Key insights from the 16th Annual Pharmaceutical Compliance Conference in Washington, DC

US Healthcare Fraud and Enforcement Panels

A day-one panel included current prosecutors working for US Attorney's offices as well as two former prosecutors. Prosecutor efforts have focused on the opioid crisis, kickbacks and bribes paid to doctors in exchange for patient referrals, and off-label promotion. The US Attorney's office of New Jersey recently created a full-time opioid enforcement unit, as prosecutors have focused on all aspects of the opioid supply chain including manufacturers, pharmacies, pharmacy benefit managers, and prescribers. Investigators have seen cases valued at more than $1 billion and noted that cases are becoming more elaborate and sophisticated.

In a day-two panel, Jane Yoon of Paul Hastings LLP led a discussion with a former Special Agent of the OIG, an attorney for the FTC, a Supervisory Special Agent in the FBI, and an Assistant Chief of the DOJ's FCPA Unit. The panel focused on recent enforcement trends and high priority risk areas, noting that the ways of detecting and identifying cases have changed drastically in the past 20 years. The FBI and DOJ utilize informants, media, open source data, self-disclosure, cooperation with foreign regulators, and data analytics to identify and assist with cases. In 2018, the DOJ formed two additional regional Medicare Strike Force Teams (Appalachian and Newark/Philadelphia regional teams) that target healthcare fraud and opioid over-prescription. These teams are staffed with individuals that specialize in healthcare fraud and abuse.

The DOJ revised the FCPA Corporate Enforcement Policy in March 2019 to relax and clarify criteria for self-disclosure and data retention. The initial policy did not intend to prohibit companies from allowing the use of ephemeral messaging services. The DOJ expects policies and systems to be in place to capture the information when employees use these services, which would fall under a company's data retention policy. The Policy also noted that in regards to mergers and acquisitions, the DOJ expects pre-acquisition due diligence; additionally, if a company conducts a more formal investigation post-acquisition and uncovers misconduct, the Policy provides cooperation credit if the company self-discloses the misconduct to the DOJ.

The Federal Trade Commission is continuing to focus on price fixing within the pharmaceutical industry. They are looking for companies who are trying to "game the system "and try to extend the period of exclusivity of products through "pay for delay "schemes.

Workshops

A panel that included Kelly Pitt of Sobi Inc., Joyce Hsu of Sanofi US, and Jim Knepp of Johnson & Johnson shared their experiences and discussed critical components of developing auditing, monitoring, and data analytic programs. Critical components of developing these programs include business partner sponsorship, consistency of approach, establishing a governance model, and continuous refinement.

In a workshop focused on discussing auditing and monitoring of third-parties, Lori Queisser, Senior Vice President, Global Chief Compliance Officer, of Teva Pharmaceuticals discussed the evolution of Teva's approach to third party due diligence and the recent creation of a global database of approved vendors used within the organization. This database allows business users the ability to select from a list of pre-approved, previously vetted vendors who require no further due diligence.

In a think tank session focused on conducting investigations, the objectives and various benefits of the investigation were discussed. The general phases of an investigation outlined by the panelists are identification, design, implementation, and conclusion. The first two-three days of any investigation set the stage for the remaining phases. The identification stage includes understanding the issue, categorizing the allegation, and determining if an investigation is necessary. One of the key aspects of the design phase of the audit is identifying an effective investigation team that is multi-disciplinary and collaborative, has clearly identified roles and responsibilities, and has relevant and diverse experience. In the implementation stage, the panel noted key considerations when conducting interviews including disclosures, location, and strategy. The interviewer should have a plan, but be ready to modify and go off-script.

Keynote Speakers

In a keynote address from J. Kevin Foster, Founder and CEO of Business Ethics Advisors and former Executive Vice President, Finance of Peerless Real Estate Services, Mr. Foster shared his personal story and involvement in a criminal case that lead to a five year prison sentence. He spoke about how he and other business executives fell into ethical traps which allowed a $100 million fraud to take place. Within the presentation, Mr. Foster discussed the E.T.H.I.C.S traps: exaggerated ego, temptation, hijacked by outside pressure, integrity failures of leadership, consequences not considered, and stinking thinking. The presentation referenced the numerous well-known companies that have faced scandals in recent years and noted how most of these cases began with small unethical slips.

A panel discussion focused on the future of the Compliance profession noted that corporate compliance has shifted from reactive to proactive since the "compliance boom "in the 2000s. Compliance departments are now independent and empowered functions within organizations. OIG guidance says that the Chief Compliance Officer should report independently to the board rather than the CFO or to the Legal Department. The Chief Compliance Officer is no longer a lieutenant of the Legal Department, but rather an independent, multidisciplinary subject matter expert who is involved in all components of an organization.

Global Compliance - Spotlight on High Risk Markets

David King, Ethics and Compliance Officer at Merck discussed the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), whose members include major multinational companies as well as regional and national industry associations such as PhRMA, EFPIA, and JPMA. Member companies are required to adopt the IFPMA Code of Practice and industry associations are required to implement local codes consistent with the IFPMA Code. In 2019, the IFPMA Code of Practice has moved from rules-based to principle based ethos. Additional 2019 significant changes include a complete ban on all product-branded promotional aids for Rx only products, allowing minimal value corporate-branded pens and pads at company organized events for the purpose of note-taking during the meeting, and a complete ban on all personal gifts to healthcare professionals including cultural/customary gifts that were previously permitted. Guidelines related to items of medical utility were presented which allow devices such as inhalation devices and devices intended to assist patients, but do not permit basic supplies (i.e., stethoscopes, surgical gloves, blood pressure monitors, and needles). Educational materials are permitted as long as the item does not have independent value.

The panelists also discussed the regulatory, operational, and compliance risk considerations working in Japan, Russia, Turkey, and China. Each market presents unique risks when a company conducts or is considering conducting business in these countries. Ryan Lenz, VP and Head of Europe, Middle East, Africa, and Asia Audit and Assurance at GSK discussed his company's approach to third party audits. Recognition of third party risk lead to the development and increased use of third party audits focused on FCPA risk and commercial activities.