skip to main content

HHS-OIG Senior Counsel Riordan Focuses on Kickbacks, Accountability, and the Role of Compliance in Pharma Compliance Congress Keynote

On Wednesday, October 22, 2015, the 16th Annual Pharmaceutical Compliance Congress and Best Practices Forum in Washington, D.C., was kicked off by keynote speaker Mary Riordan, HHS-OIG Senior Counsel and perhaps OIG’s most well-known face to the pharmaceutical industry. Ms. Riordan has probably written or reviewed and approved every major pharma Corporate Integrity Agreement (CIA) since this conference started 16 years ago. In her talk, Ms. Riordan laid out three hot button areas for company compliance professionals:  kickbacks, individual accountability, and the role of compliance in business operations. We thought these were worth sharing, particularly because two of the areas – a jump in kickback cases and individual accountability in the investigation and resolution of corporate investigations  – were themes also emphasized by the government speakers at the AUSA Roundtable panel.    


Stating that kickback issues continue to be of significant interest to OIG and relators, Ms. Riordan counseled continued vigilance concerning all financial relationships with those who purchase and recommend drug products. She noted several recent large False Claims Act kickback settlements involving manufacturers and PBMs, long term care pharmacies, and prescribers. Ms. Riordan pointed out that publicly available data under the CMS Open Payments program (a/k/a the Physicians Payment Sunshine Act) that reflect manufacturer payments and other transfers of value to physicians and teaching hospitals will certainly be examined for possible kickback implications by law enforcement, the media and, again, the relators’ bar. She suggested that compliance departments use the Open Payments data proactively, such as to identify outliers, trends or spikes in specific geographic areas or among certain physician types. Ms. Riordan reminded the audience that companies’ Open Payments reports must be timely, accurate and complete; there are two tiers of civil monetary penalties (CMPs) for non-compliance, with a higher penalty (between $10,000 and $100,000 per violation) for knowing violations.

Apart from the usual vehicles for routing alleged kickbacks (speaking, consulting, and research arrangements with providers, and meals, trips, gifts, educational items), Ms. Riordan said less common arrangements, such as rebate and discount agreements and therapy management and therapeutic interchange programs, were surfacing with those positioned to recommend a manufacturer’s product – PBMs, P&T committees, and specialty pharmacies. Ms. Riordan suggested that compliance officers focus on potential kickbacks by –

  • Identifying financial relationships with those who prescribe, recommend, or purchase company products,
  • Determining a legitimate need for each relationship, and
  • Assuring that meaningful and effective controls are in place to capture all relationships and monitor for legitimacy.

Individual accountability

The Department of Justice’s September 2015 memorandum by Deputy Attorney General Sally Yates was referenced a number of times during the three-day program as government representatives advised that individuals – particularly corporate managers – would be subject to greater scrutiny for alleged corporate wrongdoing. Indeed, one Main Justice speaker stated that he believed that DOJ would no longer continue the common practice of providing releases for individuals as part of corporate settlements in civil False Claims Act cases. For her part, Ms. Riordan opined that the focus on individual accountability makes it clear that compliance is the responsibility of everyone in a company – from top to bottom and across all departments – not just the compliance department.

Weaving compliance into business operations

Ms. Riordan reiterated that the responsibility for corporate compliance rests with the business areas. She noted that many current CIAs require annual certifications from executives and managers in key business units. To gain comfort, these company executives and managers often employ sub-certifications, which essentially cascade accountability to lower level employees who have the day-to-day responsibility to comply with the CIA requirements at issue. Ms. Riordan suggested that companies consider weaving compliance into their system of employee rewards and discipline. She gave the example of companies who withhold bonuses unless an employee has completed all required training and has had no compliance incidents in the prior year.

The impact – on government investigation strategy and corporate compliance programs – of HHS OIG’s focus on business unit accountability for compliance, the application of the Yates memo in the DOJ/HHS OIG civil fraud space, and DOJ Fraud Division’s recent creation of a “compliance counsel“ position to assess whether corporations under DOJ scrutiny have maintained a good faith compliance program have yet to play out.  More to come no doubt.

Disclaimer: This post does not offer specific legal advice, nor does it create an attorney-client relationship. You should not reach any legal conclusions based on the information contained in this post without first seeking the advice of counsel.