James A. Boiani, Member of the Firm in the Health Care and Life Sciences practice, in the firm’s Washington, DC, office, was quoted in Law360, in “What Hospitals Need To Know Before Forming A Drug Co.” by Dani Kass. (Read the full version – subscription required.)
Following is an excerpt:
A group of hospital systems recently decided to address rising prices and shortages of generic medications by forming a nonprofit drug company, but industry attorneys warn that land mines like unfamiliar regulations and fraud concerns could trip the members up as they execute this novel plan. …
“Entering into the [U.S. Food and Drug Administration] regulatory space is a completely different animal than the standard hospital operating regulations,” Epstein Becker Green member James Boiani said. …
Several attorneys warned that if this plan isn’t carefully structured, the hospitals run a high risk of violating the False Claims Act when charging drugs they’ve made to government healthcare programs.
“The idea of making drugs and selling them to yourself and getting reimbursements can cause all sorts of concerns,” Boiani said, although he added that it’s a manageable risk.
He said that if the hospital systems profit from these reimbursements, questions could come up about whether there were any kind of kickbacks. The many existing FCA suits dealing with blurred relationships between providers and drugmakers put an extra spotlight on this relationship.