Health News Today

Three key things in health care- 18th August 2020 – Health News Today


Lesson 3 from the Novartis settlements: an ongoing lack of corporate integrity ushers in a potential new era of dreadnaught Corporate Integrity Agreements (“CIAs”).

o Over the past two weeks we outlined two lessons learned from the recent settlements between the Department of Justice and Novartis Pharmaceuticals Corporations (“Novartis”): one regarding improper use of charitable foundations to cover patient copayment obligations, and the other addressing blatant foreign and domestic bribery schemes that led Norvartis to settle alleged violations of the False Claims Act (“FCA”) and Foreign Corrupt Practices Act. The third and final lesson: years of improper behavior of the scale exhibited by Novartis reflects a deep-rooted problem that the government will seek to remedy through a CIA that applies significantly more corporate controls than typical CIAs.

o On July 1, 2020, contemporaneous with the FCA settlements, Novartis entered into a 109-page CIA with the Department of Health and Human Services Office of Inspector General (“HHSOIG”). The five-year CIA addresses the conduct at issue in the FCA violations and is Novartisspecific. Highlights include:

  • Mandated reduction in paid speaker programs, the amount spent on the programs, and a $10,000 cap per speaker;
  • Speaker programs may only occur within 18 months of the FDA product approvals and in a virtual, remote format;
  • Required measures to promote independence from any patient assistance programs to which Novartis contributes;
  • Implementation of a comprehensive monitoring program and engagement of an Independent Review Organization;
  • Hiring and retention of a Chief Compliance Officer (“COO”), creation of a Compliance Committee, and engagement of an independent Compliance Expert; and
  • Novartis board members, executives, and independent compliance monitors are required to provide regular compliance certifications.

o The comprehensiveness of the CIA likely is attributable to Novartis’s status as a repeat offender. The activities that served as the basis for the two FCA settlements occurred shortly after Novartis entered into a 2010 CIA with HHS-OIG as part of a separate settlement and which was extended for five years in 2015. Still, it could have been worse the CIA does not require a corporate monitor to make reports directly to the government.

o Key Takeaway: CIAs in the health care space are often boilerplate documents that outline standard reporting requirements. They do not typically contain provisions requiring the appointment of COOs, compliance committees, and independent compliance experts. To be sure, the rigor of the Novartis CIA’s monitoring program is understandable as an attempt to correct a repeat offender, but it may well be looked back upon as an evolutionary benchmark for best compliance program practices in the future. With Democrats positioned to make electoral gains this Fall and possibly win the White House, the next Administration’s regulators may seek to wield the bulked-up…

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