Specialty Pharmacies Employing Hemophilia Patients Run the Risk of Negative Audit Findings and Additional Legal Challenges
Worldwide there are fewer than 500,000 people with hemophilia, a genetic disease that inhibits a patient’s blood clotting ability. Hemophilia is caused by genetic mutations in a patient and is hereditary, meaning that the condition is often passed down from generation to generation. Hemophilia is treatable through a variety of specialty drug products which frequently cost over $100,000 a year per patient, and can cost over $1 million a year for some.
Given the impact of hemophilia on patients’ lives, there is strong peer-to-peer support within the hemophilia community, with hemophilia patients often being very close with other hemophilia patients through support groups. In an effort to access these close-knit communities, many specialty pharmacies have taken to employing hemophilia patients, who often serve as the best advocates to best market the pharmacy’s services. However, this practice raises several legal concerns.
Specialty pharmacies face significant risks when they employ hemophilia patients to sell promote the pharmacy’s services to family members and friends within the hemophilia community. These risks include possible federal and state anti-kickback violations, as well as the possibility of increased payer audits in which an insurance company or PBM may flag the pharmacy for allegedly fraudulent practices.
In certain cases, courts have suggested that a patient serving as an employee may mislead those with hemophilia to purchase a more expensive or a larger quantity of a drug product because they anticipate compensation from the sale. In some cases, patient employees also receive a standard commission on top of their salary with the “hopes” that they will continue to refer family and friends to the pharmacy. Employees may also receive a referral fee based on the number of patients referred to the pharmacy. In these instances, pharmacies run the risk of violating anti-kickback laws. Specialty pharmacies need to ensure hemophilia employees are not encouraging patients to order excessive and unnecessary factor medication.
Even when a pharmacy is not violating state and federal laws, we have seen several payers – including insurance companies, PBMs and State Medicaid agencies – take issue with a pharmacy’s “improper employment practices” and flag claims during audits for fraudulent practices. Specifically, certain payers have flagged claims for overpayment stemming from alleged impermissible claim submissions in which a practitioner treats a professional or business associate, and the specialty pharmacy is involved in self-billing in violation of exclusions outlined in the payer contracts.
Pharmacies can challenge these audit findings by submitting a formal appeal to the payer, or, in some cases, filing an appeal with the Department of Insurance in their state.
In any event, pharmacies considering employing patients (especially hemophilia patients) must take steps to ensure compliance with Federal and State rules, as well as contractual requirements. This includes setting forth robust policies and procedures around each employee’s job description and responsibilities, as well ensuring that they act as bona fide employees for the pharmacy.
How Frier Levitt Can Help
Frier Levitt works with specialty pharmacies to employ best practices to ensure compliance with all Federal and State regulations. Our attorneys regularly appeal payer audit findings and can aid your pharmacy throughout the appeals process. Contact us to find out how we can assist your specialty pharmacy.
 US v. Waters, F.Supp.2d 2012 WL 1570537 (S.D. Ala. May 3, 2012); US v. Vernon, 723 F.3d 1234 (11th Cir. 2013); US v. Polin, 194 F.3d 863 (7th Cir. 1999); US v. Miles, 360 F.3d 472 (5th Cir.2004); and US v. Medco Health Systems Inc., F.Supp.2d 2013 WL 6858758 (D.N.J. Dec. 30, 2013)