Monday, March 05, 2012

Former defense lawyer examines ways to limit Medicare fraud –

WASHINGTON – Katrice Bridges Copeland used to defend pharmaceutical company executives when their companies were accused of fraud.>But when she saw that Pfizer, after being accused of fraud, had entered a third corporate integrity agreement with the government and paid $2.3 billion in fines to avoid being excluded from doing business with Medicare, Copeland said she was infuriated. She sat down and wrote a 63-page paper encouraging more effective measures to get companies to comply.

"That's not even a quarter of their profits," said Copeland, a law professor at Pennsylvania State University. "I was up in arms."

Government officials say they are, too, and they've talked about incorporating some of Copeland's ideas.

"That's a question we've been struggling with for the last couple of years," said Gregory Demske, assistant inspector general for legal affairs at Health and Human Services. "We recognize there's a problem."

If a company is excluded from doing business with the government, then medications that only those companies produce will not be available to beneficiaries. But, Copeland said, the fees associated with corporate integrity agreements haven't been enough to keep companies from bilking the government again.

"It's still in the company's interest to promote off-label marketing because they're still going to make more in profits than they lose in fines," she said.

HHS officials are talking with those at the Justice Department and Food and Drug Administration to fix the problem, Demske said.

Most of the cases come from off-label marketing of prescription medications. For example, Pfizer was accused of marketing Bextra, a painkiller, for uses other than what the FDA had approved. Such uses constitute fraud because they take government money for purposes the FDA has not approved.

Instead of excluding an entire company from doing business with the government, Copeland said, the drug being marketed off-label could be excluded.

HHS officials considered that, Demske said, but they needed to ensure that beneficiaries could get their medications. The agency is considering taking away a company's patent rights as part of a settlement with the government.

That, he said, would allow other companies to make and sell the drugs to the government. Such a deal could be negotiated with companies as part of a fraud settlement and would not require congressional approval.

"We could require other things if the defendant will agree to it," he said. "If not, there might not be a settlement."

And if there's no settlement, there may be an exclusion.

Copeland suggested requiring companies to conduct clinical trials for the off-label uses they were accused of, requiring that they license a product to other manufacturers and holding high-level individuals criminally liable. Demske said that investigators began going after individuals in companies in 2010 and that they have focused resources on that idea.

Pfizer, Bristol-Myers Squibb and Abbott Laboratories did not respond to questions from USA TODAY.

"Imposing such a severe penatly on a person who had no knowledge of the wrongdoing at issue is manifestly unfair and unjust," said Matthew Bennett, senior vice president of the Pharmaceutical Research and Manufacturers of America.

The Supreme Court ruled in the 1970s that the government may go after officials who should have knowledge that fraudulent behavior is happening under their management. However, the law applies only to individuals holding a position at a company.

"If they leave, we can't reach them," Demske said. "The law is written in present tense."

The government has to send a note notifying the person that it is considering excluding them, which leaves the person plenty of time to leave the company.

"They would be free to work elsewhere," Demske said.

A bill to address the problem passed the House last year but hit the Senate too late in the session to make it to a vote. A new bill, HR 675, has been introduced.

Officials with the Centers for Medicare and Medicaid Services are looking for answers, said Ted Doolittle, deputy director of CMS' Center for Program Integrity. Instead of excluding a company, the CMS can revoke payment, which the government plans to do more aggressively, he said.

Last month, 78 home health care agencies in Texas were suspended in connection with a fraud case, and Doolittle said the CMS will not pay them for services until they are cleared of wrongdoing. First, he said, the CMS had to make sure beneficiaries would be able to get the services they need if those centers were out of business.

Congress members have suggested mandatory exclusions for crimes, but Copeland said the cases often don't reach that point because the parties settle before a proclamation and because the government has to worry about patient access.

If the government targeted individuals more aggressively, that could send a powerful message to drug companies, said Stan Twardy, leader of law firm Day Pitney's health care compliance group.

"Something called a jail is going to send a lot stronger signal than a fine," he said. "The regulations can change, but individuals and companies will take advantage of any loopholes they may find. It's part of that game of maximizing profits."

Under a system of agreements and fines, he said, the corporate culture will remain the same.

Copeland said she doesn't think that's enough.

"If you go after the sales manager because the sales manager could have prevented the fraud, it doesn't change the corporate culture," she said. "The more prescriptions, the more money you make, so the incentive remains."

Patrick Burns, spokesman for the non-profit Taxpayers Against Fraud, said although there may be differences of opinion, there is a greater sense or urgency about fighting the problem.

"We're all thinking the same thing," Burns said of investigators and Congress members. "The good news is they're pushing to actually do it."

Posted via email from Jack's posterous

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