Industry examples offer a blueprint for stronger compliance

Companies can learn from recent industry settlements and Department of Justice (DOJ) guidance to stay in the know.

One of the key themes emerging from a panel at the recent Pharmaceutical Compliance Congress was the importance of actively monitoring and learning from industry settlements. As David Schumacher, partner at Hooper Lundy Bookman, noted, “When these settlements or the advisory opinions are coming down, are you going through it?”

David Schumacher, partner at Hooper Lundy Bookman

Companies need to demonstrate active engagement and evolution of their programs based on industry developments. “Just the fact that we have a program isn’t enough anymore,” Schumacher said, highlighting the government’s expectation that organizations should be “synthesizing what the government is telling us and changing and updating our programs as a result.”

The two recent cases below demonstrate how proactive compliance measures can mean the difference between minor corrections and major enforcement actions.

Example 1

Schumacher described its client, a New England health system, that took immediate action after observing a competitor’s settlement. Here the competitor was not following CMS’s national coverage decisions for a medical procedure, which were ultimately determined to be false claims. The health system’s compliance team thought it had better look at its records since they conducted the same procedure. They identified some problematic coding and claims issues and promptly initiated a self-disclosure to CMS.

While this resulted in some financial penalties [if the federal government overpays you, that has to be reported and the amount of overpayment returned], the outcome was far more favorable than waiting for government intervention, Schumacher said.

This case exemplifies how monitoring industry settlements can serve as an early warning system for potential compliance issues.

Example 2

Another case involved rare and ultrarare disease biopharma Ultragenyx and kickbacks, which resulted in a $6 million settlement. Here the company provided a free genetic testing program aimed to help patients access the necessary diagnostics that would inform the HCP of the results, thus triggering a prescription for its drug. All of this was above board and provided free access to testing.

However, it went bad when Ultragenyx also then separately paid the contracted laboratory that was carrying out the diagnostic, to provide the test results, the name of the HCP who ordered the test, a de-identified patient ID number, and the date the test was ordered. Ultragenyx used the information to tell its sales force to visit the HCPs who ordered a test or had a patient with a positive test result.

This contrasts sharply with the December 2024 Office of Inspector General (HHS-OIG) Advisory Opinion No. 24-12 that approved a similar program that maintained stricter information barriers.

The opinion listed the following as a reason for its positive opinion:

• Strict eligibility criteria based on clinical and family history
• Information barriers and safeguards
• No billing to patients or payors for any component of genetic testing or counseling
• Testing focused on an ultrarare condition
• Program designed to screen and often rule out conditions rather than directly lead to prescriptions

It specifically noted “that the OIG would likely have issued a negative opinion if there had been a ‘more direct nexus’ between the free testing and the purchase of drugs, highlighting the importance of maintaining appropriate information barriers in such programs.”

Shumacher added he thought that the timing of the Advisory Opinion six months after a DOJ settlement was fairly quick and attributed that as the OIG trying to provide guidance to industry on this evolving topic.

For these types of programs, Shumacher advised taking a page from the DOJ’s recent compliance guidance and ask three questions about your program:

• Is the program well designed?
• Is it adequately resourced and empowered to function effectively?
• Does it work in practice?

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