Mark Farrar, Christian Dingler, Matthew Chandler, and Greg Mills
COVID-19 and the ensuing lockdown did little to slow the workload faced by Ethics and Compliance Departments at life sciences companies. Over the past several months, Compliance professionals have had to quickly react to new risks and ways of working and provide guidance to their organizations – often via video conference from the home office.
In the months since the pandemic hit, several government agencies and industry organizations have released modified rules or guidances to reflect these unique times. In addition, the U.S. Department of Justice (DOJ) and other enforcement agencies have remained diligent in combatting fraud in the life sciences industry, as evidenced through a continued stream of enforcement actions and settlements.
The below is a summary of key guidance and enforcement actions released since March.
Open Payments Program
FDA Drug Samples Policy
In June, the U.S. Food and Drug Administration (FDA) released the document, “Samples: Temporary Policy on Prescription Drug Marketing Act Requirements for Distribution of Drug Samples During the COVID-19 Public Health Emergency.” In it, FDA outlines the agency’s temporary policy regarding certain requirements under the Prescription Drug Marketing Act (PDMA) for distribution of drug samples during COVID-19. FDA provides flexibility on the requirement to collect a physical signature upon delivery of drug samples, and offers guidance on the ability of licensed providers to request drug samples be delivered to their homes.
OIG FAQs on Application of Enforcement Authority During COVID-19
The Office of Inspector General (OIG) is accepting inquiries from the health care community regarding the application of OIG's administrative enforcement authorities, including the Federal Anti-Kickback Statute and civil monetary penalty (CMP) provision prohibiting inducements to beneficiaries. Thus far, FAQs have focused on inquiries from healthcare providers, but are helpful in understanding OIG’s position on certain COVID-related practices.
PhRMA Code on Interactions with Healthcare Professionals
The Pharmaceutical Research and Manufacturers of America (PhRMA) released guidance on providing meals to healthcare providers (HCPS) during COVID-19. The guidance specifies that company representatives who are virtually detailing an HCP may still provide a meal to the HCP’s office if the representative remains virtually “present” throughout the informational presentation, and where there is reasonable expectation the HCP will remain present as well. PhRMA reiterates its policy that field sales representatives and their immediate managers should limit provision of meals to in-office settings.
AdvaMed Code of Ethics Compliance Guidance
The Advanced Medical Technology Association (AdvaMed) released the “Code of Ethics Compliance Guidance Related to the COVID-19 Response.” The guidance specifically addresses the provision of monetary or in-kind donations in response to COVID-19 as well as standards for virtual education events. Regarding the provision of meals, AdvaMed states that companies should create a process to continue to ensure meals are not used as an inappropriate inducement and to track attendance to ensure only appropriate recipients of training/education receive meals. AdvaMed also states that companies should specify that no home delivery of meals will be permitted.
DOJ’s Updated Guidance on “Evaluation of Corporate Compliance Programs”
While not directly spurred by the challenges brought by COVID-19, the June 2020 updates to DOJ’s “Evaluation of Corporate Compliance Programs” are especially noteworthy in the current period where compliance resources are stretched thin and new business risks have materialized. Key additions to the 2019 document focus on whether the corporate compliance program is “adequately resourced and empowered to function effectively.” Another new section, “Data Resources and Access,” asks whether compliance personnel have sufficient access to the data needed to allow for timely and effective monitoring, and, if there are impediments to accessing that data, what the company is doing to address them. The document encourages companies to incorporate data-driven reviews into ongoing risk assessments.
Notable Enforcement Activity
Despite some flexibility offered for business practices in the COVID-19-era, the DOJ and other agencies have continued enforcement activity with numerous high-dollar settlements and other actions.
On June 25, the DOJ announced that Novartis Hellas S.A.C.I. (Novartis Greece), a subsidiary of Novartis AG, and Alcon Pte Ltd, a former subsidiary of Novartis AG and current subsidiary of Alcon Inc., agreed to pay a combined total of more than $233 million in criminal monetary penalties to resolve the department’s investigation into violations of the FCPA. The resolutions arise out of a Novartis Greece scheme to bribe employees of state-owned and state-controlled hospitals and clinics in Greece, and to falsely record improper payments relating to the corrupt scheme and similar conduct, as well as an Alcon Pte Ltd scheme to make and falsely record improper payments in Vietnam. Novartis AG also agreed to pay over $112 million to the U.S. Securities and Exchange Commission (SEC) in a related matter.
On July 2, the SEC announced that Alexion Pharmaceuticals Inc. agreed to pay more than $21 million to resolve FCPA-related charges. According to SEC’s order, Alexion subsidiaries in Turkey and Russia made payments to foreign government officials to secure favorable treatment for Alexion’s primary drug, Soliris. Alexion Russia and Alexion Turkey maintained false books and records of these improper payments, which Alexion’s internal accounting controls were not sufficient to detect or prevent. The SEC further stated that Alexion’s subsidiaries in Brazil and Colombia failed to maintain accurate books and records, including by creating or directing third parties to create inaccurate financial records concerning payments to patient advocacy organizations.