Doc­tors in­ter­est of

Re­cip­i­ents of sus­pect drug-com­pany pay­ments draw­ing at­ten­tion of fed­eral fraud en­forcers

Modern Healthcare - - COVER STORY -

It takes two sides to cre­ate a kick­back. But un­til re­cently, the re­cip­i­ents of il­le­gal pay­ments in health­care have faced far fewer le­gal con­se­quences than the huge cor­po­ra­tions ac­cused of hand­ing out the for­bid­den lu­cre. Many pos­si­ble rea­sons have been of­fered as to why physi­cians and other health­care providers have his­tor­i­cally faced lit­tle, if any, scru­tiny in cases of al­leged kick­backs and bribery and sub­tler forms of ma­nip­u­la­tion of drug-pre­scrib­ing pat­terns. But that may be chang­ing.

The fed­eral gov­ern­ment’s fo­cus on waste in health­care spend­ing has never been more in­tense, ow­ing to the grow­ing cost pres­sures and con­cern over Medi­care’s fu­ture. In­sid­ers in the en­force­ment and le­gal de­fense com­mu­ni­ties in health­care say there’s rea­son to ex­pect the scru­tiny will trickle down to indi- vid­ual physi­cians and other providers, though such cases are of­ten tough to prove in court.

“Even though there have been a lot of high­pro­file pros­e­cu­tions and other civil and crim­i­nal agree­ments with com­pa­nies, the physi­cians or providers ab­so­lutely should not be lulled into be­liev­ing that they are not tar­gets,” said Rod­er­ick Thomas, chair­man of the whitecol­lar and gov­ern­ment in­ves­ti­ga­tions prac­tice for Wi­ley Rein in Wash­ing­ton. “It is crit­i­cally im­por­tant that physi­cians have a strong com­pli­ance pro­gram.”

Hos­pi­tals, in­clud­ing many aca­demic med­i­cal cen­ters, have be­gun to mon­i­tor their physi­cians’ fi­nan­cial re­la­tion­ships through re­port­ing pro­grams that re­quire dis­clo­sures of com­pen­sa­tion from health­care man­u­fac­tur­ers. One such sys­tem is the Cleve­land Clinic, which in 2008 be­gan pub­lish­ing physi­cians’ com­pen­sa­tion from in­dus­try and eq­uity own­er­ships in med­i­cal prod­uct com­pa­nies (July 5, 2010, p. 6).

“It be­hooves aca­demic med­i­cal cen­ters to stay on top of this kind of in­for­ma­tion and con­sider what kinds of re­la­tion­ships are ap­pro­pri­ate and not ap­pro­pri­ate for their

physi­cians,” said Har­vard as­sis­tant pro­fes­sor Aaron Kes­sel­heim, also a lawyer and an in­ternist in phar­maco-eco­nom­ics at Brigham and Women’s Hospi­tal, Bos­ton.

“They don’t like it when they open the news­pa­per and see a story about one of their physi­cians’ fi­nan­cial en­tan­gle­ments that they didn’t know about,” he said.

Bil­lions of dol­lars have flowed into fed­eral cof­fers in re­cent years from phar­ma­ceu­ti­cal com­pa­nies ac­cused of us­ing un­der­handed tac­tics to ma­nip­u­late how doc­tors pre­scribe drugs, whether though al­leged vi­o­la­tions of the An­ti­Kick­back Statute, the False Claims Act or the For­eign Cor­rupt Prac­tices Act, or other laws.

This month, Pfizer agreed to pay $60 mil­lion to set­tle al­le­ga­tions with­out ad­mit­ting wrong­do­ing that it had long main­tained a sys­tem of brib­ing doc­tors in eight coun­tries to pre­scribe its drugs. In July, Glax­oSmithK­line agreed to pay a record $3 bil­lion in fines and set­tle­ments in an agree­ment that in­cluded the cor­po­ra­tion plead­ing guilty to mis­brand­ing drugs by pub­lish­ing mis­lead­ing med­i­cal re­search and pay­ing in­flu­en­tial physi­cians to pro­mote off-la­bel uses (See chart).

Dr. John Santa, a for­mer in­ternist who is di­rec­tor of the Con­sumer Re­ports Health Rat­ings Cen­ter, said physi­cians who take money to al­low drug­mak­ers to boost sales through in­ap­pro­pri­ate means should be held ac­count­able, es­pe­cially if they work for the man­u­fac­tur­ers di­rectly or as highly paid “de facto” em­ploy­ees.

“It’s bad for the pro­fes­sion,” Santa said. “And the pro­fes­sion needs to re­al­ize that doc­tors who do in­ap­pro­pri­ate things and, as a re­sult, make a lot of money should be held to crim­i­nal stan­dards, whether they do it in­di­vid­u­ally or in a com­pany.”

Santa said that even the doc­tors who lend their influence to a drug com­pany by pub­licly recit­ing mar­ket­ing points ought to share blame when prob­lems with the drugs turn up: “They’re doc­tors that other doc­tors lis­ten to. And in my mind, that is a (group) that we don’t hold ac­count­able. In part, we haven’t known who they are. We are go­ing to know who they are now.”

In 2008, HHS’ in­spec­tor gen­eral’s of­fice started in­clud­ing re­quire­ments in cor­po­rate in­tegrity agree­ments with large drug com­pa­nies that any and all pay­ments to doc­tors be pub­licly dis­closed on their web­sites.

Two years later, a sim­i­lar re­quire­ment was en­shrined in­dus­try­wide in the Pa­tient Pro­tec­tion and Af­ford­able Care Act. Known as the Physi­cian Pay­ments Sun­shine Act, the re­form pro­vi­sion kicks in March 31, 2013, and will re­quire all drug com­pa­nies and de­vice­mak­ers to dis­close pay­ments to doc­tors. Those dis­clo­sures will be pub­lished on­line an­nu­ally, ac­cord­ing to the law (Dec. 19, 2011, p. 12).

Mary Rior­dan, a se­nior coun­sel to HHS’ in­spec­tor gen­eral’s of­fice who has helped write cor­po­rate-in­tegrity agree­ments with sev­eral large drug com­pa­nies, in­clud­ing GSK’s in July, said pub­lic dis­clo­sures may lead to pa­tients ques­tion­ing their physi­cians’ fi­nan­cial ar­range­ments with drug­mak­ers.

“And some­times those are per­fectly le­git­i­mate re­la­tion­ships for a doc­tor to have with a man­u­fac­turer,” Rior­dan said. “There are other sit­u­a­tions where the re­la­tion­ship be­tween the doc­tor and the man­u­fac­turer is sus­pect.”

Ex­perts say large com­pa­nies of­fer much more at­trac­tive tar­gets, fi­nan­cially and in the pur­suit of the wider goal of chang­ing in­dus­try prac­tices. Com­pa­nies may also be eas­ier to dig up in­crim­i­nat­ing ev­i­dence against, and they may ac­tu­ally tend to want to set­tle a case faster be­cause the pro­fes­sional dam­age to a cor­po­ra­tion may not be as se­vere as to an in­di­vid­ual doc­tor.

Rior­dan ac­knowl­edged that she has heard rep­re­sen­ta­tives for phar­ma­ceu­ti­cal com­pa­nies grouse about the lack of cases filed against doc­tors when ma­nip­u­la­tion of med­i­cal judg­ment is al­leged.

“My re­sponse to that is typ­i­cally, if there is a doc­tor you’d like us to look at, give us a name,” she said.

Spokes­peo­ple with the Amer­i­can Med­i­cal As­so­ci­a­tion and the Phar­ma­ceu­ti­cal Re­search and Man­u­fac­tur­ers of Amer­ica did not re­turn re­quests for in­ter­views.

For­eign cor­rup­tion

Sev­eral large health­care man­u­fac­tur­ers with U.S. op­er­a­tions are cur­rently un­der in­ves­ti­ga­tion for al­leged transactions with doc­tors in other coun­tries.

In Novem­ber 2009, the Jus­tice Depart­ment’s As­sis­tant At­tor­ney Gen­eral for the Crim­i­nal Division, Lanny Breuer, an­nounced a new fo­cus on health­care com­pa­nies that do busi­ness over­seas. The in­ves­ti­ga­tions would be con­ducted by a group of pros­e­cu­tors with deep ex­pe­ri­ence us­ing the For­eign Cor­rupt Prac­tices Act, he said.

At least half a dozen drug­mak­ers have re­ported re­ceiv­ing re­quests for in­for­ma­tion re­lated to FCPA probes, in­clud­ing Teva Phar­ma­ceu­ti­cals, which dis­closed a probe just this month.

On Aug. 7, New York-based Pfizer and its sub­sidiary Wyeth agreed to pay more than $60 mil­lion to set­tle al­le­ga­tions with­out ad­mit­ting wrong­do­ing that the two com­pa­nies main­tained an ex­ten­sive pro­gram to bribe doc­tors to buy its prod­ucts in coun­tries in­clud­ing Bul­garia, China, Croa­tia, the Czech Repub­lic, Italy, Kaza­khstan, Rus­sia and Ser­bia.

A state­ment from Pfizer said the com­pany self-re­ported the vi­o­la­tions and noted that in­ves­ti­ga­tors praised its “thor­ough and re­spon­sive” han­dling of the al­le­ga­tions.

The first phar­ma­ceu­ti­cal maker to set­tle such a case was New Jersey-based John­son & John­son, which in April 2011 took re­spon­si­bil­ity for the brib­ing charges it self-re­ported in 2007 that its em­ploy­ees in Greece, Poland and Ro­ma­nia vi­o­lated the law by brib­ing doc­tors to in­duce them

to buy and use the com­pany’s drugs and de­vices.

The U.S. Se­cu­ri­ties and Ex­change Com­mis­sion com­plaint against J&J quoted a 2005 email from a vice pres­i­dent at the com­pany’s DePuy sub­sidiary as say­ing that no one in the in­dus­try com­plied with Euro­pean an­tib­ribery laws, and that do­ing so would cause a cor­po­ra­tion to lose 95% of its busi­ness.

The J&J de­ferred-pros­e­cu­tion agree­ment with the U.S. gov­ern­ment re­quires it to co­op­er­ate with do­mes­tic and for­eign in­ves­ti­ga­tors ex­am­in­ing the con­duct of its own em­ploy­ees and those of other com­pa­nies, but ex­perts say it would be rare for ac­tual doc­tors to be pros­e­cuted in those cases. A com­pany spokesman de­clined to com­ment.

Jen­nifer Fis­cher, an as­so­ciate at­tor­ney with Ar­ent Fox in Wash­ing­ton, said ju­ris­dic­tional is­sues pose a bar­rier to such cases. The FCPA ap­plies to cor­rup­tion of gov­ern­ment of­fi­cials, but pros­e­cu­tors can use it to in­clude doc­tor-bribery in coun­tries that have gov­ern­ment-run health­care sys­tems.

“The physi­cians that are re­ceiv­ing the pay­ments or re­mu­ner­a­tions are usu­ally em­ployed by health­care fa­cil­i­ties in other coun­tries, so they don’t come un­der U.S. ju­ris­dic­tion,” Fis­cher said. “Even as­sum­ing the gov­ern­ment wanted to go af­ter the physi­cians— which it’s not clear that they do, con­sid­er­ing that they don’t do much in the Anti-Kick­back realm—they couldn’t.”

Do­mes­tic chal­lenges

Be­yond mere ju­ris­dic­tional is­sues, cases against doc­tors pose tougher chal­lenges and pro­vide smaller re­wards than charges against the com­pa­nies.

Jac­que­line Wolff, who co-chairs the cor­po­rate in­ves­ti­ga­tions and white-col­lar de­fense group at Manatt, Phelps & Phillips in New York, said the chances are bet­ter of dig­ging up in­crim­i­nat­ing ev­i­dence against a com­pany that might have hun­dreds of em­ployee e-mail ac­counts to scour for mes­sages ca­su­ally dis­cussing kick­back ar­range­ments, as com­pared with a sin­gle doc­tor’s cor­re­spon­dences.

And un­der the fed­eral Anti-Kick­back Statute, a pros­e­cu­tor must prove a doc­tor knew he or she had will­ingly re­ceived or so­licited pay­ments in ex­change for pur­chas­ing goods that were later billed to Medi­care—a high ev­i­den­tiary bar to meet with­out di­rect ev­i­dence such as e-mails.

“You’ll have a doc­tor who will say, ‘I have been given a con­sult­ing agree­ment be­cause I’m an ex­pert in the field, and I pre­scribe this drug, and I be­lieve in this drug, and that is the only rea­son why,’ ” Wolff said. “That makes it a very much more dif­fi­cult case to bring against a physi­cian.”

De­fense at­tor­neys also noted that while gov­ern­ment of­fi­cials might not ad­mit it pub­licly, pros­e­cu­tors stand to gain more fi­nan­cially from pros­e­cut­ing phar­ma­ceu­ti­cal com­pa­nies that pay out bil­lions in set­tle­ments— the so-called “deep pock­ets” ra­tio­nale.

“I don’t think even the gov­ern­ment would dis­agree that while there is fraud and abuse out there to be gone af­ter, it has been a big mon­ey­maker for the gov­ern­ment,” said Ar­ent Fox’s Fis­cher. “There is a lot of money to be made from big cor­po­ra­tions. But even if a physi­cian is mak­ing re­ally good money, he can only pay so much.”

How­ever, Lewis Mor­ris, the long­time chief coun­sel for HHS’ in­spec­tor gen­eral who re­tired in April, re­minded one au­di­ence at an Amer­i­can Bar As­so­ci­a­tion physi­cian le­gal is­sues con­fer­ence in Chicago in June 2011 that “it takes two to have a kick­back.”

In his re­marks, Mor­ris ac­knowl­edged that al­though the of­fice had not been as ef­fec­tive at look­ing at the physi­cians who re­ceive kick­backs, it had started re­quir­ing com­pa­nies set­tling cer­tain schemes to co­op­er­ate in fu­ture in­ves­ti­ga­tions of pay­ment-seek­ing doc­tors.

Scott Taebel, a Mil­wau­kee-based Hall Ren­der at­tor­ney who fo­cuses on com­pli­ance work in­clud­ing Anti-Kick­back al­le­ga­tions, said in­dus­try lawyers have taken note of the in­creased will­ing­ness to at least gather ev­i­dence on in­di­vid­u­als’ ac­tions dur­ing cases against ma­jor cor­po­ra­tions.

“It does seem to be more fo­cused on the man­u­fac­turer or the hos­pi­tals, but the tide may be turn­ing,” he said.

Pfizer paid $60 mil­lion this month to set­tle al­le­ga­tions with­out ad­mit­ting wrong­do­ing that it had main­tained a sys­tem of al­legedly brib­ing doc­tors to pre­scribe its drugs. The com­pany said the gov­ern­ment praised its self-re­port­ing of the ac­cu­sa­tions.

HHS’ in­spec­tor gen­eral’s of­fice in 2008 in­cluded re­quire­ments in agree­ments with large drug com­pa­nies that all pay­ments to doc­tors be pub­licly dis­closed.

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