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Perspectives

OIG Counsel Riordan speaks at Pharmaceutical Compliance Congress

Comments on pricing, provider interactions

On Wednesday, November 6, 2019, Mary Riordan, the senior counsel in the Office of Counsel to the Inspector General (OIG) of the Department of Health and Human Services (HHS), spoke at the 2019 Pharmaceutical and Medical Device Compliance Congress on OIG’s recent enforcement actions and their emphasis on issues looking ahead.

November 18, 2019 | Life sciences

Ms. Riordan highlighted a number of instances of kickbacks or fraud that resulted in enforcement actions over the past year. In addition to speaking on a few specific policy issues, Ms. Riordan’s general comments on corporate compliance programs followed familiar themes of full disclosure, prevention, and cooperation.

Chief among Ms. Riordan’s issue-specific remarks was the agency’s response to the opioid crisis, where she cited recent settlements with manufacturers and providers related to the inappropriate promotion and distribution of opioid products. In particular, Ms. Riordan described recent settlements in the hundreds of millions of dollars that employed novel uses of corporate integrity agreements (CIAs) to ensure future compliance, ongoing cooperation with the government, and the removal of executive officers and others were merited. Ms. Riordan also cited the Appalachian Opioid Takedown as an effort that unified traditional investigation with sophisticated analytics in identifying and in some cases prosecuting the fraudulent or inappropriate distribution of opioid products. She was clear in stating that additional law enforcement actions continue today.

On pricing, Ms. Riordan cited price-fixing and collusion between generic drug manufacturers as an area of interest for enforcement authorities. Aside from active enforcement, a unifying theme of her comments on pricing enforcement was the importance of accurate and timely reporting in line with federal requirements. She described current efforts to align average sales price and average manufacturer price for Medicare Part B and the use of rebates for Part D drugs. Last, Ms. Riordan’s comments on the Medicaid Drug Rebate Program noted a recent legislative change that includes authorized generic drugs in average manufacturer price calculations for Medicaid rebates.

Copay assistance programs continue to receive heightened scrutiny by regulators, and Ms. Riordan noted the inherent challenges to maintain a clear firewall between manufacturers and charities that aid in copays. She also noted that it was the intent of Congress for copays and coinsurance to place market pressure on drug prices and that manufacturers subsidizing these expenses for consumers work directly against this intent.

Ms. Riordan questioned the value of health care provider speaker engagement programs and recommended that pharmaceutical companies take a close look at whether a direct, peer-to-peer speaker program is the best use of resources, especially long after a product’s initial launch. Citing their inherent risks, she suggested that companies look at other modalities of educating providers on an ongoing basis. Other questions Ms. Riordan submitted for consideration were whether adequate controls are in place to identify fair market value for a speaker, keeping commercial considerations out of nomination decisions, and whether a meal or other activity could be considered an inducement to use a product.

As a general observation, Ms. Riordan recommended that compliance teams take a broad view of risk and search for more unusual forms of kickbacks too. She also recommended looking past more prominent commercial considerations to look more intently at risks among personnel who perform tasks that intersect with the Food Drug and Cosmetic Act, the Medicaid Drug Rebate Program, and other price-reporting activities. She emphasized maintaining active risk assessment programs are becoming common features of CIAs, closing by encouraging compliance officers to be able to stand behind their efforts when contacted by investigators.

Disclaimer: This content is based on notes taken during Ms. Riordan’s presentation at the 2019 Pharmaceutical and Medical Device Compliance Congress. We have not validated or confirmed these statements with her.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional adviser.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

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