Top high-risk areas in pharmaceutical M&A transactions

Speaker programs, government price reporting and patient support programs are among the top compliance risk areas in M&A transactions, experts say.

At the recent Pharmaceutical Compliance Congress, panelists during the “Managing M&A and Licensing Agreements” session identified these key risk areas requiring careful examination. Here’s what they said:

Speaker programs

Speaker programs serve as an essential purpose for pharmaceutical companies: They’re a key way to educate healthcare professionals (HCPs) about new products and relevant diseases. However, these programs aren’t without their difficulties and come with compliance risks that companies must manage carefully.

Mark Casey, chief legal officer and corporate secretary at Novavax, described speaker programs as “one of the hottest areas” for compliance focus during M&A transactions and have also been subject to recent settlements.

For example, in April, Gilead Sciences agreed to pay a $202 million settlement over speaker programs kickback allegations.

Alison Fethke, counsel at Ropes & Gray LLP, suggested that speaker programs “clearly would be something to spend some time on … digging a little bit on general pharma code compliance.”

Agreeing with Fethke, Casey said, “You’ve got to dig deep because it’s easy for people to try to justify what they’re doing, especially in terms of speaker programs.

“You find the red flags, which are: particular speakers getting most of the gigs, speakers receiving a lot of money, and speakers who also happen to be among your biggest purchasers of a product,” he continued.

Speaker programs often signal potential Anti-Kickback Statute violations that can trigger whistleblower lawsuits and government investigations, the panelists noted.

Government price reporting

According to Fethke, price reporting errors can rapidly multiply into substantial financial penalties.

“If you have a company with a commercial product, I highly recommend that you do some pretty detailed diligence on their price reporting because errors in price reporting, the fines multiply very quickly,” she said.

Casey further noted that price reporting has to be “a key and deep area of your diligence.

“You have a long tail for potential liability, and remediation effort can be substantial,” he said.

Patient support programs

Fethke highlighted how patient support programs are now a fundamental expectation for most pharmaceutical companies, especially in specialized or competitive markets. She stated she frequently encounters issues with these programs during transactions and noted that data rooms often lack sufficient information about them. A data room is a secure, centralized digital hub for all documents pertinent to a potential merger or acquisition.

She advises examining a product’s website, especially its patient support sections. This often reveals crucial details typically absent from formal documentation.

Fethke listed key areas to investigate, which include:

• The scope and breadth of the programs

• Vendor arrangements and partnerships

• Data flows and how patient information is managed

• Consent forms and patient agreements

• The operational backend of the programs

• Specific eligibility terms and criteria

• The financial benefits provided to patients

• How free drug programs are administered

“It’s an area where there is a lot of movement, and there’s a lot of overlapping legal concerns,” Fethke said.

Field team coordination

According to Tim Moore, vice president, head of legal and compliance, secretary, at Corium — a biopharma company that focuses on CNS therapies — another area deserving scrutiny is the coordination between medical and commercial departments, especially regarding field operations.

This coordination introduces several compliance considerations:

• Joint field activities: When and how medical and commercial representatives appear together at healthcare facilities or events

• Communication alignment: Ensuring consistent messaging that remains within regulatory boundaries

• Role delineation: Maintaining appropriate separation between scientific exchange and promotional activities

While Moore acknowledged that “there may not be a lot of off-label risk” in some cases, he suggested that field coordination should be “something to consider when making that list of things you want to focus on” during compliance assessments.

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