Endo Health Solutions, Inc. and its subsidiary Endo Pharmaceuticals Inc. (Endo) have agreed to pay $171.9 million to resolve civil allegations of marketing their adhesive pain patch Lidoderm for off-label uses. As part of the settlement, Endo will enter into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General.
The Department of Justice (DOJ) announcement states: “[F]rom March 1999 through December 2007, Endo caused false claims to be submitted to federal health care programs…by promoting Lidoderm for unapproved uses, some of which were not medically accepted indications and, therefore, were not covered by the federal health care programs.” Endo has also agreed to pay $20.8 million to resolve criminal liability. In a deferred prosecution agreement to resolve the charge, Endo admitted to promoting Lidoderm to healthcare providers for unapproved indications.
Interestingly, the government press release failed to mention any allegations of kickbacks or false statements at all. These “plus factors” have become staples of off-label settlement announcements. The DOJ announcement focused purely on the fact that Endo promoted its drug for uses not yet approved by the Food and Drug Administration (FDA).
Lidoderm was FDA-approved for relief of pain associated with post-herpetic neuralgia (“PHA”), a condition that can affect individuals with a history of shingles. Endo admitted to promoting Lidoderm for lower back pain and chronic pain. This alone sufficed for criminal and civil liability. “Pharmaceutical companies have a legal obligation to promote their drugs for only FDA-approved uses,” the release stated, quoting U.S. Attorney for the E.D. of Pennsylvania, Zane D. Memeger.
Endo is the latest company to settle with the government over False Claims Act (FCA) allegations. Since January 2009, the Justice Department has used the FCA to recover more than $19 billion from pharmaceutical companies. Most FCA action stems from qui tam relators—whistleblowers who can earn up to one-third of the settlement figure.
Corporate Integrity Agreement
The Inspector General of the U.S. Department of Health and Human Services, Daniel R. Levinson, stated: “Under our CIA, Endo agrees to promote its products legally, while board members and top executives are specifically held accountable for compliance.”
Endo’s CIA requires that the Board of Directors of the company be “responsible for the review and oversight of matters related to compliance.” Furthermore, “Certifying Employees,” including the CEO, Chief Operating Officer, and Senior Vice President, are “specifically expected to monitor and oversee activities within their areas of authority.” The Certifying Employees “shall annually certify…that [Endo] is compliant with applicable Federal health care program and FDA requirements and with the obligations of this CIA.”
Third Party Educational Activity
The CIA requires Endo to implement written policies and procedures for its compliance program, which must adhere to requirements of the CIA, the Federal healthcare program, and FDA. The CIA lists Endo’s minimum responsibilities, and notably among the items are requirements for Third Party Educational Activity:
(1) Funding must be reviewed, tracked, and evaluated to make sure it meets compliance criteria;
(2) Funding decisions must be based on objective criteria such as the qualifications of the requestor, the quality of the program, and pre-established educational goals;
(3) Funding must be provided only pursuant to a written agreement with the funding recipient, and payments must be consistent with the written agreement;
(4) Endo must disclose its financial support of the Third Party Educational Activity and any financial relationships with faculty, speakers, or organizers at such Activity;
(5) As a condition of funding, the third party must agree to disclose Endo’s financial support and require faculty, speakers, or organizers at such Activity to disclose any financial relationship with Endo;
(6) The activity must have an educational focus;
(7) The content, organization, and operation of the activity (including the faculty, educational methods, materials, and venue) must be independent of Endo’s control;
(8) Endo must support only activities that are non-promotional in tone/nature; and
(9) Endo’s support must be contingent on the provider’s commitment to provide information that is fair, balanced, accurate and not misleading.
Risk Assessment and Mitigation Process
The CIA requires Endo to develop and put in place a standardized, centralized annual risk assessment and mitigation process (the “RAMP Program”). The RAMP Program requires Endo to assess and identify risks associated with Government Reimbursed Products that are marketed in the United States, including risks associated with the sales, marketing, and promotion of such products. This involves an “evaluation, at least annually, of the risks associated with Government Reimbursed Products.” Endo then must formulate a specific plan designed to mitigate or reduce the identified risks.
Field Force Monitoring and Review Efforts
Endo must also establish a comprehensive “Field Force Monitoring Program” (FFMP) to evaluate and monitor its sales representatives’ interactions with healthcare professionals (HCPs). The FFMP must be a formalized process designed to directly and indirectly observe the appropriateness of sales representatives’ interactions with HCPs, and to identify potential off-label promotional activities or other improper conduct.
The FFMP must include: (1) a Speaker Monitoring Program; (2) direct field observations of sales representatives; and (3) the monitoring and review of other records relating to sales representatives’ interactions with HCPs.
1. Speaker Program Activities
Endo’s program must require all speakers be qualified and to complete training. Endo and the speakers must enter into written agreements that describe the scope of work, speaker fees, and compliance obligations for the speakers (including requirements that the speaker may not directly or indirectly promote the product for off-label uses). Endo must ensure there is a “legitimate need” for each speaker program and maintain a centralized electronic system through which all speaker programs are initiated, tracked, and administered. This system must also include controls designed to ensure the programs are used for legitimate and lawful purposes, in accordance with applicable Federal health care program and FDA requirements.
Endo must also institute a Speaker Monitoring Program, under which Endo’s compliance group or other appropriately trained personnel attend speaker programs and conduct live audits of 30 of such programs during a Reporting Period. The audited programs must be selected both on a risk-based targeting approach and on a random sampling approach. “Monitoring Personnel” must review the speaker’s slides and other materials used as part of the program, speaker statements made during the program, and Endo representative activities during the program to assess whether the programs were conducted in a manner consistent with Endo’s policies and procedures.
2. Observations of Sales Representatives
As a component of the FFMP, Endo Monitoring Personnel must also conduct observations of sales representatives acting on behalf of Endo to assess whether the interactions between the sales reps and HCPs are consistent with applicable legal requirements and with Endo’s policies and procedures. The CIA states that these “observations shall be full day ride-alongs with sales representatives,” and each must consist of directly observing all meetings between a sales representative and the HCPs during the workday. These observations must be scheduled throughout the year, selected by Endo Monitoring Personnel both on a risk-based targeting approach and on a sampling approach.
The CIA requires that Endo Monitoring Personnel conduct at least 20 observations each reporting period. At the completion of each observation, Monitoring Personnel must prep:
1) The identity of the sales representative;
2) The identity of the Monitoring Personnel who conducted the observation;
3) The date and duration of the observation;
4) The product(s) promoted during the observation;
5) An overall assessment of compliance with Endo policy; and
6) The identification of any potential off-label or other potentially illegal promotional activity by the sales representative.
3. Records Review
Endo is also required to review various types of records to assess the interactions of Endo sales personnel and HCPs. These records include: expense reports, call notes, emails and other electronic records, and promotional materials provided by sales personnel to HCPs.
Endo must include a summary and the results of the FFMP as part of their Annual Report. As part of each Annual Report, Endo must also provide OIG with copies of the observation report for any instances where improper promotion occurred, and describe the actions the company took as a result. OIG may also request observational reports at any time.
Monitoring of Non-Promotional Activities
Within 120 days after the Effective Date, Endo must develop and implement a monitoring program for: (1) consultant arrangement activities; (2) research-related activities; (3) publication activities; and (4) medical education grants. The company must target each of these activities on both a risk-based targeting approach and on a sampling approach.
Medical Education Grant Activities:
Endo must establish a grants management system which must be the exclusive mechanism though which requestors may seek or be awarded grants for independent medical education. Endo’s sales and marketing personnel shall have no involvement in, or influence over, the review and approval of medical education. Grant requests shall be submitted through the grants management system and processed in accordance with standardized criteria developed by Endo.
Endo also must establish a “Grants Monitoring Program” through which it will conduct audits for each Reporting Period of at least 5 grants. Like the speaker audits, the Grants Monitoring Program will select grants for review both on a risk-based targeting approach and on a sampling approach.
Endo Monitoring Personnel conducting the Grants Monitoring Program must review proposal documents (including grant requests), approval documents, contracts, payments, and other materials relating to the grants and any events or activities funded through the grants in order to assess whether the activities were conducted in a manner consistent with Endo’s Policies and Procedures.
Results from the Grants Monitoring Programs, including the identification of potential violations of policies, must be compiled and reported to the compliance officer for review and follow-up. Any compliance issues identified and any corrective action taken must be recorded in the files of the Compliance Department.
Reporting of Physician Payments and Other Transparency
The CIA is mostly consistent with the Physician Payment Sunshine Act requirements. Endo must post “in a prominent position on its website an easily accessible and readily searchable listing of all U.S.-based physicians and Related Entities who or which received Payments.” For each physician, the applicable listing must include: (i) physician’s full name; (ii) name of any Related Entities (if applicable); (iii) city and state that the physician has provided to Endo for contact purposes; (iv) aggregate value of the payment(s) in the preceding quarter or year (as applicable). The CIA states: “If payments for multiple physicians have been made to one Related Entity, the aggregate value of all payments to the Related Entity will be the reported amount.”
Comparison with other CIAs – A Trend Towards More Disclosure and Monitoring
“The Endo CIA requirement for a ‘Grant Management system’ is not entirely new,” states Marc Eigner, partner at Polaris Management Partners, a company that specializes in Grant Systems and monitoring. Indeed, Policy and Medicine highlighted Boehringer Ingelheim’s CIA requirements in 2012.
BI’s agreement includes similar grant management and continuing grant monitoring (p. 32). The “Grants Management systems” provision has also been specifically mentioned in CIAs for Baxano Surgical, Inc. (p. 29) and UCB (p. 31).
GlaxoSmithKline’s CIA includes a Grant Monitoring provision (p. 42). We wrote about GSK’s CIA obligation and their $3 billion settlement back in 2012. Novartis’ CIA contains a monitoring program as well (p. 35). These monitoring requirements are much the same as Endo’s. However, the government did not require GSK or Novartis to establish a grants management system to function as “the exclusive mechanismthough which requestors seek or are awarded grants for independent medical education,” as Endo is required to do. This requirement keeps a complete shield between education grants and the marketing department.
Interestingly, the grant management requirement is absent from Johnson and Johnson’s CIA, as part of their $2.3 billion settlement from 2013. In fact, there is little mention of education grants at all in this agreement. UCB and Boehringer Ingelheim have been under CIA since 2011 and 2012 respectively, so it is curious that these two earlier CIAs contained the grants management language while J&J’s 2013 CIA did not.
Most CIAs in the past 5 years, while not specifically using the words “Grants Management system,” allude to a similar requirement. Eigner notes that the trend in CIAs is to include the requirements for more disclosure and regular monitoring. Most of Polaris’ clients have been getting ready with reporting and disclosure, but Eigner states they are struggling with the monitoring requirement.
As Endo’s CIA hints at, “monitoring” requires a tremendous amount of company resources in the face of somewhat ambiguous responsibilities.