Chapter 23 Pharmaceutical Manufacturers Learning Objectives Familiarity with largest drug companies and their record of fraud violations 7 elements of a mandatory compliance program Role of the Compliance Officer Purpose of policies and procedures on compliance Areas of greatest drug company fraud risk Analyze compliance program effectiveness Questions & complaints about compliance Introduction Drugs constitute 10% of health care spending Reasons for continued growth in expenditures on drugs Few factors slowing that growth Pharmaceutical Manufacturers & Their Fraud Violation Records Pharmaceutical industry composed of a few very large, highly competitive companies Top 10 pharmaceutical companies based on their revenues in 2010 and 2011 Largest federal fraud settlements with pharmaceutical companies in last five years Active Corporate Integrity Agreements with pharmaceutical companies in early-2013 Seven Elements of Effective Compliance Implementing written policies and procedures Designating a Compliance Officer and Committee Conducting effective training and education Developing effective lines of communication Conducting internal monitoring and auditing Enforcing standards through disciplinary guidelines Responding to problems & taking corrective action Designating a Compliance Officer and Compliance Committee Compliance Officer – focal point for compliance activities, full-time, sufficient authority, staff & resources, direct access to CEO and BOD OIG-prescribed responsibilities of the CO Compliance Committee – advise and assist the CO, understand company operations, integrity, judgment, assertiveness, and accessibility Written Policies and Procedures Code of Conduct – fundamental principles and values to provide overall direction to employee work behavior Policies and procedures – governing employee actions in areas of operations where there is the highest risk of potential liability under federal fraud and abuse laws Risk areas defined by OIG Program Guidance for Pharmaceutical Manufacturers 7 Integrity of Data Used to Determine Government Reimbursement Many federal and state health care programs base their reimbursement rates for drugs on price and sales data submitted by drug firms Failure to submit high integrity data exposes a company to liability under the False Claims Act, the Civil Monetary Penalties Statute, and the Anti-Kickback Statute Prices reported must reflect any adjustments made to prices charged to purchasers Kickbacks and Other Illegal Remuneration Violations of the Anti-Kickback Statute (AKS) may result in criminal penalties Identify paying relationships with persons able to generate federal health care revenues for the company Examine reasons for each of the relationships Criteria for judging legal risk of a relationship Modify the relationship or fit it into one of the “safe harbors” Risky Relationships: Purchasers and Their Agents Discounts and other remuneration to purchasers Product supp ...

1. Chapter 23
Pharmaceutical Manufacturers
Learning Objectives
Familiarity with largest drug companies and their record of
fraud violations
7 elements of a mandatory compliance program
Role of the Compliance Officer
Purpose of policies and procedures on compliance
Areas of greatest drug company fraud risk
Analyze compliance program effectiveness
Questions & complaints about compliance
Introduction
Drugs constitute 10% of health care spending
Reasons for continued growth in expenditures on drugs
Few factors slowing that growth
Pharmaceutical Manufacturers & Their Fraud Violation Records
Pharmaceutical industry composed of a few very large, highly
competitive companies
Top 10 pharmaceutical companies based on their revenues in
2010 and 2011
Largest federal fraud settlements with pharmaceutical
companies in last five years
Active Corporate Integrity Agreements with pharmaceutical
companies in early-2013

2. Seven Elements of Effective Compliance
Implementing written policies and procedures
Designating a Compliance Officer and Committee
Conducting effective training and education
Developing effective lines of communication
Conducting internal monitoring and auditing
Enforcing standards through disciplinary guidelines
Responding to problems & taking corrective action
Designating a Compliance Officer and Compliance Committee
Compliance Officer – focal point for compliance activities, full-
time, sufficient authority, staff & resources, direct access to
CEO and BOD
OIG-prescribed responsibilities of the CO
Compliance Committee – advise and assist the CO, understand
company operations, integrity, judgment, assertiveness, and
accessibility
Written Policies and Procedures
Code of Conduct – fundamental principles and values to provide
overall direction to employee work behavior
Policies and procedures – governing employee actions in areas
of operations where there is the highest risk of potential
liability under federal fraud and abuse laws
Risk areas defined by OIG Program Guidance for
Pharmaceutical Manufacturers
7
Integrity of Data Used to Determine Government

3. Reimbursement
Many federal and state health care programs base their
reimbursement rates for drugs on price and sales data submitted
by drug firms
Failure to submit high integrity data exposes a company to
liability under the False Claims Act, the Civil Monetary
Penalties Statute, and the Anti-Kickback Statute
Prices reported must reflect any adjustments made to prices
charged to purchasers
Kickbacks and Other Illegal Remuneration
Violations of the Anti-Kickback Statute (AKS) may result in
criminal penalties
Identify paying relationships with persons able to generate
federal health care revenues for the company
Examine reasons for each of the relationships
Criteria for judging legal risk of a relationship
Modify the relationship or fit it into one of the “safe harbors”
Risky Relationships:
Purchasers and Their Agents
Discounts and other remuneration to purchasers
Product support services
Educational grants
Research funding
Risky Relationships: Persons Able to Make or Influence
Referrals
Physicians are the best example – anything of value given to
them is prohibited

4. Best protection is an AKS safe harbor
Otherwise, factors to be considered
PhRMA Code on Interactions with Healthcare Professionals
Its guidelines
High-risk manufacturer-physician relationships
Risky Relationships: Agents
Most drug company compliance problems start with sales and
marketing personnel
Compliance training for marketing people
Educate about minimum PhRMA Code standards
Corrective action for misbehaving sales agents
Monitor sales force activities
Special issue – compensation for sales agents
Conducting Effective
Training and Education
Teach employees to follow compliance-friendly policies &
procedures in performing their jobs
Topics to be covered
Instructors
Required participation
Frequency of training
Condition of employment
Developing Effective Lines of Communication
Employees must have effective ways of asking questions about
compliance, and reporting incidents that may violate compliance
procedures and fraud & abuse laws.
Communication channels offering anonymity and freedom from
retaliation, well-publicized

5. Typical channel media, including periodic surveys
Auditing and Monitoring
Watch over the functioning of the company’s compliance
program, assess its effectiveness, and make recommendations
for improvement
Regular monitoring of program operations
Periodic audits of its activities and the results they produce
Prospective and retrospective reviews
Topics to focus on
Enforcing Standards Through Well-Publicized Disciplinary
Guidelines
Enforced against employees who fail to follow compliance
policies and procedures
The level of discipline will depend on the severity of the
employee’s misconduct
Discipline could range from oral or written warnings, through
suspension, up to dismissal.
Responding to Detected Problems & Developing Corrective
Action
Launch an immediate investigation
Violation of law or compliance program rules
Decisive steps to correct any problem
Report legal violations to government authorities – may
mitigate any penalties

6. Review of a Typical Pharmaceutical Manufacturer Compliance
Program
Compare the language in a typical drug company compliance
program with recommendations made in this chapter and in the
OIG Compliance Program Guidance for Pharmaceutical
Manufacturers.
In what ways is it better than the recommendations, and in what
areas could it stand to be improved
Questions ???
Complete an online search for mental health informed consent.
You can search for psychiatry or psychotherapy clinics and
most will have information posted on their websites. Review the
informed consent documents. Give a brief summary of what you
located then identify the main components of informed consent
for psychiatric mental health treatment. Must include
information related to SI, HI, A/VH, signs and reporting of
abuse, etc… Note when informed consent can be breached, what
are additional considerations for minors.
· Zur, O. PhD. (2020). Introduction to informed consent in
psychotherapy, counseling and assessment (Links to an external
site.). Zur Institute. https://www.zurinstitute.com/informed-
consent/#:~:text=It%20often%20involves%20a%20process,obtai
ning%20consent%20from%20the%20client