Archives for July 2013

Kusserow’s Corner: Wyeth Pharmaceuticals to Pay Nearly $491 Million for Unapproved Off-Label Uses of a Drug


In the latest in a series of cases brought against pharmaceutical manufacturers for unallowable “off label” uses of their products, the Department of Justice (DOJ) announced on July 30, 2013 a new settlement.  Wyeth Pharmaceuticals, Inc. (acquired by Pfizer, Inc. in 2009) agreed to pay $490.9 million to resolve its criminal and civil liability arising from the unlawful marketing of the prescription drug Rapamune® for uses not approved as safe and effective by the FDA. Rapamune is an “immunosuppressive” drug that prevents the body’s immune system from rejecting a transplanted organ. The case originated in two cases brought by qui tam relators (“whistleblowers”) under provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the government and share in any recovery.  The relators were a former Wyeth sales representative and a pharmacist.  The resolution agreement includes a criminal fine and forfeiture totaling $233.5 million, as well as an agreement to pay a criminal fine of $157.58 million and forfeit assets of $76 million.

Under the Federal Food, Drug and Cosmetic Act (FDCA), a company such as Wyeth is required to specify the intended uses of a product in its new drug application to the FDA. Once approved, a drug may not be introduced into interstate commerce for unapproved or “off-label” uses until the company receives FDA approval for the new intended uses. In 1999, Wyeth received approval from the FDA for use of Rapamune in renal (kidney) transplant patients; however from 1998 through 2009, it promoted Rapamune for unapproved uses, some of which were not medically accepted indications, and, therefore, were not covered by Medicare, Medicaid and other federal health care programs.  Wyeth’s sales force was trained to promote this drug for off-label uses not approved by the FDA, including ex-renal uses, and even paid bonuses to incentivize those sales.

The unapproved uses included non-renal transplants, conversion use (switching a patient from another immunosuppressant to Rapamune) and using their drug in combination with other immunosuppressive agents not listed on the label. The government alleged that this conduct resulted in the submission of false claims to government health care programs.

Pfizer is currently subject to a Corporate Integrity Agreement (CIA) with HHS’ Office of Inspector General that it entered in connection with another matter in 2009, shortly before acquiring Wyeth.

Richard P. Kusserow served as DHHS Inspector General for 11 years.  He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters.  The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Copyright © 2013 Strategic Management Services, LLC.  Published with permission.

CMS Announces Home Health and Ambulance Enrollment Moratoria for Miami, Chicago, and Houston Metro Areas

CMS has announced a temporary six-month moratoria on Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) enrollment of new home health providers in the Miami and Chicago metropolitan areas and ground ambulance supplier enrollments in the Houston metropolitan area. The affected counties in each of the three metropolitan areas are: Miami (Miami-Dade and Monroe); Chicago (Cook, DuPage, Kane, Lake, McHenry and Will); and Houston (Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller). A Federal Register notice announcing the moratoria published on July 31, 2013 (78 FR 46339).

The temporary moratoria, which began July 30, is being imposed to fight fraud, waste and abuse, while continuing to ensure patient access to care. Existing home health providers and ground ambulance suppliers in these affected counties can continue to deliver and bill for services under the moratoria. CMS may lift the moratoria early or extend it another six months by issuing another Federal Register notice.

PPACA Authority

Section 6401(a) of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) added a new section 1866(j)(7) to the Social Security Act to provide the Secretary of HHS with authority to impose a temporary moratorium on the enrollment of new fee-for-service Medicare, Medicaid or CHIP providers and suppliers, including categories of providers and suppliers, if the Secretary determines a moratorium is necessary to prevent or combat fraud, waste, or abuse. Section 6401(b) of PPACA added specific moratorium language applicable to Medicaid at section 1902(kk)(4) of the Soc. Sec. Act, requiring states to comply with any moratorium imposed by the Secretary unless the state later determines that the imposition of such moratorium would adversely impact Medicaid beneficiaries’ access to care.


CMS determined, in consultation with the HHS Office of Inspector General (OIG) and the Department of Justice that fraud trends in these three geographical areas warranted a moratorium on home health providers and ground ambulance suppliers. Key factors which CMS considered included a disproportionate number of providers and suppliers relative to beneficiaries, a rapid increase in enrollment applications from providers and suppliers, and extremely high utilization. Federal law enforcement agencies have also pursued and prosecuted a large number of cases of health care fraud in each of these areas.

Senate Support

U.S. Senators Orrin Hatch (R-Utah), Chuck Grassley (R-Iowa), and Tom Coburn (R-Okla.) issued a press release welcoming the CMS action. Over the past three years, reports from HHS-OIG and letters from the senators have urged the use of the enrollment moratoria tool to help stop Medicare fraud.

Governors Band Together to Address Health Care “Super-Utilizers”

As Medicaid expands, so does the need for finding quality health care at lower cost, and one big thing each state must contend with is what to do with a “super-utilizer.” Over the past few years, much research has been done to identify these Medicaid recipients, who frequently use the emergency room, hospital inpatient services, and other high-cost forms of health care delivery instead of coordinated, lower-cost interventions. Finding the perfect way to care for these super-utilizers might just be the ticket for state officials to address rising Medicaid expenditures while improving quality of care and health.

State Research

The National Governors Association recently announced that it will fund seven states in a collaborative effort to design and improve state-level health systems to ensure better provision of coordinated and targeted services for “super-utilizers.” The selected states and Commonwealth are Alaska, Colorado, Kentucky, New Mexico, Puerto Rico, West Virginia and Wisconsin. This “Developing State-Level Capacity to Support Super-Utilizers” policy academy, is designed to assist states in creating the regulatory environment, data systems, workforce, financing structures, and stakeholder relationships to support the delivery of high-quality and comprehensive services for super-utilizers.

Colorado Governor John Hickenlooper is excited about the prospects. “This collaboration will allow us to better respond to the unique health needs of individuals,” he said. “Colorado’s goal is to become the healthiest state in the nation by achieving the best care and producing the best health outcomes with the best value, and this will get us one step closer.”

Kentucky Governor Steve Beshear announced, “I’m proud Kentucky has been chosen to participate in this important program.” “Across the nation, an understanding has been growing that we must focus our efforts on providing the best in coordinated care, helping to direct individuals who may be using more expensive, less effective services to more cost-efficient preventive services that provide better health outcomes in the long run. It’s by achieving these outcomes that we will build a healthier future for Kentucky.” Kentucky’s Medicaid program spent more than $219 million on emergency room (ER) use in 2012. In that 12-month span, 4,400 Medicaid recipients used the ER 10 or more times, including a recipient who visited the ER 121 times and another who used 30 different ERs.

A policy academy is a highly interactive, team-based, multi-state process for helping a select number of states develop and implement an action plan to address a complex public policy issue. Participating states receive guidance and technical assistance from NGA staff and faculty experts, as well as consultants from the private sector, research organizations, and academia. Funding for the policy academy is provided by the Robert Wood Johnson Foundation and the Atlantic Philanthropies.

Staggering Statistics

CMS has just issued an Informational Bulletin sharing details about super-utilizer programs, revealing just how important it is that states figure out a way to deal with this issue. Within the Medicaid program, 5 percent of beneficiaries account for 54 percent of total Medicaid expenditures, and 1 percent of beneficiaries account for 25 percent of total Medicaid expenditures. Of this top 1 percent, 83 percent have at least three chronic conditions and more than 60 percent have five or more chronic conditions. While people with serious chronic conditions or an acute illness are expected to have higher utilization, CMS noted that there is growing evidence that some of these high-cost patients are not receiving coordinated care, preventive care, or care in the most appropriate settings.

CMS pointed out that the fundamental question, of course, is whether a super-utilizer program truly is likely to be successful in improving beneficiary outcomes and reducing unnecessary spending. States will need to determine what payers are involved and who provides the services. States must decide on a “targeting strategy” to identify potential patients. CMS noted that a successful program identifies candidates that are likely to experience high levels of costly but preventable utilization in the future and that are capable of being helped by the specific capabilities of the program.

FDA Announces Proposed Rules on Safety of Imported Food

Please note that these rules were published in the Federal Register on July 29, 2013 at 78 FR 45730 and 78 FR 45782

The FDA announced that it was to issue two proposed rules to help ensure that imported food meets the same safety standards as food produced in the U.S. These proposals, one on the accreditation of third-party auditors and another on verifying foreign suppliers, are, according to the FDA, one step toward the implementation of the Food Safety Modernization Act (FSMA) (P.L. 111-353). Both proposed rules were published in the Federal Register on July 29, 2013.

Imported food in the U.S. comes from about 150 countries and accounts for 15 percent of the U.S. food supply—including 50 percent of the fresh fruits and 20 percent of the fresh vegetables consumed by Americans. FDA Commissioner Margaret Hamburg stated, “These rules would make importers more accountable for food safety, and would enhance our ability to monitor conditions and standards in foreign facilities that produce and process food.” While the FDA will continue to rely on inspections at U.S. ports of entry to keep contaminated foods from entering the U.S., under the proposed rules, “we will significantly enhance our ability to identify issues before food gets to our shores.”

Food Safety Modernization Act

According to the FDA, the FSMA aims to ensure the U.S. food supply is safe by shifting the focus of federal regulators from responding to contamination to preventing it. The law provides the FDA with new enforcement authority designed to achieve higher rates of compliance with prevention- and risk-based food safety standards.

Accreditation of Third-Party Auditors

The FDA proposed to amend its regulations to provide for the accreditation of third-party auditors and certification bodies to conduct food safety audits of foreign food entities, including registered foreign food facilities, and to issue food and facility certifications. According to the FDA, the use of such auditors, certification bodies, and food and facility certifications will improve the safety of the U.S. food supply by preventing potentially harmful food from reaching U.S. consumers. The FDA stated that these regulations will also increase efficiency by reducing the number of redundant food safety audits.

Verifying Foreign Suppliers

Under the proposed rule for foreign supplier verification programs, American importers would have the responsibility of verifying that their suppliers produce foods that meet U.S. safety requirements. Importers would be required to have a plan for imported food, which includes identifying hazards associated with each food that are reasonably likely to occur, and provide adequate assurances that these identified hazards are being adequately controlled.