Price and Reimbursement
In the European Union, the pricing and
reimbursement mechanisms by private and public health insurers vary largely by country and even within countries. The public systems
reimbursement for standard drugs is determined by guidelines established by the legislator or responsible national authority. The
approach taken varies by Member State. Some jurisdictions operate positive and negative list systems under which products may only
be marketed once a reimbursement price has been agreed. Other Member States allow companies to fix their own prices for medicines,
but monitor and control company profits and may limit or restrict reimbursement. The downward pressure on healthcare costs in general,
particularly prescription drugs, has become very intense. As a result, increasingly high barriers are being erected to the entry
of new products and some of EU countries require the completion of studies that compare the cost-effectiveness of a particular
product candidate to currently available therapies in order to obtain reimbursement or pricing approval. Special pricing and reimbursement
rules may apply to orphan drugs. Inclusion of orphan drugs in reimbursement systems tend to focus on the medical usefulness, need,
quality and economic benefits to patients and the healthcare system as for any drug. Acceptance of any medicinal product for reimbursement
may come with cost, use and often volume restrictions, which again can vary by country. In addition, results based rules of reimbursement
Other Healthcare Laws
In addition to FDA restrictions on marketing
of pharmaceutical products, federal and state healthcare laws restrict certain business practices in the biopharmaceutical industry.
These laws include, but are not limited to, anti-kickback, false claims, data privacy and security, and transparency statutes and
The federal Anti-Kickback Statute prohibits,
among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, to
induce, or in return for, purchasing, leasing, ordering or arranging for the purchase, lease or order of any good, facility, item
or service reimbursable under Medicare, Medicaid or other federal healthcare programs. The term “remuneration” has
been broadly interpreted to include anything of value, including for example, gifts, discounts, the furnishing of supplies or equipment,
credit arrangements, payments of cash, waivers of payment, ownership interests and providing anything at less than its fair market
value. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand
and prescribers, purchasers and formulary managers on the other. Although there are a number of statutory exceptions and regulatory
safe harbors protecting certain common activities from prosecution, the exceptions and safe harbors are drawn narrowly, and our
practices may not in all cases meet all of the criteria for a statutory exception or safe harbor protection. Practices that involve
remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny
if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory
exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead, the legality
of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances.
Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving
remuneration is to induce referrals of federal healthcare covered business, the statute has been violated. The Patient Protection
and Affordable Care Act as amended by the Health Care and Education Reconciliation Act, or collectively, PPACA, amended the intent
requirement under the Anti-Kickback Statute and criminal healthcare fraud statutes (discussed below) such that a person or entity
no longer needs to have actual knowledge of the statute or the specific intent to violate it in order to have committed a violation.
In addition, PPACA provides that the government may assert that a claim including items or services resulting from a violation
of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act (discussed
below). Further, the civil monetary penalties statute imposes penalties against any person or entity that, among other things,
is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know
is for an item or service that was not provided as claimed or is false or fraudulent.
The federal false claims laws prohibit,
among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for
payment or approval to the federal government or knowingly making, using or causing to be made or used a false record or statement
material to a false or fraudulent claim to the federal government. As a result of a modification made by the Fraud Enforcement
and Recovery Act of 2009, a claim includes “any request or demand” for money or property presented to the U.S. government.
Recently, several pharmaceutical and other healthcare companies have been prosecuted under these laws for, among other things,
allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product.
Other companies have been prosecuted for causing false claims to be submitted because of the companies’ marketing of the
product for unapproved, and thus non-covered, uses. The federal Health Insurance Portability and Accountability Act of 1996, or
HIPAA, created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme
to defraud any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing
or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery
of, or payment for, healthcare benefits, items or services.