Life Science Compliance Update

February 16, 2018

Aegerion Sentenced to Pay $7.2 Million to Patients


On January 30, 2018, Federal U.S. District Court Judge William Young sentenced Aegerion to pay some of the roughly $36 million fine for off-label marketing to Juxtapid patients. In November, Judge Young rejected an initial plea deal between the Department of Justice (DOJ) and Novelion Therapeutics (who now owns Aegerion) because it would have restricted his ability to impose a sentence upon the company.

Judge Young instead sentenced Aegerion in a deal that gave him discretion to determine how the payment would be split up. Young ordered the company to pay $7.2 million – the same amount the company had agreed to pay from the beginning – as part of the total $40.1 million fine.

Young’s concern with the DOJ-Aegerion agreement was that it was a fine that entirely went to the government, he instead wanted it to go to ninety-one patients who may have been harmed by Aegerion’s conduct. In a statement to the prosecution, Young stated, “I think you ought to pay more attention to the actual people who were harmed here.” He also went on to say, “I feel so strongly that people who were harmed by this criminality ought to have some recompense,” as quoted by the Boston Globe.

The patients who were affected and are set to receive a portion of the fine had taken Juxtapid for reasons other than the FDA-approved marketed reasons (which was to treat high cholesterol in people with a rare genetic disease). Instead, the company promoted the drug to patients who did not have the rare genetic disease, some of whom wound up with side effects including liver toxicity and gastrointestinal distress.

During court on the day of sentencing, Aegerion pled guilty to two misdemeanor counts that it misbranded Juxtapid in violation of the Federal Food, Drug & Cosmetic Act. In total, Aegerion agreed to pay $36 million to resolve criminal and civil claims by the DOJ and a $4.1 million deferred prosecution agreement to resolve a United States Securities and Exchange Commission case.

Jeffrey Hackman, Novelion’s chief operation officer, accepted responsibility for the conduct and stated, “It never should have occurred, and we strive to ensure it never occurs again.”

In a statement, Novelion called the sentence an "important milestone" that allows it to focus on its business going forward. "As a company, we are deeply committed to legal and regulatory compliance," Chairman Jason M. Aryeh said. "We have worked tirelessly to build a culture of integrity and ethics under our new management team and board of directors, in an effort to put legacy Aegerion challenges behind us."

This is certainly an interesting way of sorting out the total fine for the company, and it will be interesting to see if any other judges begin to take the same tact – or better yet, if other companies get out in front of the issue and start to make payments to certain patients as part of settlement deals, or if this is a one-off situation.

February 15, 2018

House Holds Hearing on Opioid Crisis


On January 17, 2018, the House Ways and Means Subcommittee on Oversight held a hearing entitled “The Opioid Crisis: The Current Landscape and CMS Actions to Prevent Opioid Misuse.” The hearing focused on efforts by the Centers for Medicare and Medicaid Services (CMS) to utilize data to identify high risk individuals in the Medicare Part D program who are likely to abuse opioids. The hearing also examined the extent of the problem as well as the tools and programs CMS has used to protect individuals with substance abuse issues and to prevent physicians from over-prescribing.

The Committee heard testimony from a three-person panel, all of whom shared progress reports regarding steps the agency has taken to address different aspects of the opioid crisis. Discussion at the hearing largely focused on the desire to pass bipartisan legislation to address the opioid crisis as well as to determine best practices to identify over-prescribers and reduce instances of fraud.

Opening Statements

Chairwoman Lynn Jenkins opened the hearing by highlighting statistics regarding rising opioid related overdose death rates in her home state of Kansas. She went on to state that the “immense cost opioids impose on society” have caused a loss of productivity and put undue burden on the U.S. economic system. To lessen this burden, Jenkins stressed the importance to provide Medicare, specifically private Part D plan sponsors, the tools they need to ensure that opioids are provided only when medically necessary.

Full Committee Ranking Member Richard Neal mainly focused on the effect the opioid epidemic has on Medicare beneficiaries and negative impact on labor participation rates around the country. In the face of a looming expiration of the Administration’s public health emergency declaration, Neal voiced his frustration that there has not been “positive action” taken to find a solution to opioid overuse.

Witness Testimony

Gary L. Cantrell, Deputy Inspector General for Investigations at the Department of Health and Human Services (HHS), highlighted the work at the Office of the Inspector General (OIG) in restricting vulnerable beneficiaries’ access to drugs by identifying and apprehending physicians and pharmacies who inappropriately or unnecessarily prescribe opioids. He explained that opioid related fraud encompasses a broad range of criminal activity that the OIG, in tandem with state and federal law enforcement officials, has focused on recently.

Elizabeth H. Curda, Director of Health Care at the Government Accountability Office (GAO), explained how CMS developed a “misuse” strategy to oversee opioid prescribing in the Medicare program. She explained that CMS relies on private insurers – known as plan sponsors – to be alerted of “high-risk” beneficiaries, or beneficiaries receiving opioid prescriptions from four or more prescribers. After a high-risk beneficiary is identified, she said, plan sponsors are alerted, identify a plan of action, and respond to CMS within thirty days of the alert.

Kimberly Brandt, Principal Deputy Administrator for Operations at CMS, explained how CMS oversees efforts from Medicare Part D sponsors to work with prescribing physicians in an attempt to identify improper opioid utilization. Brandt explained that this is done by using utilization monitoring systems to identify high-risk beneficiaries and then alerting pharmacies of the patient’s status.

Committee Discussion

Tracking High-Risk Beneficiaries

Chairwoman Jenkins voiced her concern that CMS only tracks a small portion of the at-risk population when attempting to determine high-risk beneficiaries. Ms. Curda agreed and noted that beneficiaries who are receiving large doses of opioids should be tracked, regardless how many doctors or pharmacies they have visited. It was suggested that current monitoring by CMS is insufficient, with nearly three-quarters of a million beneficiaries receiving high-level doses of opioids being overlooked and at risk for falling victim to addiction or overdose death.


Fraud in Treatment Programs

Representatives Pat Meehan and Carlos Curbelo expressed interest in the most common health care fraud schemes surrounding the opioid crisis. Mr. Cantrell explained that the most common fraud schemes are seen in “sober houses” where addicts go to receive treatment. Patients are often farmed out to corrupt doctors to receive lab testing and other expensive and unnecessary treatments, he explained. He said there have also been cases of individuals selling expensive medications back to pharmacies or on the black market, and unethical prescribers who receive kickbacks from pharmacies as a reward for prescribing certain addictive drugs. Mr. Cantrell attributed this to a lack of resources for law enforcement officials to address every fraud case that comes through the system.

Potential Legislative Solutions

Throughout the hearing, members on both sides of the aisle promoted bipartisan legislation to address the opioid epidemic. Representative Judy Chu advocated for Ensuring Access to Quality Sober Living Act of 2017 (H.R. 4684), a bill she sponsored in hopes to develop a set of best practices for sober living communities. Chu also highlighted details of the Acupuncture for Heroes and Seniors Act of 2017 (H.R. 2839), a bill she sponsored in an effort to advocate for alternative treatment options, particularly acupuncture, to be covered through Medicare.

Meanwhile, Representative David Schweikert spoke in support of the Comprehensive Opioid Abuse Reduction Act of 2016, which was signed into law in 2016. He claimed the bill would act as a mechanism to standardize the prior authorization process and promote the use of pharmaceuticals with less addictive tendencies.

February 14, 2018

Should ACOs Be Revamped?


In an article authored by the American Enterprise Institute’s Resident Fellow and Milton Friedman Chair, James C. Capretta, he argues Medicare Accountable Care Organizations (ACOs) haven’t produced savings for the federal government. He believes ACOs would become more efficient and innovative if they were forced to compete with the other options beneficiaries have for getting their Medicare-covered benefits.

Creation of ACOs

Capretta describes the initial purpose of ACOs. They were created to address Medicare’s problematic fee-for-service program which has been found to foster waste and overuse of services. While Medicare Advantage provides a private alternative, they are typically led by insurance entities. Medicare ACOs, then, offer physicians and hospital systems the opportunity to form their own managed care arrangements separate from the MA program.

ACO Performance

Most ACOs participate in the ACA’s Medicare Shared Savings Program (MSSP). MSSP ACOs that meet quality standards and provide care at a sufficiently lower cost get to keep half of the savings they generate. According to recent performance data there were 432 ACOs participating in the shared savings option in 2016. All but 22 of the ACOs were “one-sided risk” ACOs, which means they could earn a bonus payment but were not at risk for a penalty if they exceeded their spending targets.

Only 31 percent of the ACOs produced enough savings to earn a bonus payment for 2016. 44 percent of the ACOs incurred expenses above the benchmarks that were set for them by CMS. The overall savings produced by ACOs for Medicare was $691 million in 2016. However, Capretta points out after taking into account bonus payments, the net effect of MSSP was an increase in Medicare costs of over $39 million for 2016.

Physicians and ACOs

Capretta describes a system where physicians are being pushed into joining ACOs to increase their fees, and when physicians join ACOs, their Medicare patients come with them. The hope among some ACO advocates is that Medicare fee-for-service will be transformed into a more efficient program without the Medicare beneficiaries even noticing that something had changed.

He argues this will not help the ACOs become more efficient over time. Because the beneficiaries are never asked whether they want to be assigned to an ACO, they are not obligated to stay in-network when they get their care. They can see any physician they want at no additional cost to themselves. Also, many physicians are not aware if individual patients are inside or outside of their ACO.

The current system will likely backfire over time, argues Capretta, due to the reliance on coercion of physicians. He believes physicians will join ACOs to avoid fee cuts and ultimately resent their circumstances. This will result in lobbying for regulatory changes that lessen the administrative impact of participating in an ACO. This, in turn, makes it more difficult for the ACOs the effectively operate, creating a program not unlike today’s fee-for-service option.

Revamping ACOs

In Capretta’s view, ACOs should be revamped so that they are presented to the beneficiaries as a clear and distinct enrollment option, alongside unmanaged fee-for-service and MA plans. Beneficiaries selecting ACOs should know they will be getting their care through an organized network of providers. This is similar to preferred provider organizations (PPOs) in the commercial market. He suggests beneficiaries retain the right to see any licensed provider, but would pay more in cost-sharing for services if they go outside of the ACO network.

High-performing ACOs would attract beneficiary enrollment because they would be able to share the savings they produce with the beneficiaries in the form of lower premiums and better coverage. ACOs providing premium discounts to their enrollees would be tagged with the aggregate cost of those reduced premiums when their financial performance was measured against their benchmark.

He further notes that beneficiaries currently have the option to purchase Medicare prescription drug coverage and supplemental insurance to partially cover their cost-sharing requirements. Capretta argues that CMS should build an online portal that allows beneficiaries to see clearly what the various combinations of coverage options will cost them in terms of the premiums they would pay as well as their cost-sharing requirements when they use services.


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