As the Covid-19 pandemic recedes, we have seen healthcare fraud investigations by the US Department of Justice and other regulators in the healthcare and life sciences space surge, and there is no sign of this trend abating.
The False Claims Act (FCA) is the primary civil enforcement mechanism to police violations of laws and regulations applicable to healthcare and life sciences companies. Cases can be brought by the Government directly, or by whistleblowers (“relators” under the FCA), and damages and penalties for violations can be staggering.
Broadly speaking, the FCA prohibits submitting false claims to Government payors (e.g., Medicare) or, as is particularly relevant to manufacturers that do not directly bill government payors, “causing” someone else to submit false claims. For example, if a pharmaceutical manufacturer markets a product off-label, it may be accused of causing prescribers to submit false claims for uses of a product that are not medically accepted and thus are not covered.
The Anti-Kickback Statute (AKS) is another tool frequently deployed in the life sciences space. It prohibits paying or receiving remuneration in exchange for referrals of business reimbursed by federal healthcare programmes, and can be pursued criminally, civilly as a predicate for an FCA claim, or administratively. A “classic” AKS allegation is that a pharmaceutical or device manufacturer paid kickbacks to doctors in exchange for prescribing their products, but the AKS also gives rise to more nuanced theories of liability.
New areas of focus have emerged in the heightened enforcement atmosphere post-COVID, including COVID-19 treatments, rare diseases, genetic testing arrangements, private equity investments in healthcare and life sciences, and clinical trial fraud. These join the fields in which the Government has routinely been interested, such as speaker programmes, off-label marketing, patient assistance, expensive pharmaceuticals, and commission-based arrangements with independent contractors.
It is no surprise that effective compliance programmes are critical to detect and prevent fraud, and that the health of a compliance programme will be scrutinised by the Government in any investigation or enforcement action. Most sophisticated life sciences companies are well-versed in the nuts and bolts of good compliance hygiene, but now is a good time to evaluate an organisation's compliance programme with fresh eyes, because that is what the Government will be doing. Companies should ask themselves if their programme is both well-designed and implemented:
- Does it work in practice to prevent and detect violations?
- Are adequate internal resources devoted to compliance?
- Have recent changes in operations and/or growth been accounted for?
These and other questions should routinely be a subject of self-reflection for any company, but given the current enforcement environment, now is a particularly good time for healthcare and life sciences companies to take stock.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.