Lately, we have answered more and more questions from pharmaceutical clients on hubs and specialty pharmacies, and associated compliance risks. In this Bulletin, we will summarize, at a very high level, the nature of hubs and hub services, some of the legal issues to consider, and recommendations to minimize risk if a company develops such a program. For information regarding some enforcement actions that focused on hubs or hub services, please see our prior Bulletin.
- While there can be different models, hubs generally serve as a single point-of-contact for manufacturers to ensure efficient medication distribution
- hubs are typically either standalone entities or they partner with specialty pharmacies
- Hubs are able to perform a number of key functions, including reimbursement services, distribution services (e.g., third-party logistics or an administrator of patient assistance programs), managing ongoing therapy adherence, compliance (e.g., Risk Evaluation and Mitigation Strategy (REMS) assistance), and can serve as intermediaries between manufacturers and specialty pharmacies
- Some hub services may include:
- inbound call handling; intake and insurance verification; reimbursement and co-pay services; patient education and assistance programs; product messaging and education; and medical information and pharmacovigilance
- Some benefits of hubs include, but are not limited to: providing patients and physicians with better access to products, helping with faster initiation of therapy by addressing insurance barriers, and developing stronger relationships between manufacturers and healthcare providers
Legal Issues to Consider
While hubs can provide many benefits, such as helping patients gain access to therapies and gain education, there are also legal issues and potential compliance risks, such as improperly increasing product sales or product market share, which could implicate certain federal laws, discussed in more detail below.
One legal area that companies must consider is the Anti-Kickback Statute (AKS). The law makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimburseable by a Federal health care program. The tension can be, among other things:
- making it easier for healthcare professionals to prescribe products
- competing with therapeutic alternatives
- developing relationships with prescribing physicians
- increasing sales by lowering rates of non-adherence
In the context of a hub arrangement, reimbursement support services that provide coverage assistance through some combination of co-pay cards/coupons, manufacturer patient assistance program, or support of Charitable Foundation Patient Assistance Programs (PAPs) might have AKS implications. Similarly, verifying insurance coverage is a frequent hub service, but obtaining prior authorization, assisting with appeals, or providing a free interim supply of product, potentially benefitting the healthcare professional personally, could raise AKS scrutiny.
Finally, it is likely acceptable for a hub program’s benefits investigations group to check on the availability of reimbursed coverage for the drug itself. However, there could be AKS exposure if the investigation focused on the coverage of the overall treatment of a specific patient’s condition, and not merely on the drug.
False Claims Act
This civil statute, imposes liability for knowingly submitting, or causing the submission of, false or fraudulent claims for government reimbursement. For example, a manufacturer (through its hub program) may be at risk of False Claims Act liability if it causes a prescriber to submit an incorrect claim for payment, such as by providing incorrect coding information. It is important to note that AKS violations may also result in violations of the False Claims Act.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) (which was revised, in part, by the HITECH Act of 2009), focuses on privacy rules and security rules (not discussed here). It also governs use and disclosure of protected health information. Prescribing physicians and dispensing pharmacies are “covered entities,” even if the manufacturers or hubs are typically not. The interactions may require a Business Associate Agreement between the hubs and the healthcare professionals and dispensing pharmacies. There are also breach reporting requirements, i.e., breaches of privacy rights by the hub could result in certain reporting obligations.
Food and Drug Administration
Hubs act on behalf of manufacturers. Therefore, statements made should comply with the requirements of the Federal Food, Drug, and Cosmetic Act (for example, no off-label statements). A hub program should ensure there are controls and processes in place, such as company-approved call scripts for hub coordinators and appropriate training for personnel members to maximize compliance with FDA requirements.
Some potential high-risk areas
- Hubs that also provide other services (e.g., pharmacy)
- Hub services that replace or supplement tasks that are the responsibility of the prescribing physician (e.g., potential AKS issues)
- Compensation to a hub that varies with the volume or value of prescriptions filled or re-filled (e.g., potential AKS issues)
- Hub services that address off-label product uses (e.g., potential FDA or False Claims Act issues)
- Hub services that involve the extensive use or sharing of patient information (e.g., potential HIPAA issues)
- Some hub programs exclude patients who have coverage through Medicare, Medicaid, and the Federal employee benefit plans
- helps to minimize AKS and False Claims Act concerns
- Implementation of Data Sharing Restrictions
- a company should not receive (directly or indirectly through third parties) any data or information that would allow it to receive individual patient information, or any information related to the identity, amount or nature of the products or services that are made available by an independent PAP from donations provided by the company, including any projections for additional funding required to continue a specific type of support
- within the company, the aggregate-level data received from independent PAPs should not be shared with commercial personnel
- Focus on patient care, not the drug
- consider a needs assessment to document the basis for hub services from a patient care perspective
- If the hub helps with financial assistance, the hub should provide only a general overview of the third-party assistance options to the patient or provider, with contact information for each independent PAP that has an applicable fund and is currently accepting new applications
- A hub representative should inform the patient or the patient’s provider that the referral to the independent PAP is not a guarantee of assistance, and the PAP has discretion to provide assistance based on its own independent eligibility criteria
- Sales and marketing personnel should not be involved in hub services
- Manufacturers should monitor and supervise hub services and oversee hub activities, such as scripting, services, and maintenance of privacy
- Avoid providing services that would replace tasks that would otherwise be the responsibility of the prescribing physician
- The contract with the hub should be carefully considered to define the services and responsibilities; the hub is acting as an agent of the manufacturer
- Ensure compensation is Fair Market Value for AKS purposes
- Do not provide hub services that address off-label uses for the product
- Closely monitor hub services that involve use or sharing of patient information
- Ensure internal and external communications discuss only appropriate purposes for the hub services
- Remember that manufacturers generally bear the responsibility for hub activities