Category: Healthcare Contracting

Spring Cleaning for Government Contractors? Think Compliance.

Merle M. DeLancey Jr.

If you’re like me, it’s the time of year when you clean out your garage and closets and do all those outside projects you delayed until the weather warmed up. If you are a government contractor, you should consider this to be the season to do some spring cleaning in terms of your government contract compliance programs and procedures. Not to be an alarmist, but there are numerous areas you can review now and, if you should find some compliance deficiencies, you still have ample time to get your house in order before an agency audit or the deadline for submission of certain government reports.

Set forth below is a list of areas you may want to clean up: Continue reading “Spring Cleaning for Government Contractors? Think Compliance.”

States Pass Fewer Drug Manufacturer Pricing Disclosure Laws in 2018

Merle M. DeLancey Jr.

While the introduction of state legislation that would require drug manufacturers to disclose pricing and other information did not slow down in 2018, the number of bills that were made law did slow down. During 2018, 22 state legislatures considered bills seeking to require drug manufacturers to disclose pricing information; however, most of the legislation failed.

Two New State Laws

Since my Drug Manufacturer Pricing Disclosures: Mid-Year 2018 Update, two states—Vermont and New Hampshire—passed laws that arguably touch on requiring pharmaceutical manufacturers to report drug prices.[1] Continue reading “States Pass Fewer Drug Manufacturer Pricing Disclosure Laws in 2018”

What DOJ’s FY 2018 False Claims Act Recovery Statistics Reveal

Michael J. Slattery

The Department of Justice (“DOJ”) recently released its annual fraud statistics for FY 2018. The statistics reveal that False Claims Act (“FCA”) recoveries reached their lowest level since FY 2009. However, although total recoveries are down, this decrease is more a by-product of a down year in major health care and financial services recoveries, and we think it is too early to view these numbers as reflecting a sea change in enforcement.

The annual statistics published by DOJ on December 21, 2018 demonstrate that the Government recovered a total of $2.88 billion in qui tam and non-qui tam FCA judgments and settlements in FY 2018. This represents the lowest amount recovered since FY 2009, when the Government recovered nearly $2.47 billion. It also demonstrates a short-term trend in declining recovery. FY 2018 was the second straight year in which fraud recovery decreased. However, recent comments by the Trump administration’s nominee for U.S Attorney General likely indicate that no affirmative decision to decrease FCA actions will occur in the next few years. Continue reading “What DOJ’s FY 2018 False Claims Act Recovery Statistics Reveal”

Breaking Camp(ie): Supreme Court Sends Gilead FCA Case Back for Likely Dismissal, Postponing Escobar’s Return

Justin A. Chiarodo and Stephanie M. Harden

The Department of Justice’s (“DOJ”) bombshell statement last month that it would seek dismissal of the Gilead False Claims Act (“FCA”) suit—a qui tam suit alleging misrepresentations and concealments regarding active ingredient sources and quality for HIV medications—surprised many in the government contracts community. Though DOJ had signaled earlier last year in the so-called “Granston memo” that it may seek dismissal of certain FCA cases, the fact that DOJ sought to do so while a case was on appeal to the Supreme Court—and without consulting relators—was unexpected.

Continue reading “Breaking Camp(ie): Supreme Court Sends Gilead FCA Case Back for Likely Dismissal, Postponing Escobar’s Return”

What Is the Christian Doctrine and Why Should You Care?

Merle M. DeLancey Jr.

The Christian Doctrine

The Christian doctrine provides that a mandatory statute or regulation that expresses a significant or deeply ingrained strand of public procurement policy shall be read into a federal contract by operation of law, even if the clause is not in the contract. G. L. Christian & Associates v. United States, 312 F.2d 418 (Ct. Cl. 1963). The doctrine is an exception to the general rule that the government must put vendors on notice of contract requirements, whether expressly or through incorporation by reference. It also is an exception to standard commercial contracting practices and contract interpretation principles. The rationale for the doctrine is that procurement policies set by higher authority cannot be avoided or evaded (deliberately or negligently) by lower government officials. Continue reading “What Is the Christian Doctrine and Why Should You Care?”

In Department of Veterans Affairs Procurements, Veteran-Owned Businesses Trump All Other Contractors

Merle M. DeLancey Jr.

On October 17, 2018, the Federal Circuit ruled that the Department of Veteran Affairs (“VA”) must give priority to veteran-owned small businesses (“VOSB”) when awarding contracts. PDS Consultants Inc. v. U.S., et al., Nos. 17-2379 and 17-2512, 2018 WL 5019735 (Fed. Cir. Oct. 17, 2018). At first blush, no one would argue with the foregoing statement. But, this mandate became less clear when the VA was faced with awarding a contract to a VOSB or following an otherwise mandatory requirement for all federal agencies to buy a specific list of items made by nonprofits employing the blind and significantly disabled.

Here is the source of confusion. More than 40 years ago, Congress enacted the Javits-Wagner-O’Day Act (“JWOD”), which required federal agencies to buy certain items and services from nonprofits that employ the blind or people with other significant disabilities. Today, this mandatory procurement policy is implemented through the AbilityOne program. In 2006, Congress passed the Veterans Benefits, Health Care, and Information Technology Act (“VBA”). As the U.S. Supreme Court stated in Kingdomware, the VBA made it mandatory in almost every procurement for the VA to follow the “Rule of Two.” The “Rule of Two” requires the VA to award a contract to a VOSB whenever at least two VOSBs can perform the work at a reasonable price. Continue reading “In Department of Veterans Affairs Procurements, Veteran-Owned Businesses Trump All Other Contractors”

Drug Manufacturer Pricing Disclosures: Mid-Year 2018 Update

Merle M. DeLancey Jr.

Earlier this year, I commented on state drug pricing transparency laws in effect and/or enacted during 2017.[1] I also opined that it was likely more states would pass similar transparency laws requiring drug manufacturers to disclose pricing and/or price increases during 2018. While proposed drug pricing transparency and disclosure legislation has been introduced and is pending in numerous states, during the first half of 2018 only two states (Oregon and Connecticut) passed new laws imposing price disclosure requirements on drug manufacturers. Maine expanded its existing disclosure law. Also of note was the United States Court of Appeals for the Fourth Circuit finding Maryland’s Anti-Gouging law unconstitutional. Continue reading “Drug Manufacturer Pricing Disclosures: Mid-Year 2018 Update”

Department of Veterans Affairs Updates Pharmaceutical Federal Schedule Supply

Merle M. DeLancey Jr.

The Department of Veterans Affairs (“VA”) National Acquisition Center (“NAC”), which administers the VA Federal Supply Schedule (“FSS”) Program, has already had a busy year. Among other procurement streamlining activities, the NAC currently is in the process of refreshing all nine (9) of its FSS solicitations to incorporate the most recent regulations and provide updates and clarifications.

Last month, the NAC updated the open and continuous Solicitation for Pharmaceuticals—Schedule 65 I B Pharmaceuticals FSS contract. The NAC issued Mass Modification 0006 and Solicitation Refresh 8. The Modification and Refresh update and incorporate procurement regulations and update or clarify FSS Program policy changes since the last refresh in February 2014, as amended. Refresh 8 applies to all companies submitting FSS proposals (for new contracts and renewals) after June 21, 2018. The Mass Modification is a standard bilateral modification to existing FSS terms and conditions, which the NAC is requesting manufacturers sign and return by July 30, 2018. Continue reading “Department of Veterans Affairs Updates Pharmaceutical Federal Schedule Supply”

New Medicaid Rebate Agreement

Merle M. DeLancey Jr.

On March 23, 2018, the Centers for Medicare & Medicaid Services (“CMS”) announced the introduction of a new Medicaid National Drug Rebate Agreement. The new Agreement incorporates legislative and regulatory changes, including, for example, the Affordable Care Act, which have occurred since the original Agreement was published in 1991.

Manufacturers currently participating in the Medicaid Program have until October 1, 2018, to sign the new Agreement. Failure to enter into a new Agreement by October 1, will result in termination of a manufacturer’s existing Agreement.

While the new Agreement does not contain significant changes from the existing Agreement, several changes are worth noting and repeating: Continue reading “New Medicaid Rebate Agreement”

Do Federal Supply Schedule Contracts Still Have Value?

Merle M. DeLancey Jr.

Over the past several months, there has been a confluence of congressional and agency actions that will have a significant impact on Federal Supply Schedule (“FSS”) contract holders. These changes are so significant that they will likely cause companies with FSS contracts to question whether having an FSS makes sense. These changes could also cause companies to restructure the segments of their companies that are responsible for selling to the federal government.

Order Level Materials

In late January 2018, the General Services Administration (“GSA”) issued its Order Level Materials (“OLM”) final rule. This rule allows agencies to purchase supplies or services in direct support of a task or delivery order placed against FSS contract or Blanket Purchase Agreement (“BPA”). OLMs are subject to special ordering procedures. See GSAR 552.238-82. For example, the OLMs cannot have been known when an FSS contract or BPA was awarded. OLMs (excluding travel) cannot exceed 33.33 percent of the total value of the applicable task or delivery order. Whether an FSS holder is required to obtain competitive quotes for an OLM order depends upon the value of the order and the FSS holder’s purchasing system. Continue reading “Do Federal Supply Schedule Contracts Still Have Value?”

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