Preparing for Post-Pandemic Scrutiny: Proactive Compliance is Key for Life Sciences Companies

With the pandemic winding down and a new administration in Washington D.C., the U.S. Food and Drug Administration (FDA) and other enforcement agencies are starting to return to their pre-COVID-19 agendas by, among other things, targeting compliance violations in the life sciences industry.

Since the beginning of the pandemic, FDA has largely been preoccupied with COVID-19 vaccines, therapeutics, and the online marketing of COVID-19-related products. With most of the administration’s resources allocated to responding to the pandemic, the amount of attention paid to other areas of the life sciences industry decreased considerably. As a result, the number of enforcement actions also declined.

But today, the industry is experiencing an increase in facility inspections and warning letters as the pandemic slows and FDA turns its sights back to biologics, medical devices, and other pharmaceutical products. Other federal agencies, including the Department of Justice (DOJ) and the Department of Health and Human Services (HHS) are also turning their attention to the life sciences industry.

Based on Buchanan’s careful and consistent monitoring of trends in the life sciences enforcement space before and after the outbreak of the pandemic, its decades of experience working with life sciences regulators, and its expertise in counseling life sciences companies on compliance best practices, there are certain areas in particular we expect enforcement agencies to examine closely in the near term:

1. Data Integrity Issues: In December 2018, FDA updated its guidance around data integrity after noticing an increase in compliance violations involving record keeping. This updated guidance includes new rules around data backup, security, accuracy, documentation, and more. In some cases, adhering to these new rules will require significant technological upgrades for life sciences companies that haven’t prioritized data integrity in the past.

2. Physician Speaker Programs: In November 2020, HHS and the Office of Inspector General (OIG) released a Special Fraud Alert related to promotional speaker programs that pharmaceutical and medical device companies offer to share information about marketed products. Due to the government’s view that such programs pose significant fraud and abuse risks, the government has now provided explicit guidance on topics such as remuneration to physicians serving as speakers and how often speaker programs may be offered to the same physicians. Notably, while many in-person speaker programs have been postponed, curtailed, or switched to virtual events as a result of COVID-19, the Special Fraud Alert was clear that there is significant risk whenever healthcare professionals receive compensation for speaker programs. Whether an event is in-person, virtual, or otherwise is not a factor in HHS’s and/or OIG’s determination of potential fraud. Accordingly, life sciences companies should ensure that their speaker program policies comply with the various government expectations that the Special Fraud Alert addresses.
3. Current Good Manufacturing Practices (CGMP) Inspections: With more individuals getting vaccinated and COVID-19 cases on the decline, FDA is expected to resume visits to facilities and manufacturing sites for inspections. Risk management and compliance professionals must start making preparations for these inspections to resume.

4. Sunshine Act Reporting: The DOJ recently expressed heightened interest in dual matters that involve both a purported failure to report transfers of value to the Centers for Medicare and Medicaid Services (CMS), as required under the Sunshine Act’s Open Payments Program, and alleged Anti-Kickback Statute (AKS) violations under the False Claims Act (FCA). Despite its designated authority to impose civil monetary penalties, CMS had not previously engaged in any publicly accessible enforcement actions since reporting obligations commenced in 2013. In October 2020, however, the DOJ and CMS announced a watershed parallel settlement with a device manufacturer over alleged violations of the AKS, FCA, and Sunshine Act in the form of hosting a multitude of expensive events at a neurosurgeon-owned restaurant and, among other things, failing to accurately report those transfers of value in their Sunshine Act reporting.

Taking a Proactive Approach to Compliance

With inspections and enforcement actions expected to rise, life sciences companies should evaluate the current state of their compliance programs and make any adjustments or enhancements necessary to prepare for a higher level of government scrutiny and oversight. Ramping up levels of preparedness, oversight, and proactivity will be key to becoming and remaining compliant.

Indeed, now is an ideal time for organizations to assess their risk management processes and procedures and determine how well they are operating. Performing a thorough organizational risk assessment is a crucial first step to identifying potential compliance program gaps. This exercise, if completed adeptly and with expert advice, will also provide life sciences companies with greater visibility into potential risks and insight into how to promptly address them.

Based on the results of the risk assessment, life sciences companies can then hone in on the functionality of their various compliance program components, namely leadership, communication, policies and controls, training, and oversight. Preservation of a commitment to functionality and core program principles are essential to assisting companies in transitioning to today’s reinvigorated regulatory and enforcement climate with clarity, risk awareness, focus, and program robustness.

We also recognize, however, that compliance, legal, and risk management professionals at life sciences companies often have limited resources and cannot focus their full attention at any given time on all areas of potential liability. Accordingly, minimizing those risks within the areas of regulatory focus noted above, along with other heightened risks specific to each individual company, will assist these professionals in determining how best to allocate their resources.  

Leveraging Legal and Compliance Expertise

Conducting a thorough risk assessment while keeping up with a long list of evolving new rules from FDA and other regulatory agencies can seem like an overwhelming undertaking for compliance and legal departments. And it certainly is an arduous task requiring the appropriate expertise, careful planning, consistent effort, and coordination among various stakeholders.

But these professionals need not go at this task alone. Buchanan has regulatory compliance experts and former FDA staff with successful track records of performing risk assessments at life sciences companies that help these organizations build, maintain, and improve best-practice compliance programs. Our teams combine life sciences operational savvy with a deep understanding of federal regulations to construct a compliance approach that mitigates the possibility of issues with (or negative attention from) relevant agencies and regulators.  

With the regulatory spotlight intensifying post-pandemic, compliance teams should not delay in addressing these risk areas and instead take a proactive approach. By identifying and addressing these areas of increased government scrutiny, life sciences companies can optimize compliance-related resource allocation and more effectively monitor compliance program gaps while mitigating regulatory risk.