lawyer, pharmacist defense, Medicare fraud defense lawyer, Legal counsel for pharmacists, Goldenway Pharmacy Discount, Florida pharmacy defense attorney, Florida health care attorney, Florida health care lawyer

“The Health Law Firm” is a registered fictitious business name of George F. Indest III, P.A. – The Health Law Firm, a Florida professional service corporation, since 1999.
Copyright © 1996-2016 The Health Law Firm. All rights reserved.

FDA’s Agenda for 2016: Biggest Issues on Agency’s Calendar for the New Year

PS 4 Indest-2009-3By: George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law
The Food and Drug Administration (FDA) has great influence on a vast array of issues impacting the medical industry in the U.S. The decisions it makes in 2016 will have a significant impact for health care providers and on the lives of many Americans. Here is a look at the top issues on the agency’s agenda in 2016.

Reigning in E-Cigarettes.

The use and health of electronic cigarettes (e-cigarettes) have been hot topics between Americans for years and big changes are on the way in 2016. The FDA’s proposal for 2016 will grant the agency permission to oversee e-cigarettes. The proposal, called the “deeming rule,” will give the agency authority to regulate and require pre-market reviews for e-cigarettes. This process will be used to determine which products are safe and which could be potentially dangerous to consumers.

In addition, the FDA seeks to ban e-cigarette sales to minors and require all packages to have a warning label stating that the product contains nicotine. To read more on the FDA’s regulations on e-cigarettes and other tobacco products, click here.

Regulating Drug Marketing and Advertising.

Until recently, drug manufacturers were required to prove that their products were safe and effective before they could be marketed or advertised to treat a specific ailment. Off-label prescribing is nothing new in this industry, but companies are usually careful not to encourage unapproved uses.

Recently, a significant case involving Amarin Pharma Inc., and the availability of information for unapproved uses, caused the FDA to revamp its rules. In this case, Amarin Pharma Inc. won an injunction against the FDA’s ban on off-label marketing. To read our previous blog on this case, click here.

Dr. Janet Woodcock, director of the FDA’s Center for Drug Evaluation and Research, wrote that the agency’s front-burner priorities for 2016 included reevaluating regulations for drug advertising and promotion. To read further on off-label marketing, click here.

The Backlog of Generic Drugs.

Escalating drug prices have become a serious drain on consumers’ wallets and lawmakers are looking to generic drugs as an alternative. Currently, about 4,300 applications for generic drugs are waiting approval or rejection by the FDA. The FDA blames drug manufacturers for careless and incomplete applications that slow the process, but the availability of generic drugs to the consumer is the bottom line.

Sometimes referred to as copycat drugs, generic brand drugs are between 30 and 80 percent cheaper than brand-name drugs. Generic drugs account for 88 percent of all prescriptions in the United States, but only 28 percent of the cost, according to the Generic Pharmaceutical Association.

In the year 2016, the FDA looks to finalize a rule that would permit generic drug companies to update labels with important safety information without prior FDA approval. This rule however, comes with a catch: increased liability in the case of safety problems. To read more on this problem from the American Pharmacists Association, click here.

Fees for Services.

While the FDA is charged with regulating drug manufacturers, it also relies on these companies for its continued operation. It charges fee to companies that manufacture generic drugs in order to offset the costs of regulating them and fees for other aspects of its operations.

Congress approved several important measures for 2016, which require reauthorization every five years. First, the Prescription Drug User Fee Act (PDUFA), authorizes the FDA to collect money from companies that produce certain human drug products. These measures have been enacted to force manufacturers to pay fees to offset the costs of regulating generic drugs.

As part of these new measures, the FDA has agreed to certain performance goals. These goals include: increased patient participation in drug development and review, expansion of the FDA’s Sentinel program to strengthen oversight of post-marketing safety, and the ability to use funds to hire and retain top talent.

New Year, New Decisions.

Not only does the FDA face several significant decisions in 2016 that greatly impact the lives of many Americans, but the industry is pushing for “real-world” evidence outside of clinical trials. The FDA has jurisdiction over some 20 to 25 cents out of every consumer dollar. In short, the decisions the FDA makes matter, big time.

Comments?

What are your thoughts on the FDA’s biggest issues in 2016? Do you agree with the tactics the FDA is using to tackle these issues? Is there an important issue that you think should be added?

Contact Health Law Attorneys Experienced in Representing Pharmacies and Pharmacists.

The Health Law Firm represents pharmacists and pharmacies in DEA, DOH and FDA investigations, qui tam and whistleblower cases, regulatory matters, licensing issues, litigation, administrative hearings, inspections and audits. The firm’s attorneys include those who are board certified by The Florida Bar in Health Law as well as licensed health professionals who are also attorneys.

To contact The Health Law Firm please call (407) 331-6620 and visit our website at www.TheHealthLawFirm.com.

Sources:

Kaplan, Sheila. “E-cigarettes. Generic Drugs. A guide to the FDA in 2016.” STAT. (January 4, 2016). Web.

U.S. Food and Drug Administration. “Electronic Cigarettes (e-Cigarettes).” Public Health Focus. (January 10, 2016). Web.

Kaplan. Sheila. “Backlog of unapproved generic drugs helps boost drug prices.” STAT. (December 29, 2015). Web.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

KeyWords: Food and Drug Administration (FDA), FDA guide for 2016, FDA significant decisions in 2016, crackdown on electronic cigarettes (e-cigarettes), “deeming rule”, drug advertising and promotion, off-label prescribing, drug advertising and promotion of off-label use, backlog of generic drugs, approval of generic drugs, reauthorization of the Prescription Drug User Fee Act (PDUFA), pharmacist defense attorney, The Health Law Firm, health law firm, pharmaceutical company lawyer, pharmacy defense attorney, legal representation for pharmacists, health law attorney

“The Health Law Firm” is a registered fictitious business name of George F. Indest III, P.A. – The Health Law Firm, a Florida professional service corporation, since 1999.

 

Copyright © 1996-2016 The Health Law Firm. All rights reserved.

2015 Proved to Be a Good Year in Medicine as FDA Approvals of First-Of-A-Kind Drugs Continued to Escalate

7 Indest-2008-4By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

It’s been 19 years since anyone has seen the approval of more first-of-a-kind drugs by the U.S. Food and Drug Administration (FDA).  2015 proved to be a year of satisfactory innovation for medicine.  With the approval of 45 drugs formulated with never-before-sold ingredients, the FDA came close to surpassing its previous all-time record of 53 first-of-a-kind drug approvals in 1996.

The increase in newly formulated drugs is a reflection of the industry’s shift in focus to a greater availability of treatments for rare and hard-to-treat diseases.  This expansion is also a good indicator of the government’s acquired efficiency in reviewing new therapies and heightened scientific understanding of diseases that once eluded the medical community.

However, such progress is not without its challenges.  The increased specialty drug approvals may be a further catalyst in the ongoing political debate over rising prescription drug costs.  Furthermore, most pharmaceutical companies still struggle with timely research and development (R&D) turnarounds, sufficient returns on investment (ROI), and effective marketing launches for new drugs competing with their more affordable generic counterparts.

For a full listing of the FDA’s press announcements for first-of-a-kind drugs approved in 2015, click here.

As Innovation Rises So Do Prescription Drug Costs.

Innovative new drugs for rare and hard-to-treat diseases often come with problems of their own that need curing.  In addition to streamlined reviews and extra patent protections, one of the inconveniences attributed to innovation in medicine is the higher price tag associated with the up-and-coming prescription drugs.  This issue has created such a stir among the pharmaceutical industry and consumers alike that it is even a hot topic in the current presidential campaign.  Some candidates have even proffered outlined proposals meant to bridle the rising costs.

Presently, the FDA is restricted from considering prices during the drug approval process.  This results in the anonymous approval of drugs carrying a price tag in excess of hundreds of thousands of dollars for a year’s supply.  One of the most expensive drug approvals of 2015, was Vertex Pharmaceuticals’ Orkambi, formulated to treat cystic fibrosis and costing $259,000 annually.

Pharmaceutical Industry Faces Its Own Cost-Related Difficulties.

Whether or not the running price for improved lung function is set at $259,000, is perhaps debatable.  However, it is known that big pharmaceutical companies can spend billions of dollars each year on R&D and struggle to obtain a decent ROI.  Several factors contribute to a lackluster ROI for drug makers.

The time it takes to research and develop one new drug averages 14 years.  This is an increase from past projections of 11 years in the 1990s.  This escalation in turnaround time is due to more complex drug trials and health insurers’ requests for increased data stores.

Furthermore, new medicines frequently possess dismal sales forecasts.  Additionally, they are pitched alongside a growing list of their cheaper generic formulations.

Still, It’s Not All Bad.

It was reported by Reuters and The Associated Press (AP), that the trend in heightened innovation in medicine will continue in 2016.  AP reported that “IMS Health predicts 225 new drugs will be approved worldwide between 2016 and 2020.”  Furthermore, Reuters publicized analysts’ belief that 2016 will also bring “further advances in cancer treatments […] and significant progress in drugs for autoimmune diseases.”

That’s certainly good news for the pharmaceutical industry and medical community alike as we enter a new year!

Comments?

What are your thoughts on the increased FDA approvals of first-of-a-kind drugs?  Are you excited about the prospect of further advancements in medicine in 2016?

Contact Health Law Attorneys Experienced in Representing Pharmacies and Pharmacists.

The Health Law Firm represents pharmacists and pharmacies in DEA, DOH and FDA investigations, qui tam and whistleblower cases, regulatory matters, licensing issues, litigation, administrative hearings, inspections and audits. The firm’s attorneys include those who are board certified by The Florida Bar in Health Law as well as licensed health professionals who are also attorneys.

To contact The Health Law Firm please call (407) 331-6620 and visit our website at www.TheHealthLawFirm.com.

Sources:

Hirschler, Ben.  “Drug Approvals at 19-Year High Belie Industry Challenges.”  Reuters: 4 Jan. 2015.  Web.  5 Jan. 2015.

Perrone, Matthew.  “First-Of-A-Kind Drug Approvals Continued Rise in 2015.”  The Associated Press: 4 Jan. 2016.  Web.  5 Jan. 2015.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

KeyWords: research and clinical trials defense lawyer, health attorney, pharmacist defense attorney, The Health Law Firm, health law firm, Food and Drug Administration (FDA) drug approvals, pharmaceutical company lawyer, pharmacy defense attorney, legal representation for pharmacists, research and development in pharmaceutical industry, FDA approval of first-of-a-kind drugs, innovation in pharmaceutical industry

“The Health Law Firm” is a registered fictitious business name of George F. Indest III, P.A. – The Health Law Firm, a Florida professional service corporation, since 1999.

Copyright © 1996-2016 The Health Law Firm. All rights reserved.

OIG Issues Favorable Advisory Opinion 15-14 Involving 501(c)(3) Charitable Organization Funded by Pharmaceutical Manufacturers

7 Indest-2008-4By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

A nonprofit organization (Requestor) requested an advisory opinion from the Office of the Inspector General (OIG).  The organization is dedicated to helping financially needy patients, including those covered by Medicare and Medicaid, with a single disease state (Disease State) obtain magnetic resonance imaging (MRI) (altogether, “Arrangement”).  Specifically, the Requestor sought the OIG’s opinion as to the legality of its funding for the Arrangement.

The Arrangement is funded by persons and corporations, primarily pharmaceutical manufacturers, as well as foundations and other entities.  The Requestor asked the OIG whether the Arrangement constituted violations of any of the following:

(a)    the civil monetary penalty provision of the Social Security Act (Act) prohibiting inducements to beneficiaries at section 1128(a)(5);

(b)    the exclusion authority of the Act at section 1128(b)(7); or

(c)    the civil monetary penalty provision at section 1128A(a)(7) of the Act

as each of those sections relate to section 1128B(b) of the Act, otherwise known as the federal Anti-Kickback Statute (AKS).

The OIG issued a favorable opinion on November 13, 2015, Advisory Opinion 15-14, concluding that the Arrangement does not constitute grounds for the imposition of civil monetary penalties and that it would not impose sanctions in connection with the AKS with respect to the Arrangement.

OIG’s Analysis of the Arrangement.

In its analysis of the Arrangement, the OIG noted its longstanding guidance permitting stakeholders to contribute to the health care safety net for financially needy patients.  This guidance is inclusive of federal health care program beneficiaries.  OIG’s Supplemental Special Advisory Bulletin on Independent Charity Patient Assistance Programs states “that pharmaceutical manufacturers can effectively contribute to the safety net by making cash donations to independent, bona fide charitable assistance programs.”  It states further, “…we recognize that bona fide independent charities may reasonably focus their efforts on patients with particular diseases (such as cancer or diabetes) and that, in general, the fact that a pharmaceutical manufacturer’s donations to an independent charity are earmarked for one or more broad disease funds should not significantly raise the risk of abuse.”

To read the full OIG’s Supplemental Special Advisory Bulletin on Independent Charity Patient Assistance Programs, click here.

The OIG further relied on its Special Advisory Bulletin on Patient Assistance Programs for Medicare Part D Enrollees in its overall assessment of the risks imposed by the Arrangement.  The referenced bulletin states in pertinent part, “…cost-sharing subsidies provided by bona fide, independent charities unaffiliated with pharmaceutical manufacturers should not raise anti-kickback concerns, even if the charities receive manufacturer contributions…This, we believe lawful avenues exist for pharmaceutical manufacturers and others to help ensure all Part D beneficiaries can afford medically necessary drugs.”

To read the OIG’s Special Advisory Bulletin on Patient Assistance Programs for Medicare Part D Enrollees in its entirety, click here.

OIG’s Conclusive Assessment for Fraud and Abuse Risk.

OIG concluded that the Arrangement presented minimal risk of donors’ (including pharmaceutical manufacturers) contributions influencing direct or indirect referrals by the Requestor due to the following determinations:

(1)    No donor or donor affiliate exerts direct or indirect control over the Requestor or the program because the Requestor is an independent, nonprofit, tax-exempt charitable organization that operates independently and autonomously from donors and donors’ contributions;

(2)    Although the Requestor matches “full-pay” patients* with contracted MRI providers for MRI’s covered under the Arrangement, all patients are free to choose their health care providers, practitioners, suppliers and insurance plans, and the Requestor does not refer to or recommend donors or donor affiliates;

(3)    The Requestor does not provide the donors with any data that would enable a donor to correlate its donations with the amount or frequency of the use of its drugs or devices; and

(4)    No donor or donor affiliate directly or indirectly influences the identification or delineation of the Disease State fund.

Accordingly, the OIG concluded that the Arrangement presented a low risk of fraud and abuse and was not likely to improperly influence beneficiaries’ choice of providers, suppliers, items or services due to the following determinations:

(a)    Although the Requestor matches “full-pay” patients with contracted MRI providers, the Requestor reimburses contracted providers in full and those MRI costs are not reimbursed by Medicare or Medicaid.  Additionally, the requestor does not refer to, recommend or arrange for particular providers, suppliers, drugs or insurance plans to “co-pay” patients*;

(b)    The Requestor’s determination of a patient’s qualification for assistance is based solely on financial need determined in a verifiable and consistent manner.  This determination is made without regard to the patient’s providers, suppliers, drugs or insurance plans, or any referring party or donor and the amount of the corresponding donation; and

(c)    The Requestor assists all eligible financially needy patients on a first-come first-served basis to the extent of available funds without regard for a patient’s provider, supplier or insurance plan.  Additionally, patients have already selected a provider or supplier for treatment, and the Requestor does not refer patients to, or recommend or arrange for products or services of, a donor.

*A patient is categorized as “full-pay” or “co-pay” based on their insurance status and deductible or cost-sharing obligations.  “Full-pay” patients can be either uninsured or insured with a deductible or cost-sharing obligation that exceeds the average charge for an MRI negotiated with contracted MRI providers in the program.

To read the full OIG Advisory Opinion 15-14, click here.

Comments?

Are you a Medicare or Medicaid provider with questions regarding potential risks of government health care fraud or abuse?

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Sources:

Demske, Gregory E.  “OIG Advisory Opinion No. 15-14.”  Office of Inspector General.  Department of Health and Human Services: Issued 13 Nov. 2015, Posted 20 Nov. 2015.  Web.  1 Dec. 2015.

Fraud and Abuse Practice Group Leadership.  “Summary of OIG Advisory Opinion 15-14.”  American Health Lawyers Association: 30 Nov. 2015.  E-mail.  1 Dec. 2015.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida area.  www.TheHealthLawFirm.com. The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

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