Keeping an Eye on Corporate Integrity Agreements

Posted 23 June 2015 | By Sharon DeGrove Bishop, RAC 

Keeping an Eye on Corporate Integrity Agreements

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Even in the world of healthcare product regulation, the initials CIA still stand for surveillance and vigilance.

The Corporate Integrity Agreement, commonly known as a CIA, is an enforcement tool of the US Department of Health and Human Services' (DHHS) Office of the Inspector General (OIG) and is part of a settlement agreement arising from allegations of healthcare fraud.

CIAs for manufacturers generally stem from allegations of off-label product promotion. Such allegations can be extremely dangerous for life science companies. Under federal law, companies found guilty of defrauding federal healthcare programs are supposed to be banned from participating in those programs.

The CIA offers companies a way to continue participating in Medicare, Medicaid or other federal healthcare programs in return for agreeing to the terms of the CIA settlement.

Off-label Promotion – the Big Bugaboo

For some background, what is off-label product promotion?

Under the Food, Drug and Cosmetic Act, in its application to the FDA a company must specify the intended uses of a drug or device for which it seeks approval. Approval is granted with respect to those particular intended uses as delineated in the approval letter, and all promotional activities must be limited only to those uses.

Medical practitioners can choose to use the product outside these bounds, but if sales and marketing materials or discussions stray from the approved intended uses, the product is deemed misbranded. When Medicare or Medicaid reimbursement occurs for a misbranded product, the real trouble begins and a CIA can be the end result.

What's in a CIA?

Some common elements of CIAs include:

  • implementing a written policy and code of conduct, including employee training
  • submitting annual reports of government healthcare claims for their affected products
  • retaining an Independent Review Organization to conduct annual reviews

The agreements are typically in force for 5 years and are intended to become part of the corporate DNA to effect long-term change in compliance.

Failure to live up to the terms of a CIA can ultimately lead to a company being excluded from participating in federal programs, meaning none of their products is eligible for Medicare or Medicaid reimbursement – a serious hit to the bottom line.

In other words, CIAs are a big deal. You don't want one, and you want to know if your competitor ends up with one because you may be able to address their unmet customer need. There are currently about 200 companies or individuals operating under a CIA

Opportunities for Competitors

A company being subject to a CIA can represent an opportunity for competitors. If a product was being used off-label, any competitive product that fills that need within the law is likely to see increased demand, and the first competitor to get their sales reps on the job wins. So it definitely pays to be in the know.

When a CIA Means Major Dollars

CIAs often accompany big money penalties. A single 2014 pharmaceutical company settlement totaled over $192 million. The Department of Justice's annual report presents some revealing numbers for health care fraud in fiscal year 2014:

  • $2.3 billion - judgments and settlements to the Federal government
  • 924 - new criminal investigations opened
  • 734 - defendants convicted of health care fraud-related crimes

CIAs are not new, however their nature is becoming more restrictive and punitive, even attacking executive pay via a recently employed executive financial recoupment program, or "claw-back" provision. This provision exacts personal financial penalties for any executive discovered to have been involved in misconduct – in one case, putting at risk up to three years of annual performance pay for the noncomplying executive.

How to Steer Clear of a CIA

Employee whistle blowers are often the ones to bring these activities to light, so internal oversight is key to preventing off-label promotion from happening in your company.

Review all marketing materials, and conduct regular documented training with your sales and marketing team to ensure that only approved intended uses are in promotional materials and discussed with practitioners. Don't forget distributors – as a manufacturer, you are responsible for what they say and do on your behalf, so train and monitor them too.

Be sure to keep up with new developments in advertising and promotion requirements through guidance documents, so you know the current hot button issues to address. Guidance documents are issued by many different federal agencies, so pay attention to your news sources to track any changes in interpretation of existing regulations.

CIAs are serious and often accompany substantial civil and/or criminal fines, sometimes in the billions of dollars. In recent years, many large multinationals have been subject to CIAs, and we can expect these measures to become more comprehensive and punitive in the future. And while the pharmaceutical manufacturers' big dollar CIAs make the news, medical device manufacturers are increasingly facing them as well.

So we should all keep an eye out.

Let us know what you think. To contact us with your thoughts or to request more information, email or connect with us on LinkedIn, Twitter and Facebook.

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