Another hot button for investigators is whether manufacturers comply fully with product tracking requirements set by the Prescription Drug Marketing Act (PDMA). The latest question to arise is the extent to which a company is responsible for detecting discrepancies between sales and retail reports. The issue emerged from a recent criminal case against a Kansas City pharmacist who diluted chemotherapy drugs. Patients have filed civil charges against Eli Lilly for failing to report the problem earlier than it did, even though a Lilly sales rep helped uncover the scheme by noting big discrepancies in sales numbers.

Attacking AWPCongress, meanwhile, is leading the charge to revise how manufacturers report prices to Medicare and Medicaid. A key allegation in the TAP case is that the company inflated its average wholesale price (AWP), then sold its prostate cancer therapy Lupron (leuprolide) to physicians at much lower rates, allowing doctors to make hefty profits on the spread between the two prices.

At a hearing in late September, leaders of the House Energy and Commerce Committee were particularly vocal about reforming the system. Not only does the big spread on office-administered therapies boost Medicare expenditures by an estimated $1 billion a year, it also forces seniors to pay more out of pocket for treatments.

Oncologists and home health agencies have opposed reform because they claim that they need to profit from drug price spreads to make up for the low reimbursement they receive for treating patients. Congress' General Accounting Office (GAO) countered that oncologists receive sufficient fees. Tom Scully, administrator of the Centers for Medicare & Medicaid Services (CMS), noted that HHS tried to fix the problem a year ago, but Congress blocked it. Representative Jim Greenwood (R, Pennsylvania) now wants to revise the law so that Medicare reimbursement is based on wholesale acquisition costs instead of AWPs. Even if Congress fails to act this year-which seemed likely at press time-the spotlight on industry pricing is already curbing the promotion of "spread" profits.

Seeking ComplianceTo clarify those and other issues, the OIG is developing a Compliance Guide to help pharma companies establish internal programs that ensure employees understand and obey all rules and statutes. In announcing the project last June, OIG listed seven major elements to be included in a comprehensive program and asked for suggestions about what risk areas need to be addressed. OIG is examining comments from interested parties and is expected to issue a draft early next year.

An indication of how OIG might expect marketers to demonstrate compliance appears in the agency's Corporate Integrity Agreement negotiated as part of TAP's settlement agreement. The basic provisions are not that surprising. They require TAP to provide employee training in ethical marketing practices, to appoint a compliance officer and a corporate compliance committee, and to issue a code of conduct. Every quarter, TAP also has to report its "true average sale price" for all products covered by Medicare and Medicaid, a requirement similar to OIG's agreement with Bayer last January. (See PE Washington Report, June 2001.)

What is unusual is the broad scope of oversight and review that independent review organizations (IROs) will conduct. To ensure that TAP calculates prices correctly, the integrity agreement calls for an outside consultant to review the company's records and transactions, including how it calculates best prices and corrects inaccurate data.

Even more sweeping is the call for an annual independent review of TAP's systems, policies, and practices governing sales and marketing. That requirement allows an IRO to examine all documents dealing with sales of Lupron and Prevacid (lansoprazole) to see if the company has established controls and written policies for key marketing activities such as

• retention of physicians and other prescribers for consulting, speaking, or advisory arrangements
• sponsorship of meetings and other events
• payment of educational, clinical, and research grants
• expenditures for third-party advice on reimbursement
• gifts and payments for business courtesies and customer assistance programs
• reduction or forgiveness of debt and other assistance to customers
• drug sampling programs.

The IRO will review expense reports and agreements with speakers and consultants, with emphasis on the company's arrangements with its largest and fastest growing purchasers and prescribers. The detailed review of marketing practices represents a "quantum leap" over previous requirements, comments attorney Paul Kalb of Sidley, Austin, Brown & Wood. Kalb also notes that a key whistleblower in the TAP case was a physician who objected to the company's sales practices, highlighting the need for marketers to examine how promotional activities affect customers and disgruntled employees.