For­mer drug ex­ecs lose ap­peal

Bid for re-en­try to Medi­care is de­nied

Modern Healthcare - - The Week In Healthcare - Shawn Rhea

An ap­peals court rul­ing in a paindrug mar­ket­ing case sends a clear mes­sage that fed­eral reg­u­la­tors have the author­ity to hold in­di­vid­ual ex­ec­u­tives re­spon­si­ble for health­care fraud per­pe­trated by their com­pa­nies, said le­gal and ethics ex­perts fa­mil­iar with the case.

But whether the de­ci­sion will em­bolden fed­eral reg­u­la­tors to more broadly and ag­gres­sively pur­sue their author­ity to sin­gle out in­di­vid­ual cor­po­rate of­fi­cers and own­ers for pun­ish­ment is less clear.

In a 30-page de­ci­sion last week, U.S. District Judge Ellen Hu­velle up­held a ban that bars three for­mer Pur­due Fred­er­ick Com­pany ex­ec­u­tives from par­tic­i­pat­ing in fed­eral health­care pro­grams such as Medi­care and Med­i­caid for 12 years. The of­fi­cers were banned for fail­ing to take ac­tion to stop false mar­ket­ing of the pain med­i­ca­tion OxyCon­tin. As a re­sult, any com­pany the ex­ec­u­tives form or work for dur­ing that pe­riod risk be­ing ex­cluded from do­ing busi­ness with the govern­ment.

The ap­peals court rul­ing comes on the heels of re­cent ac­tions taken by HHS’ in­spec­tor gen­eral’s of­fice and the Food and Drug Ad­min­is­tra­tion to ad­dress in­di­vid­ual re­spon­si­bil­ity in health­care fraud. In Oc­to­ber, HHS is­sued guid­ance de­tail­ing what fac­tors it would con­sider in cer­tain ex­clu­sion cases (Oct. 25, p. 12).

Last month, Fed­eral pros­e­cu­tors in­dicted for­mer Glax­oSmithK­line at­tor­ney Lau­ren Stevens for al­legedly mak­ing false state­ments and ob­struct­ing an FDA in­quiry into the mar­ket­ing of the an­tide­pres­sant Well­butrin, though the drugmaker to date has not been charged.

Some ob­servers be­lieve that the cu­mu­la­tive ac­tiv­ity is a sign that fed­eral agen­cies in­tend to more ag­gres­sively use their pow­ers to ex­clude in­di­vid­u­als.

“They want com­pli­ance to be an im­per­a­tive from the top,” said El­iz­a­beth CarderThomp­son, a part­ner in the law firm Reed Smith. “If you en­gage in mis­con­duct at one com­pany, they want to make sure you don’t go and do the same thing some­where else,” she added. “Peo­ple spend their lives work­ing in health­care, so this is po­ten­tially a very, very se­ri­ous devel­op­ment to be ex­cluded from a fed­eral pro­gram.”

But Michael Gus­mano, a re­search scholar with the bioeth­i­cal in­sti­tute the Hast­ings Cen­ter, said the un­re­lated ac­tions don’t nec­es­sar­ily sig­nal a con­certed pol­icy change. “Whether this re­flects a sys­tem­at­i­cally dif­fer­ent ap­proach from what HHS has done in the past is not clear to me,” said Gus­mano, in an e-mail.

HHS’ in­spec­tor gen­eral’s of­fice, ac­cord­ing to its spokesman Don White, “has not made any state­ment that it plans to more ag­gres­sively pur­sue ex­clu­sion.”

The ex­clu­sion of the for­mer Pur­due of­fi­cers —pres­i­dent and CEO Michael Fried­man, chief med­i­cal of­fi­cer Paul Gold­en­heim and gen­eral coun­sel Howard Udell—was im­posed by HHS in 2008. They pleaded guilty to mis­de­meanor charges of be­ing “re­spon­si­ble cor­po­rate of­fi­cers” dur­ing a nearly six-year fraud­u­lent mar­ket­ing cam­paign for OxyCon­tin pro­mot­ing the pain med­i­ca­tion as be­ing less ad­dic­tive and less sub­ject to abuse and di­ver­sion than other sim­i­lar pre­scrip­tion pain drugs. The claims were made de­spite a lack of clin­i­cal stud­ies to sup­port them, ac­cord­ing to a court doc­u­ment.

In their ap­peal, Fried­man, Gold­en­heim and Udell ar­gued that HHS doesn’t have the author­ity to ex­clude in­di­vid­u­als con­victed un­der the “re­spon­si­ble cor­po­rate of­fi­cer” doc­trine be­cause such con­vic­tions are not based on ev­i­dence that the re­spon­si­ble of­fi­cers were ac­tu­ally aware that il­le­gal ac­tiv­i­ties were tak­ing place un­der their watch.

But in her opin­ion, Hu­velle ruled that HHS had the dis­cre­tion to im­pose the ban and noted that the Pur­due ex­ec­u­tives ad­mit­ted in their pleas that they had re­spon­si­bil­ity to pre­vent or cor­rect the mis­brand­ing. “It strains credulity to ar­gue that, de­spite this ad­mis­sion, they ‘were not ac­cused of com­mit­ting any un­law­ful acts them­selves’,” she wrote.

Carder-Thomp­son said the ban is “a very, very se­ri­ous devel­op­ment.”

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