November 16, 2004. Government Price Reporting – Operational Challenges and Solutions. 4.02 Pharmaceutical Price Reporting Issues, Challenges, and Solutions. Ben Barrameda CPA, JD Senior Manager, Life Sciences & Health Care Regulatory Deloitte & Touche LLP. Jody Ann Noon RN, JD - PowerPoint PPT Presentation
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and Compliance CongressHistorical Perspective • The government pricing requirements have been in place since the inception
of the Medicaid Drug Rebate Program in 1990. In 1992, the Veterans Health Care Act required additional pricing requirements.
• Enforcement has intensified in recent years. Recent settlements involving allegations of false or fraudulent price reporting include the following:
Settlement Date
Company Settlement Amount
Allegations
July, 2004 Schering-Plough $345 million Underpayment of Medicaid drug rebates on Claritin
December, 2003 AstraZeneca Pharmaceuticals
$355 million Fraudulent marketing and drug pricing involving inflation of AWP for Zoladex
April, 2003 Bayer Corporation $257 million “Lick and stick” concealment of discounts to a HMO related to relabeled Cipro to fraudulently inflate Best Price and reduce government rebate payments
April, 2003 GlaxoSmithKline $88 million “Lick and stick” concealment of discounts to a HMO related to relabeled Paxil and Flonase to fraudulently inflate Best Price and reduce government rebate payments
October, 2002 Pfizer $49 million Concealment of discounts to a HMO to fraudulently inflate Best Price and reduce government rebate payments for Lipitor
December, 2001 TAP Pharmaceutical $875 million Fraudulent marketing and drug pricing involving inflation of AWP for Lupron
• Manufacturers must calculate and report BP and AMP to CMS within 30 days of the end of each quarter for all outpatient drugs covered under the manufacturer’s rebate agreement with CMS.
• Manufacturers must pay rebates to each State Medicaid agency within 30 days of receiving Medicaid Utilization information for the covered drugs paid for by the Agency in the quarter.
• Manufacturers must calculate and report non-FAMP to the Dept of Veterans Affairs (VA) within 30 days of the end of each quarter for all drug products covered under the manufacturer’s Pharmaceutical Pricing Agreement with the VA.
• Manufacturers must calculate and report non-FAMP for all covered drug products by November 15 of each year for the one-year period ended September 30.
• Manufacturers may not charge more than the FCP for covered drug products purchased by Federal Agencies and State homes represented by the VA.
• Manufacturers must calculate and report ASP to CMS within 30 days of the end of each quarter for all Medicare and Part B drugs and biologics covered under the Medicare Prescription Drug, Improvement, and Modernization Act and the Social Security Act.
• ASP will be used to calculate payment allowances to manufacturers for covered drugs and biologics effective January 1, 2005.
• Manufacturers may not charge Federally-qualified health centers and other entities enrolled in the 340B Program more than AMP reduced by a rebate percentage calculated for the preceding calendar quarter for outpatient drugs covered under State plans for medical assistance.
and Compliance CongressComplex Business Process - Sales
•All U.S. sales (and Puerto Rico for non-FAMP)•All products participating (practically all)•All distribution channels•All rebates and discounts given•All adjustments to transactions (e.g. shipment in
error, picking error, damaged shipments, etc.)•All other marketing incentives given to induce sale
• Many of the systems are legacy and/or customized systems that rely heavily on manual inputs – Contracting system – Invoicing System – Chargeback System– Rebate System– Sales ERP System– Financial Reporting System (general ledger)– Accounts Payable System– Government Price Reporting System– Medicaid Rebate System– Sales ERP system– Various Excel spreadsheets– Access database– Medicaid rebate system– Hardcopy (e.g. customer contracts)
Align internal audit practices with business and risk objectives
Increase focus on risk management and regulatory compliance
Improve security of applications, systems, and data
Improve breadth, depth, quality, and timeliness of business information
Improve breadth, depth, quality, and timeliness of business information
Financial ManagementRevenue Growth Business Performance
Management
Reduced Operational
Costs
ReducedRisk
Improved Cash Flow
Key Business Goals
DRIVERS
Source: Deloitte Value Map – Life Sciences
Strategically, core contracting and pricing processes – and enabling systems – are important drivers of revenue, profitability, and ultimately, shareholder value
Jody Ann Noon RN, JDPrincipalNational Practice LeaderLife Science and Health Care Regulatory PracticeDeloitte & Touche [email protected](212) 436-2558
As an RN, JD, Jody utilizes her past experience practicing law to assist life science companies to develop systems to comply with complex legal and regulatory requirements. Jody has experience working with the OIG Compliance Guidance, the federal False Claims Act, Anti-kickback Statute, Medicare & Medicaid requirements, Physician Self-Referral Law (Stark) and Privacy requirements.
Ben Barrameda, Esq., CPA, MBASenior ManagerLife Science and Health Care Regulatory PracticeDeloitte & Touche [email protected](212) 436-3555
Ben is a senior manager in Deloitte’s Life Science and Health Care Regulatory practice, and he is one of Deloitte and Touche’s leading pharmaceutical pricing practitioners. Ben has over 15 years of experience in providing dispute consulting and litigation support, due diligence, internal investigations, developing, implementing and monitoring corporate compliance programs, audit, control, financial modeling, and business processes.