summary and analysis of recent doj settlements · summary and analysis of recent doj settlements...

Summary and Analysis of Recent

DOJ Settlements

John T. Bentivoglio / Skadden

Pharmaceutical Compliance Forum

September 11, 2012

Recent DOJ Settlements (September 2012) | 2 Skadden, Arps, Slate, Meagher & Flom LLP

• Overview of Settlement Activity – 2011 v. 2012 (to

date)

• Pharma/Device Settlements: Summary and Analysis

– GSK

– Abbott

• Key Take-Aways and Discussion

• Appendices: Excerpts of Alleged Misconduct

– GSK Settlement

– Abbott Settlement

Topics for Discussion

Note: Summaries Based on DOJ Statements and

Publicly Available Settlement Documents


Pharmaceutical Settlements: 2011

Company Allegations Criminal Component Total Recovery

Elan Off-label promotion Misdemeanor FDCA $203,000,000

EMD Serono Inducements None $44,000,000

KV Pharma GMP violations None $17,000,000

GE Health AWP None $30,000,000

Genentech Off-label promotion None $20,000,000

Merck Off-label promotion Misdemeanor FDCA $950,000,000

Novo

Nordisk

Off-label promotion None $25,000,000

Pfizer Off-label promotion None $14,000,000

Scios Off-label promotion Misdemeanor FDCA $85,000,000

UCB Off-label promotion Misdemeanor FDCA $35,000,000

Total (10) $1.423 billion


Pharmaceutical Settlements: 2012 (to date)

Company Allegations Criminal Component Total

Recovery

Abbott •Off-label promotion

•Inducements

Misdemeanor FDCA $1.5 billion

GSK •Off-label promotion

•Safety data reporting

•Inducements

•Price reporting

Misdemeanor FDCA $3 billion

Total $4.5 billion

Recent DOJ Settlements (September 2012) | 5 Skadden, Arps, Slate, Meagher & Flom LLP 5

GSK Settlement

• Criminal: Three misdemeanor violations of the FDCA (two counts of

misbranding, one of failing to report drug safety

• Fines and Penalties: $3 billion in criminal fines and civil penalties

• Products:

– FDCA: Paxil, Wellbutrin, Avandia

– Civil: 10 products

• Alleged Misconduct:

– Off-label promotion

– Failure to report safety data

– Financial inducements

– Price reporting

• Compliance Obligations:

– 5-year Corporate Integrity Agreement (including strict management

accountability and oversight requirements seen in recent CIAs)

– Requires changes in compensation of sales reps, recoupment of

compensation of executives


GSK Settlement -- FDCA


GSK Settlement – FDCA (cont’d)


GSK Settlement – Civil


GSK Settlement – Civil (cont’d)


GSK: Selected CIA Provisions

• Certain provisions apply to GSK PLC, reflecting trend in CIAs with

ex-US companies

• New management oversight provisions, largely reflecting structural

changes implemented prior to CIA signing

– Compliance Committee co-chaired by GSK President

– Deputy Compliance Officers

– Integrity Champions

• Elimination of territory-based compensation for sales reps and

immediate supervisors

• Provisions for recoupment of executive compensation

• Enhanced internal procedures and external disclosure requirements

around publications, studies


Abbott Settlement

• Criminal: Misdemeanor violation of the U.S. Food, Drug & Cosmetic

Act (FDCA)

• Fines and Penalties: $1.5 billion in criminal fines, civil penalties, and

forfeiture

• Product: Depakote® (an atypical anti-psychotic), approved for certain

epileptic seizures, bipolar mania, and prevention of migraines. Label

(which expanded over time) has three boxed warnings.

• Alleged Misconduct: Promotion for unapproved uses (e.g., agitation in

dementia, schizophrenia)

• Compliance Obligations:

– 5-year Corporate Integrity Agreement (including strict management

accountability and oversight requirements seen in recent CIAs)

– Additional compliance program oversight and reporting obligations

included as a condition of probation (this is new)


Abbott: Summary of Allegations

• Created long-term sales force to promote Depakote for nursing home

patients, including for dementia and schizophrenia

• Promoted a side effect (somnolence or drowsiness) as a benefit for

treatment of agitation

• Misled HCPs by selectively providing study results (i.e., providing studies

with positive results while withholding negative studies). This occurred in

distribution of reprints, medical info letters, and HCP-consultant meetings

• Held Speaker faculty meeting at which HCP/attendees were provided off-

label studies, including slides on such studies for later use in speaker

programs

• Held consultant meetings at which off-label studies were presented;

attendees were targeted based on sales force input

• Provided extensive off-label information to sales reps and encouraged them

to use these materials in discussions with HCPs

• Allowed reps to obtain and distribute reprints that had been discontinued

but were still available from contractor


Abbott: CIA Provisions

• 5-year CIA requires, among other things, that Abbott's board of directors

review the effectiveness of the company's compliance program, that high-

level executives certify to compliance, that Abbott maintain standardized

risk assessment and mitigation processes.

• Extensive monitoring provisions (similar to other recent pharma CIAs)

around:

– Speaker programs (150 live audits/year)

– Sales force activities (50 ride-alongs/year)

– Consultant arrangements (50 reviews/year)

– Publications (30 reviews/year)

– Medical education grants (30 reviews/year)

– Research activities (30 researcher, 15 investigator reviews)

• Requires disclosure of payments to HCPs

• Retention of IRO, extensive transaction and systems reviews


Abbott: CIA Provisions (cont’d)

• Plea agreement includes unique compliance obligations as a condition of

probation. Under the agreement (pp 8-12 of Criminal Plea):

– CEO must annually review compliance program and certify same to

the Probation Office

– Abbott will report any probable FDCA violations to Probation Office

– Board will report annually on effectiveness of the company’s

compliance program.

– Abbott will not compensate sales representatives for off-label sales.

– Abbott will ensure that:

• Continuing medical education grant-making decisions are not

controlled by sales and marketing,

• Letters communicating medical information to healthcare

providers be accurate and unbiased

• It has policies designed to ensure that clinical trials are approved

by the company’s medical or scientific organizations and

published in a consistent and transparent manner.


GSK, Abbott Settlements: Selected

Take-Aways

• DOJ continues to raise the bar for settlement amounts

• Abbott settlement reflects DOJ enthusiasm for investigations of

entire sectors of therapeutic areas (e.g., orthopedic companies)

• Continued/enhanced scrutiny of publication, study activities

– OIG sees internal transparency and external disclosure as necessary

(though not necessarily sufficient) controls

– Remains one of the most challenging areas from compliance

standpoint

• Patient safety continues to be key issue in prosecutorial decision

making

• Continued focus on drivers of behavior, namely:

– Field: Territory-based compensation

– Executives: Recoupment


Questions and Discussion


Appendix:

Selected Excerpts from GSK Corporate

Integrity Agreement


GSK Settlement – CIA Provisions


GSK Settlement – CIA Provisions (cont’d)