Because No One is Immune to the Law
January 10, 2020 - United States, FDA, Medical Devices + Diagnostics, Litigation, Biotech, Healthcare, Pharma, Regulatory

2019 FDA Enforcement and Related Litigation Trends (Part 3)

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Our earlier posts (part 1 and part 2) looked at a few overall trends at FDA as well as the impact of consent decrees issued in 2019. Today we will highlight some enforcement trends at the Department of Justice.

Department of Justice Enforcement Trends

In 2019, the Department of Justice (DOJ) increased its enforcement on opioid manufacturers, distributors, and pharmacies.  On February 8, 2019, the DOJ announced the issuance of a temporary restraining order to stop two Tennessee pharmacies, their owner, and three pharmacists from dispensing controlled substance medications, including opioids.  The complaint alleged that the pharmacies and pharmacists were dispensing and billing Medicare for prescriptions in violation of the Controlled Substances Act and False Claims Act, and that the unlawful dispensing of opioids was tied to the deaths of at least two people and numerous other serious overdoses.  Specifically, the complaint alleges that defendants dispensed controlled substances while ignoring signs of abuse, and falsely billed Medicare for illegally dispensed prescriptions.

On April 9, 2019, a grand jury in Virginia indicted Indivior Inc. (formerly known as Reckitt Benckiser Pharmaceuticals Inc.) for engaging in an illicit nationwide scheme to increase prescriptions of an opioid drug used in the treatment of opioid addiction.  The indictment alleges that Indivior promoted its drug without regard for safety concerns and risk of abuse.  Principal Deputy Associate Attorney General Jesse Panuccio noted that “The Department of Justice intends to hold accountable those who are in position to know the harm opioid abuse inflicts, but instead choose to profit illegally from the pain of others.  Manufacturers, distributors, pharmacies, and doctors should all be on notice that they must follow the law and act responsibly.”  On July 11, 2019, Reckitt Benckiser Group agreed to pay $1.4 billion to resolve these claims, including $647 million in forfeiture of proceeds, $700 million for false claims to government healthcare programs, and $50 million to resolve claims with the FTC for unfair methods of competition.  Acting Commissioner Sharpless stated, “Opioid addiction and abuse is an immense public health crisis and taking steps to address it is one of the FDA’s highest priorities . . . .  We also are particularly concerned with schemes to game the drug approval process to prevent generic competition for important medicines.  The FDA, including criminal investigators in our Office of Regulatory Affairs and the lawyers in our Office of Chief Counsel, will continue to work with the Department of Justice to investigate and hold accountable those who devise and participate in schemes to the detriment of the public health.” 

The DOJ also brought several actions against companies offering copay support to patients through donations to independent charitable foundations.  The focus on independent charitable foundations may be related to the government’s general concern for drug pricing, as press releases related to settlements for independent charitable foundation cases frequently noted that these copay foundations were seen as schemes to support elevated drug prices.  For example, on April 4, 2019, the U.S. Attorney’s Office announced that three pharmaceutical companies – Jazz Pharmaceuticals, Lundbeck, and Alexion Pharmaceuticals – agreed to pay a total of $122.6 million to resolve allegations that they paid kickbacks to Medicare and Civilian Health and Medical Program patients through purportedly independent charitable foundations, violating the False Claims Act.  While announcing the settlement, United States Attorney Andrew E. Lelling stated, “We are committed to ensuring that pharmaceutical companies do not use third-party foundations to pay kickbacks masking the high prices those companies charge for their drugs . . . .  This misconduct is widespread, and enforcement will continue until pharmaceutical companies stop circumventing the anti-kickback laws to artificially bolster high drug prices, all at the expense of American taxpayers.”

Paid physician speaker programs and other payments to physicians also continued as a focus for the DOJ in 2019 through Anti-Kickback Statute and False Claims Act claims.  For example, on September 26, 2019, the DOJ announced that Avanir Pharmaceuticals agreed to pay $95,972,017 to resolve allegations under the False Claims Act arising from the company providing remuneration in the form of money, honoraria, travel, and food to certain physicians to induce them to write prescriptions for Nuedexta, and specifically, payment to healthcare professionals for speaker programs based on their willingness to prescribe the product.  Enforcement for these types of programs has been prevalent over the past couple of years, and there have been no signals that we should expect anything different in 2020. 

Conclusion

Overall, it has been a year of continuing trends, with a few new areas of focus dispersed throughout the year for FDA.  We look forward to seeing what 2020 brings, especially under the new leadership and priorities of Commissioner Stephen Hahn.