PRICE FIXING Three generic pharmaceutical manufacturers – Taro Pharmaceuticals USA, Inc., Sandoz Inc. and Apotex Corporation – agreed to pay a total of $447.2 million to resolve allegations that the companies conspired to fix the price of various generic drugs, which resulted in higher drug prices for federal healthcare programs and beneficiaries. 236 The government alleged that between 2013 and 2015, all three companies paid and received compensation prohibited by the AKS through arrangements on price, supply and allocation of customers with other pharmaceutical manufacturers for certain generic drugs manufactured by the companies. Taro agreed to pay $213.2 million, Sandoz agreed to pay $185 million, and Apotex agreed to pay $49 million. Each company also entered a five-year CIA with HHS-OIG that included internal monitoring and price transparency provisions, risk assessment programs, executive recoupment provisions and compliance-related certifications from company executives and board members. In addition, all three companies previously entered into deferred prosecution agreements with the Antitrust Division to resolve related criminal charges and paid fines unrelated to the FCA penalties. 237 Taro paid a criminal penalty of $205.6 million and admitted to conspiring with two other generic drug companies to fix prices. Sandoz paid a criminal penalty of $195 million and admitted to conspiring with four other generic drug companies to fix prices. Apotex paid a criminal penalty of $24.1 million and admitted to conspiring to increase and maintain the price of a product called Pravastatin. CERTIFICATES OF MEDICAL NECESSITY Bioventus, LLC, a global medical technology company, agreed to pay the government $3.6 million to resolve FCA allegations that Bioventus submitted improperly completed certificates of medical necessity (CMN) for medically unnecessary devices. This resolution stemmed from a written self-disclosure made by Bioventus to HHS-OIG, which later transferred the matter to the U.S. Attorney’s Office for the Middle District of North Carolina. The self-disclosure was triggered when Bioventus discovered that sales representatives were completing Section B of the CMN for a device that stimulated bone growth called Exogen. This was improper because Medicare requires that Section B of the CMN be completed by the treating physician or the physician’s office. The government praised Bioventus for self-disclosing this issue stating, “Better to catch it and self-disclose than for us to discover it and come calling .” 238
with U.S. healthcare professionals. The PhRMA Code provides guidance and reinforces that pharmaceutical company interactions with healthcare professionals must be compliant. PhRMA updated its principles applicable to company-sponsored speaker programs and clarified other provisions of the PhRMA Code in response to recent government activity in this space. The updated PhRMA Code is effective as of January 1, 2022. The PhRMA Code recognizes that company-sponsored speaker programs provide important substantive educational information about drugs and disease states. As a result, the purpose of a speaker program should be to present substantive educational information designed to help address a bona fide educational need among attendees. Invitations should be limited to those who have a bona fide educational need for the information presented. In addition, meals offered as an incidental business courtesy to attendees of company-sponsored speaker programs should be modest as judged by local standards, no alcohol should be paid for or provided, and high-end restaurants and other such venues are not appropriate locations for speaker programs. Finally, repeat attendance at a speaker program on the same or substantially the same topic where a meal is provided to the attendee is generally not appropriate, unless the attendee has a bona fide educational need to receive the information presented. Attendance by speakers as participants at programs after speaking on the same or substantially the same topic is also generally not appropriate. See the updated PhRMA Code for more information. 235 Three generic pharmaceutical manufacturers – Taro Pharmaceuticals USA, Inc., Sandoz Inc. and Apotex Corporation – agreed to pay a total of $447.2 million to resolve allegations that the companies conspired to fix the price of various generic drugs, which resulted in higher drug prices for federal healthcare programs and beneficiaries.
236 https://www.justice.gov/opa/pr/pharmaceutical-companies-pay-over-400-million-resolve-alleged-false- claims-act-liability. 237 United States v. Taro Pharmaceuticals U.S.A., Inc. , No. 20-cr-13 (E.D. Pa.) (Information & Deferred Prosecution Agreement filed 7/23/20); United States v. Sandoz , Inc., No. 20-cr-111 (E.D. Pa.) (Information & Deferred Prosecution Agreement filed March 3, 2020); United States v. Apotex Corp. , No. 20-cr-169 (E.D. Pa.) (Information & Deferred Prosecution Agreement filed May 6, 2020). 238 https://www.justice.gov/usao-mdnc/pr/bioventus-agrees-pay-more-36-million-resolve-false-claims-act- violations.
235 https://phrma.org/-/media/Project/PhRMA/PhRMA-Org/PhRMA-Org/PDF/P-R/PhRMA-Code---Final.pdf.
PHARMACEUTICAL AND MEDICAL DEVICE DEVELOPMENTS BASS, BERRY & SIMS | 42
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