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July 2023 Issue
We begin this month by reviewing the U.S. Supreme Court’s long-awaited Polansky decision. The Court’s 8-1 decision clarifies when the government can intervene in a False Claims Act (“FCA”) whistleblower case and the standard of review. However, the dissent is noteworthy because it casts doubt on the constitutionality of using whistleblowers as an enforcement tool.
Next, we return to the topic of opioids. Until recently, the cases have rehashed old issues and theories of liability. However, this case involving Rite Aid Corporation uses the FCA to address alleged Controlled Substance Act violations. It is a novel theory that, if successful, has potential implications for all life sciences.
In March 2023, the HHS-OIG published new fraud and abuse FAQs and an Advisory Opinion, which covered, among other things, cash equivalents, gift cards, and in-kind items in the context of the AKS and the Beneficiary Inducement CMP. Even for compliance professionals, it is a confusing area that frequently generates compliance questions. Therefore, we decided it was essential to cover it.
Finally, we close out this issue by examining recent regulatory and legislative efforts targeting PBM business practices. Following the passage of the Inflation Reduction Act, efforts are underway to reform the PBM industry, which undoubtedly will impact prescription drug manufacturers.
Articles
FEATURE
Setting Boundaries
U.S. Supreme Court Partially Addresses Government Dismissals in FCA Whistleblower Cases
By Dr. Seth B. Whitelaw, Editor
Summary: The Supreme Court’s recent decision in Polansky answers the question of whether the government must intervene to dismiss a whistleblower FCA case after the initial seal period ends. However, it did not definitively resolve the issue of the appropriate standard of review for such motions. Moreover, three justices signaled their belief that the FCA whistleblower provisions may be unconstitutional.
Tags: Supreme Court, False Claims, Whistleblower, Intervention, Polansky, Dismissal, Timing
Litigation & Enforcement
Opioids and False Claims
Rite Aid Contends Hindsight & Hyperbole Cannot Support the DOJ’s Case
By Robert N. Wilkey, Esq., Senior Staff Writer
Summary: The ongoing prescription opioid litigation has resulted in billions of dollars in settlements involving manufacturers, distributors, pharmacies, and physicians. However, the Justice Department continues its efforts to hold those it deems responsible accountable. In the latest twist, the DOJ is suing Rite Aid, alleging that the company’s-controlled substances violations resulted in false claims. Unsurprisingly, Rite Aid is challenging the government’s case arguing, in essence, that it is built on hyperbole and limited facts. Beyond the context of prescription opioids, this case presents important reminders for life science compliance professionals.
Tags: Rite Aid, False Claims, Controlled Substances, Opioids, Pharmacy, Jurisdiction, Subsidiaries, Diversion, Due Process, Walmart, DOJ
Regulatory Update
Complicating Matters
HHS-OIG Guidance on Cash Equivalents, Gift Cards & In-Kind Items
By Kirt Kraeuter, Staff Writer
Summary: Recent FAQs and an Advisory Opinion published by the HHS-OIG clarified the government’s position on the preventive care exception to the Beneficiary Inducement CMP. They also clarified how the AKS and Beneficiary Inducement CMP interact regarding cash equivalents, gift cards, and in-kind items. Nevertheless, they are not a panacea and leave significant issues unaddressed, particularly in the appropriate treatment of gift cards.
Tags: HHS-OIG, FAQs, Advisory Opinion, Gift Cards, Kickbacks, Beneficiary Inducement CMP, Cash Equivalents, In-Kind Items, Preventive Care Exemption, Instruments Convertible to Cash, Big-Box Stores, Checks
Legislative Update
Pharmacy Benefit Managers & Drug Pricing
Congress Puts PBMs Under the Microscope
By Gwendolyn A. Ball, Staff Writer
Summary: Fresh from their success at introducing real, though limited, drug pricing reforms directed at manufacturers, the Biden Administration and Congress have now focused on reforming PBM business practices. While substantive reform is unlikely in the near term, the level of bipartisanship exhibited is an encouraging sign that the journey may not take as long as the drug pricing provisions of the Inflation Reduction Act.
Tags: PBMs, Congress, FTC, Drug Pricing, Express Scripts, CVS Caremark, OptumRx, Inflation Reduction Act
From all of us here (virtually) at Policy & Medicine Compliance Update, we hope all our readers and their families are safe and healthy. And as always, thank you for subscribing and your continuing support in making us the most comprehensive, up-to-date compliance publication for life science compliance professionals.
Wishing you all the best,
Dr. Seth B. Whitelaw
Editor