It's Not Just You: The Ever-Expanding Enforcement Effect

Since 1993, the Department of Justice has made fighting fraud and abuse in the health care industry one of the Department's top priorities. This trend is likely to continue, especially given the fact that government spending on health care is set to double by 2017. Do you think the focus of enforcement is getting larger and larger? Do you think the Government is expanding into some uncharted regulatory territory? Do you think the target areas of compliance are moving targets? It's not just you!

According to experts who spoke at the American Bar Association's white-collar crime conference in Miami last month, smaller companies - biotechs and device companies - are expected to be the next big hunting ground for fraud and wrongdoing simply because their resources are limited in terms of compliance. Officials from the Department of Justice concurred, noting that there will be "more and more off-label [marketing cases] with medical devices." Take a quick glance at recent targets over the past year and you will see that the scope and focus of health care fraud and abuse enforcement is ever expanding.

• Investment Issues: The FDA requires clinical trial investigators to disclose some levels of financial interest the investigator has in a sponsor of the study. While this clearly requires the disclosure of direct investments in the sponsor, little action has been taken to clarify the outer bounds of this rule, although the concept is noted as a focus in HHS-OIG's 2008 Work Plan. Recently, however, the State of New Jersey has initiated action against investigators for not disclosing their investment in a venture capital fund that invested in a sponsor of their study. http://www.nj.gov/oag/newsreleases08/pr20080204b.html
• Industry-Physician Arrangements: Testimony in late February before the Office of Inspector General's (OIG) Assistant Inspector General for Legal Affairs before the Senate's Special Committee on Aging explained the OIG's views of the risks associated with industry-physician financial relationships. The testimony confirmed the OIG's continued focus on physician-industry relationships.
• Clinical Trial Issues: The Ketek® saga continues as a former employee of Sanofi-aventis' CRO testified before a Congressional subcommittee alleging that both the CRO and Sanofi-aventis were aware of fraudulent data in a clinical trial for the antibiotic drug. 
• Promotional Issues: The House Energy and Commerce Committee is now investigating the television ads featuring Dr. Jarvik, rekindling the debate over the so-called direct-to-consumer advertising of pharmaceuticals, an annual $4.8 billion business. Read Dr. Jarvik's recent statement in support of the ads.
• Executive Accountability: Expect officials at the FDA and the Department of Justice to continue to "remind" drug company executives that they can be held criminally responsible for FDA violations. For example, a federal appeals in Chicago upheld prison sentences for two officers of a medical device manufacturing company for off-label promotion. (United States v. Caputo. ) And, on March 18, 2008, the InterMune's former CEO, W. Scott Harkonen, was indicted on federal wire fraud and felony charges for his alleged role in the off-label marketing of InterMune's drug Actimmune.®