Enforcement Litigation and Compliance

Washington, DC

December 9-10, 2015

Advanced Enforcement Applications

Brian Dahl, Principal, Dahl Compliance Consulting LLCSarah diFrancesca, Attorney, Cooley LLPJames Flaherty, Associate General Counsel – FDA Regulatory, Fresenius Medical Care North AmericaBeth Weinman, Associate Chief Counsel for Enforcement, Office of Chief Counsel, FDA

Moderated by Neil DiSpirito, Partner, Olsson Frank Weeda Terman Matz PC

Implications of Transparency

Brian A. Dahl

Open Payments

Implications of Transparency• Penalties for What is Not Reported

– $1,000-$10,000/transaction up to $150,000– $10,000-$100,000/transaction up to $1 million

• Penalties for What Is Reported– Kickbacks– False Claims

Case Study: Insys Therapeutics

Case Study: Insys Therapeutics

Case Study: Insys Therapeutics

Case Study: Insys Therapeutics

1. $64,315

2. $61,232

3. $53,085

4. $46,452

5. $43,513

6. $43,154

7. $41,400

8. $41,225

9. $37,382

10. $36,448

Top 10 Physicians for Speaker / Consulting Fees

Case Study: Insys Therapeutics

Case Study: Insys Therapeutics

Case Study: Insys Therapeutics

Case Study: Insys Therapeutics

http://sirf-online.org

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TRICARE Prescriptions

1/1/13-5/31/14

Case Study: Insys Therapeutics • Company Announced Subpoenas

– OIG December 2013 – U.S. Attorney District of MA September 2014

• 6 Other States Reportedly Investigating

Advanced Enforcement Applications

Government Drug Pricing Inquiries

Sarah K. diFrancesca Cooley LLP

Significant Media Attention

Drug Pricing Inquiry TimelineSummer 2015

Valeant

continues to

come under

fire for taking

significant

price increases

on several

additional

drugs

April 2015

WSJ article

discussing

Valeant’s

strategy to buy

drugs and

immediately

increase prices

significantly

July 2015

Valeant CFO

questioned by

Senate’s

Homeland

Security &

Governmental

Affairs

Permanent

Subcommittee

on

Investigations

regarding price

increases

Valeant receives

letter from Senator

McCaskill, Ranking

Member, Senate

Homeland Security &

Governmental

Affairs Permanent

Subcommittee on

Investigations,

requesting

information

regarding Valeant’s

drug price increases

September 2015

Valeant receives

second letter

from Senator

McCaskill, again

requesting

information due

to Valeant’s

“failure to

respond

substantively” to

the August 15,

2015 letter

May 2015

House Govt.

Reform and

Oversight

Committee

Ranking Member

Cummings sends

Chairman

Chaffetz a letter

requesting that

the Committee

hold a hearing in

which Valeant

and Turing CEOs

testify

August 2015

Valeant and Hospira

receive letters from

Rep. Cummings and

Sen. Sanders

requesting

information

regarding Valeant’s

drug pricing

practices

Turing receives

letter from Rep.

Cummings and

Sen. Sanders

requesting

information

regarding

Turing’s drug

pricing practices

September 2015August 2015

July 2014

Gilead receives

letter from

Senators Wyden

and Grassley,

Senate

Committee on

Finance,

requesting

documents

related to

Sovaldi, priced at

$1,000/pill

($84,000/ course

of treatment)

Drug Pricing Inquiry Timeline (cont.)October 2015

Valeant

announces

receipt of

subpoenas from

DOJ and U.S.

Attorneys’ Offices

in NY,

Massachusetts,

Pennsylvania

related to pricing,

patient

assistance, and

related areas of

interest

December 2015

October 2015

Merck and Eli

Lilly each

announce

receipt of CIDs

from the DOJ

and U.S.

Attorneys’ Office

in E.D. of

Pennsylvania

related to drug

pricing,

contracting and

Medicaid

reporting

practices

November 2015

Senate Committee

on Aging issues

letters to Valeant,

Turing, Retrophin,

Rodelis

Therapeutics

regarding

Committee’s

“comprehensive

investigation” into

the pricing of off-

patent drugs.

Document

response due

December 2, 2015

November 2015

Democratic

members of the

House

Committee on

Oversight and

Government

Reform form the

Affordable Drug

Pricing Task

Force

November 2015

Democratic

members of

House Ways and

Means

Committee send

letter to

Chairman Brady

requesting an

“immediate

hearing” into

prescription drug

costs

Initial hearings by

Senate

Committee on

Aging issues

scheduled

December 2015

September 2015

18 members of the

House Committee

on Oversight and

Government

Reform send a

letter to the

Committee

Chairman,

requesting that he

subpoena

documents that

Valeant refused to

turn over to the

Committee in

response to the

August 2015 letter

Senators Wyden

and Grassley,

Senate

Committee on

Finance, release

a 144-page

report and

thousands of

Gilead

documents

produced to the

Committee as

part of its 18-

month

investigation

Chairman

Chaffetz agrees

to hold hearings

in early 2016.

Valeant and

Turing are

anticipated

targets

Areas of Congressional Focus• Senate Finance Committee

– “Senators Wyden and Grassley have raised the following policy questions for public debate, with the goal of improving wider access to effective and affordable drug treatments”

1) What are the effects of a breakthrough, single source innovator drug on the marketplace?

2) Do the payers in the programs have adequate information to know the cost, patient volume, and increases in efficacy of a new treatment regimen?

3) What role does the concept of “value” play into this debate, and how should an innovative therapy’s value be represented in its price?

4) What measures might improve price transparency for new higher-cost therapies while maintaining incentives for manufacturers to invest in new drug development?

5) What tools exist, or should exist, to address the impact of high cost drugs and corresponding access restrictions, particularly on low-income populations and state Medicaid programs?

Areas of Congressional Focus• Senate Committee on Aging

– Substantial price increases on recently acquired off-patent drugs

– Mergers and acquisitions within the pharmaceutical industry that have sometimes led to dramatic price increases for off-patent drugs

– FDA’s role in the drug approval process for generic drugs, FDA’s distribution protocols, and off-label regulatory regime

Political Focus• Presidential candidates also jumping on the drug pricing

bandwagon. Dem. Candidate Hillary Clinton’s plan to lower drug prices includes:

– “eliminate corporate write-offs for direct-to-consumer advertising”– “establish a mandatory FDA pre-clearance procedure for these [DTC] ads funded through user-fees

paid for by pharmaceutical manufacturers”– “require health insurance plans to place a monthly limit of $250 on covered out-of-pocket prescription

drug costs for individuals”– Lower “the biologic exclusivity period from 12 to 7 years”– “require drug manufacturers to provide rebates for low-income Medicare enrollees”– “Allow Medicare to negotiate drug and biologic prices”

State Legislation • Legislation introduced in several states

(CA, MA, NY, NC, OR, PA) that would require pharmaceutical manufacturers to submit reports to the state outlining the total cost of drug production, including marketing costs

Industry Outlook• Companies cutting prices in response to

backlash

• Federal and state legislation

• Outcome of congressional inquiries

• Outcome of DOJ investigations

FDLI Enforcement, Litigation, and FDLI Enforcement, Litigation, and Compliance ConferenceCompliance Conference

FDCA Criminal InvestigationsFDCA Criminal InvestigationsDecember 9, 2015

Beth P. Weinman

Office of the Chief Counsel, Food and Drug Administration

Food & Drug AdministrationFood & Drug AdministrationOffice of Chief CounselOffice of Chief Counsel

• FDA’s Office of the Chief Counsel (OCC) is composed of litigators, counselors, and support staff.

• Litigators handle both civil and criminal enforcement cases, and defend challenges to provisions of the Federal Food, Drug, and Cosmetic Act (FDCA), the implementing regulations, and FDA policies, initiatives, and decisions.

OCI InvestigationsOCI Investigations

•On the criminal side, OCC litigators counsel Office of Criminal Investigations (OCI) agents in their investigations and advise the Department of Justice in its prosecutions related to FDA regulated products.

•In criminal prosecutions, OCC litigators have served as Special Assistant United States Attorneys, assuming primary responsibility for prosecuting violations of the FDCA or related statutes.

Individual Accountability Individual Accountability

One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing. Such accountability is important for several reasons: it deters future illegal activity, it incentivizes changes in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public's confidence in our justice system.

--September 9, 2015 Memorandum Issued by Sally Quillian Yates, Deputy Attorney General

Individual Accountability Individual Accountability

“Hardship there doubtless may be under a statute which thus penalizes the transaction though consciousness of wrongdoing be totally wanting. Balancing relative hardships, Congress has preferred to place it upon those who have at least the opportunity of informing themselves of the existence of conditions imposed for the protection of consumers before sharing in illicit commerce, rather than to throw the hazard on the innocent public who are wholly helpless.”

--U.S. v. Dotterweich, 320 U.S. 277, 284-285 (U.S. 1943)

Individual Accountability Individual Accountability “Thus Dotterweich and the cases which have followed reveal that in providing sanctions which reach and touch the individuals who execute the corporate mission…the Act imposes not only a positive duty to seek out and remedy violations when they occur but also, and primarily, a duty to implement measures that will insure that violations will not occur. The requirements of foresight and vigilance imposed on responsible corporate agents are beyond question demanding, and perhaps onerous, but they are no more stringent than the public has a right to expect of those who voluntarily assume positions of authority in business enterprises whose services and products affect the health and well-being of the public that supports them.” (emphasis added)

--U.S. v. Park, 421 U.S. 658, 672 (1975)

FDLI Enforcement, Litigation, and FDLI Enforcement, Litigation, and Compliance ConferenceCompliance Conference

Advanced Enforcement Applications

December 9, 2015

James M. Flaherty, Jr.Associate General Counsel – FDA Regulatory

Fresenius Medical Care North America

Why Am I Here?Why Am I Here?

• Not here to debate policy issues behind FDA priorities and initiatives

• Not here to explain what to do once an FDA investigation is initiated

• Here to discuss prevention – achieving and maintaining corporate (and individual) compliance

Focus On The IndividualFocus On The Individual

• Park Doctrine and Yates Memo• Knowledge is Key!• Never Attempt to Shield/Insulate Executives• Education and Training

Metrics, Scorecards, and CultureMetrics, Scorecards, and Culture

• Speak the Executives’ Language• Corporate Compliance = Good Business

– Legal and Compliance as business partners

• Quality metrics adapted for business audience• Utilize summary scorecards – simple and easy

Compliance “Tools”Compliance “Tools”

• Big Data and Predictive Analytics• Safe Islands for Sales Reps• Quality Systems Approach to Training• Newsletters, Recognition, and Awards

3 Pillars of Corporate Healthcare3 Pillars of Corporate Healthcare

1. Patient Care

2. Legal/Regulatory Compliance

3. Business Success