In what has been one of the less prominent drug-settlements in recent times, the federal government recently entered into an agreement with ISTA Pharmaceuticals Inc. to resolve criminal liability and False Claims Act (FCA) allegations. This settlement, while not as widely covered as others, nevertheless has several important considerations that are likely to demonstrate the government’s continued focus on finding new ways to punish companies.
Specifically, ISTA pled guilty to conspiracy to introduce a misbranded drug into interstate commerce and conspiracy to pay illegal remuneration in violation of the Federal Anti-Kickback Statute. What is unique about this case is that in addition to paying $33.5 million to resolve criminal and civil liability arising from its marketing, distribution and sale of its drug Xibrom, ISTA will face mandatory exclusion from
Federal healthcare programs.
Exclusion will mean that on the effective date of the exclusion, any ISTA labeled drugs in ISTA’s possession would no longer be reimbursable by Medicare, Medicaid, or other Federal healthcare programs. In June 2012, Bausch+Lomb (B+L) acquired ISTA.
Simultaneous with the False Claims Act settlement and the entry of the plea, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG), ISTA, and B+L will enter into a Divestiture Agreement under which ISTA agrees to be excluded for 15 years, effective six months after the date of the settlement. Under the terms of the Divestiture Agreement, ISTA will transfer all assets to B+L or a B+L subsidiary and will stop shipping ISTA labeled drugs within six months of the Divestiture Agreement.
Six months after the effective date of the Divestiture Agreement, all ISTA labeled drugs in the possession of ISTA or B+L will no longer be reimbursable by Medicare, Medicaid, and other Federal healthcare programs. Those ISTA labeled drugs in the stream of commerce at that time will continue to be reimbursable.
“We agreed to enter into this Divestiture Agreement based on the facts of this case, including that B+L did not have a corporate relationship with ISTA during the improper conduct,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services. “In addition, B+L acquired ISTA more than a year after the improper conduct ended, and B+L did not hire any of ISTA’s executives or senior management.”
In addition to this unique aspect, while OIG has not yet indicated whether B+L will have to agree to a corporate integrity agreement (CIA), B+L has agreed to maintain a Compliance and Ethics Program. B+L has agreed that it will maintain policies and procedures that:
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prohibit the involvement of sales and marketing personnel and others on the businesses’ commercial team in the final decision-making process with respect to educational grants in the United States, while also ensuring that the educational programming is focused on objective scientific and educational activities and discourse;
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require sales agents to discuss only those product uses that are consistent with what is indicated on the product’s approved package labeling and to forward requests for information regarding uses of B+L’s products not approved by FDA to a Medical Affairs Professional; and
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prohibit the company from engaging in any conduct that violates the Anti-Kickback Statute, including the offering or paying of any remuneration to any person to induce such person to prescribe any drug for which payment may be made in whole or in part under a Federal health care program.
The Program also requires that B+L’s President of Global Pharmaceuticals conduct an annual review of the effectiveness of B+L’s Program as it relates to the marketing, promotion, and sale of prescription pharmaceutical products, and certify that to the best of his or her knowledge, the Program was effective in preventing violations of Federal health care program requirements and the FDCA regarding sales, marketing, and promotion of B+L’s prescription pharmaceutical products.
With the government having already excluded the company, one can only wonder whether OIG will now try to exclude responsible corporate officers as it did in the Purdue Pharma case.
Background
The government alleged that between 2005 and 2010, some ISTA employees promoted Xibrom for unapproved new uses, including the use of Xibrom following Lasik and glaucoma surgeries, and for the treatment and prevention of cystoid macular edema.
The evidence showed that unaccredited continuing medical education programs were used to promote Xibrom for uses that were not approved by the FDA as safe and effective, and that post-operative instruction sheets for unapproved uses were paid for by some company employees and provided to physicians. These activities are evidence of intended uses unapproved by FDA, which rendered the drug misbranded under the FDCA.
Additionally, the government alleged that certain ISTA employees, with the knowledge and at the direction of ISTA, offered and provided physicians with free Vitrase, another ISTA product, with the intent to induce such physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom. In addition, ISTA provided other illegal remuneration, including a monetary payment to sponsor an event of a non-profit group associated with a particular physician, a golf outing, a wine-tasting event, paid consulting or speaker arrangements, and honoraria for participation in advisory meetings which were intended to be marketing opportunities, with the intent to induce physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom.
The civil settlement resolved allegations that ISTA promoted the sale and use of Xibrom for certain uses that were not FDA-approved and not covered by the Federal health care programs, including prevention and treatment of cystoid macular edema, treatment of pain and inflammation associated with non-cataract eye surgery, and treatment of glaucoma. The United States further alleged that ISTA’s violations of the Anti-Kickback Statute resulted in false claims being submitted to federal health care programs. Except as admitted in the plea agreement, the claims settled by the civil settlement agreement are allegations only, and there has been no determination of liability as to those claims.
Interestingly, one allegation is that the company instructed reps to avoid leaving a paper trail of their off-label discussions with doctors. Prosecutors had enough evidence of this to persuade ISTA to plead guilty to a felony fraud charge. “These instructions were given in order to avoid having their conduct relating to unapproved new uses being detected by others,” the Justice Department said. “ISTA agreed that this conduct represented an intent to defraud under the law.”