Medical Device Registry Agreement by mka57435

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									Enforcement Issues for
Pharmaceutical and Medical
Device Manufacturers:
Recent Developments and
Emerging Issues
January 28, 2010
Cautionary Notes

•   Company-specific citations in slides and accompanying discussion
    based on public sources – no privileged or confidential information

•   With respect to discussion of indictments and/or civil FCA
    allegations, these involve allegations of wrongful conduct – and are
    not themselves proof

•   In each of the civil settlements, the companies have denied
    wrongdoing and the settlements do not include admissions of
    liability

•   The purpose of today’s discussion is to describe and analyze
    theories of liability/risks (and potential defenses and mitigation
    strategies) – not to judge or criticize the conduct of any particular
    company

Pharma/Device Enforcement Issues| 2                      Skadden, Arps, Slate, Meagher & Flom LLP
    What we Will Cover

•   Overview of Select Recent Enforcement Actions

•   Analysis of Enforcement Trends

•   Update on Healthcare Reform

•   Broader Trends for the Healthcare Industry




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        Pharma/Device Settlements:
        One-Year Look Back
Company                      Date          Amount            Alleged Conduct

Settlements
BSC (Guidant)                 Dec 2009     $22 million    Kickbacks

Omnicare                      Nov 2009     $98 million    Kickbacks
Pfizer                        Sept 2009    $2.3 billion   OL Promotion, Kickbacks

Biovail                       Sept 2009    $22 million    Kickbacks

Quest                         April 2009   $302 million   Misbranded/Adulterated
                                                          Products
Lilly                         Jan 2009     $1.4 billion   OL Promotion, Kickbacks

Pending (reserve announced)


Forest                        April 2009   $170 million   Misleading Promotion,
                                                          Kickbacks
GSK                           Jan 2009     $400 million   Sales/Promotional Issues
    Pharma/Device Enforcement Issues| 4                       Skadden, Arps, Slate, Meagher & Flom LLP
Representative Cases for Discussion

•    Federal Criminal Cases
       –    Pfizer Settlement
       –    U.S. v. Synthes
       –    U.S. v. Reuben
       –    U.S. v. Harkonen



•    Federal Civil Enforcement Actions
       – Forest
       – Scios
       – J&J/Omnicare


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    Pfizer Settlement -- Summary
•   $2.3 billion criminal fines and civil penalties
      – $1.3 billion in criminal penalties
         • $1.195 billion criminal fine (largest US criminal fine ever)
         • $105 million criminal forfeiture
      – $1 billion in civil FCA penalties
         • $668 million for federal programs
         • $331 million for states
• Pharmacia & Upjohn: Felony plea to FDCA violation involving Bextra
• Products referenced in civil settlement
      – Promotional allegations: Bextra, Zyvox, Geodon, and Lyrica
      – Inducements: Nine (9) other products (involving conduct 2001-04)
• Six whistleblowers will share $102 million
• Previous Pfizer-related matters
      – Lipitor 2002
      – Neurontin 2004
      – Pharmacia 2007


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Pfizer Settlement - Civil




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Pfizer Settlement - Civil (cont’d)




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Pfizer Settlement - Civil (cont’d)




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Pfizer Settlement - Civil (cont’d)




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Pfizer Settlement - Civil (cont’d)




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Pfizer Settlement – Additional Perspectives
Pfizer General Counsel:
   The agreement resolves all "material pending matters" with
   the Justice Department, said Pfizer general counsel Amy W.
   Schulman in a statement. "This gives us a very important
   opportunity to put final closure on the universe of material
   open items involving our U.S.-based operations," she said.

Mike Loucks – Remarks at Press Conference




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    U.S. v. Reuben




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    U.S. v. Reuben

•   Brought by the USAO in Boston;
•   Likely an outgrowth of the Bextra investigation;
•   Reuben allegedly:
      – sought and obtained grant funding from various
        pharmaceutical companies, including Pfizer, to conduct
        placebo-controlled studies and publish the results;
      – did not actually enroll patients into the studies;
      – submitted articles for publication that included study data that
        “were wholly made up by Reuben.”
•   Pleaded guilty to health care fraud for knowingly and
    willfully executing a scheme and artifice to defraud
    Pfizer.

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U.S. v. Norian, Synthes & Individuals




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Synthes (cont’d)




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    U.S. v. Harkonen
•    October 2006: InterMune settled criminal and civil charges for off-
     label promotion; paid $37 million in fines/penalties and entered into
     DPA
•    March 2008 : Former CEO Scott Harkonen indicted on wire fraud
     and felony FDCA charges in connection with the promotion of
     Actimmune® (interferon gamma-1b)
•    Pre-Trial Rulings:
      – No First Amendment restriction on prosecution for false,
        misleading statements
      – Press release was "labeling" under the FDCA

•    Verdict (September 29, 2009):
      – Misbranding: Not guilty
      – Wire fraud: Guilty


    Pharma/Device Enforcement Issues| 17               Skadden, Arps, Slate, Meagher & Flom LLP
        Civil Enforcement Actions

                                       »Forest

                                       »Scios

                                       »J&J/Omnicare




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FCA Complaint – Forest Laboratories




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Forest Laboratories (cont’d)




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Forest Laboratories (cont’d)




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Forest Laboratories (cont’d)




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Forest Laboratories (cont’d)

•   Activities/evidence regarding off-label and/or inducements
    promotion
      –    Marketing plans and forecasts
      –    Sales force call plans
      –    Promotional speakers
      –    Advisory boards
      –    Clinical study with alleged purpose to switch patients
      –    Preceptorships
      –    Ghostwriting
      –    Gifts and entertainment
      –    ROI analysis

•   Complaint also makes reference to prior “compliance” statements
    by management


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FCA Complaint-Scios


                                       • Filed June 11, 2009

                                       • Focuses on Natrecor®
                                         (approved IV treatment for
                                         acute decompensated CHF)

                                       • Alleges promotion for serial,
                                         scheduled out-patient infusions

                                       • Qui tam complaint filed in
                                         2005 by former Area Manager




Pharma/Device Enforcement Issues| 24              Skadden, Arps, Slate, Meagher & Flom LLP
Scios Complaint – Overview

•     Activities/evidence regarding off-label promotion
        – Internal marketing materials discussing the outpatient market,
          opportunity
        – Sales force calls on outpatient infusion clinics
        – Payments to HCPs for promotional speeches, training on outpatient
          use, publications on use in outpatient setting
        – “Ghostwriting”
        – Use of CME to promote off-label use
        – Registry study conducted as a marketing tool
        – Coverage and reimbursement support

•     DOJ refers to company-sponsored studies indicating Natrecor
      was not effective for serial, out-patient infusions (¶¶ 48-54)

•     Discussion of Scios/J&J relationship

    Pharma/Device Enforcement Issues| 25                  Skadden, Arps, Slate, Meagher & Flom LLP
    Scios Complaint – Points to Consider
•    No allegation of false or misleading statements




•    Substantial discussion of coverage and reimbursement activities (¶¶ 91-97)




    Pharma/Device Enforcement Issues| 26                   Skadden, Arps, Slate, Meagher & Flom LLP
    U.S. v. Johnson & Johnson

                                       •   Filed January 15, 2010
                                       •   Focuses primarily on
                                           J&J’s antipsychotic drug
                                           Risperdal
                                       •   Alleges J&J paid
                                           kickbacks to Omnicare to
                                           induce purchasing and
                                           referrals of J&J drugs
                                       •   Qui tam complaints filed
                                           by former Omnicare
                                           pharmacist and former
                                           Omnicare financial
                                           analyst



Pharma/Device Enforcement Issues| 27         Skadden, Arps, Slate, Meagher & Flom LLP
    U.S. v. Johnson & Johnson
•   Complaint, filed by the USAO in Boston, covers
    conduct that allegedly occurred between 1999-2004;
•   Likely an outgrowth of Omnicare’s 2009 FCA
    settlement alleging that it received kickbacks from
    multiple pharmaceutical companies in exchange for
    providing formulary preference for certain drugs;
•   Complaint alleges that J&J paid kickbacks in exchange
    for Omnicare recommending certain drugs;
•   Alleged kickbacks included:
      – market share rebate payments,
      – data purchases, and
      – grants


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         Key Take-Aways




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    Insights and Analysis

•     Despite controversy over prosecution of truthful, non-misleading
      off-label promotional activities by manufacturers, DOJ actions
      generally have focused on allegations of false and misleading
      statements made with intent to defraud or mislead. The Scios
      complaint is a notable exception, though DOJ may narrow its
      focus as the case proceeds
•     There is increasing scrutiny of how companies compile and
      disclose clinical study results. While often characterized as false
      or misleading, many do not involve outright falsehoods; rather,
      they are premised on communications that are misleading by
      omission of contrary or negative study data
•     Prosecutors are scrutinizing “non-traditional" sales and marketing
      practices, including "ghostwriting," reimbursement support
      activities and interactions with compendia, formulary sponsors,
      and payor organizations

    Pharma/Device Enforcement Issues| 30                Skadden, Arps, Slate, Meagher & Flom LLP
Insights and Analysis (cont’d)
•   Several recent enforcement actions appear to be motivated, in part, by
    false statements to FDA – including statements that reassured the FDA
    regarding future compliance. Such "flouting" of regulators can be a
    critical factor in charging decisions by prosecutors
• Prosecutors are increasingly investigating the activities of individuals,
  particularly executives and management personnel, and are willing to
  bring both strict liability misdemeanor charges under the FDCA and
  felony charges for fraud
• DOJ has become increasingly active in litigating FCA actions against
  pharmaceutical companies
•   As companies raise compliance-type defenses, prosecutors are focusing
    intensively on how programs worked in practice – particularly how
    companies received, investigated and remedied improper conduct
      – Compliance efforts even more important today in light of prosecution of
        individuals under Park doctrine




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           Update on Healthcare Reform




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Pharma/Device Enforcement Issues| 33   Skadden, Arps, Slate, Meagher & Flom LLP
    Legislation aside, what are we seeing . . .
•   Transparency initiatives resulting in increased scrutiny
    of cost, relationships, and quality;

•   Increasing enforcement and oversight, with particular
    emphasis on accountability at the senior executive and
    boards of directors level;

•   Increasing focus on pay-for-performance and cost-
    effectiveness strategies; and

•   States playing a more prominent enforcement role.


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Speaker Biographies

                    John Bentivoglio represents pharmaceutical, medical device and biotechnology manufacturers
                    in FDA and health care regulatory issues, compliance programs, and civil and criminal
                    investigations by federal and state law enforcement agencies. He has extensive experience
                    developing, implementing and assessing corporate compliance programs under federal and state
                    laws. He also has assisted manufacturers in investigations by various U.S. Attorney’s Offices, the
                    Criminal and Civil Divisions of Main Justice, and state attorney generals; and negotiated several
                    CIAs. john.bentivoglio@skadden.com; 202.371.7560




                    Jennifer Bragg counsels clients on FDA enforcement issues. Her work frequently involves
                    developing strategies and conducting risk assessments to help companies to resolve their
                    regulatory issues while minimizing litigation risks. She has represented numerous global
                    pharmaceutical and medical device companies in government investigations laws, including
                    cases arising under the False Claims Act and the Federal Food, Drug and Cosmetic Act. In
                    addition. From 1998 to 2003, Ms. Bragg served in the FDA’s Office of Chief Counsel as
                    associate chief counsel for enforcement, where she provided advice to the FDA’s Office of
                    Criminal Investigations. jennifer.bragg@skadden.com; 202.371.7980.




Pharma/Device Enforcement Issues| 35                                                 Skadden, Arps, Slate, Meagher & Flom LLP

								
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