Thomas M. Moriarty

27 Pages·2014·1.36 MB·English

WORLD RECOGNITION
DISTINGUISHED
of
GENERAL COUNSEL
GUEST OF HONOR:
Thomas M. Moriarty
Executive Vice President, Chief Health Strategy Offi cer &
General Counsel, CVS Health
WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL
THE SPEAKERS
Thomas M. Moriarty Mary Langowski Joe Lockhart Vincent A. Cino
Executive Vice President, Partner, DLA Piper Founding Partner & Chairman,
Chief Health Strategy Managing Director, Jackson Lewis P.C.
Officer & General Glover Park Group
Counsel, CVS Health
Creighton Condon Matthew Hurd Enu Mainigi
Senior Partner, Shearman Partner, Sullivan & Partner, Williams &
& Sterling LLP Cromwell LLP Connolly LLP
(The biographies of the speakers are presented at the end of this transcript. Further information about the Directors
Roundtable can be found at our website, www.directorsroundtable.com.)
TO THE READER
General Counsel are more important than ever in history. Boards of Directors look increasingly to them to enhance
financial and business strategy, compliance, and integrity of corporate operations. In recognition of our distinguished
guest of honor’s personal accomplishments in his career and his leadership in the profession, we are honoring
Thomas M. Moriarty, Chief Health Strategy Officer and General Counsel of CVS Health, with the leading global
honor for General Counsel. CVS Health is the largest pharmacy health care provider in the United States, with
integrated offerings across the entire spectrum of pharmacy care.
His address will focus on the challenges and opportunities that can be found at the intersection of law and public
policy, particularly in light of the Affordable Care Act. The panelists’ additional topics include managing enforcement
and regulation with key agencies; the role of mergers and acquisitions in identifying new business solutions; and the
role that public policy plays in shaping a company’s business and, ultimately, its legal strategy.
The Directors Roundtable is a civic group that organizes the preeminent worldwide programming for directors and
their advisors.
Jack Friedman
Directors Roundtable Chairman & Moderator
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WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL
Thomas Moriarty is Executive Vice President, served as General Counsel and Corporate
Chief Health Strategy Officer and General Secretary, and also as President of Global
Counsel for CVS Health. In this role since Pharmaceutical Strategies. He served on the
October 2012, Moriarty leads the company’s company’s Executive Committee and was a
legal and government affairs departments and critical advisor to the team that developed
the Office of the Secretary. and executed Medco’s strategic merger with
Express Scripts.
A seasoned executive with many years of
legal, regulatory and health policy expe- Previously, Moriarty worked at various posi-
rience in the health care sector, Moriarty tions in the Office of the General Counsel
most recently served as General Counsel at at Merck & Co., the global biopharmaceu-
Thomas M. Moriarty
the Celgene Corporation, a biopharmaceu- tical company. He began his career at the
Executive Vice President, Chief
tical company, where he was responsible for law firm of Mudge Rose Guthrie Alexander
Health Strategy Officer and global legal strategy and served on the com- and Ferdon in New York.
General Counsel pany’s Management Committee.
Moriarty received his law degree from the
Prior to that, Moriarty spent twelve years University of Virginia School of Law and his
at Medco Health Solutions, where he undergraduate degree from Lafayette College.
CVS Health and consumers expanded choice, greater Longs Drug stores. CVS/pharmacy is rein-
access and more personalized services to help venting pharmacy to help people on their
them on their path to better health. path to better health by providing the most
accessible and personalized expertise, both
CVS Health Pharmacy Services, the phar- in its stores and online at CVS.com.
macy benefit management (PBM), mail
CVS Health (NYSE: CVS), headquartered order and specialty pharmacy division of MinuteClinic, the retail medical clinic divi-
in Woonsocket, RI, is the largest pharmacy CVS Health, provides a full range of PBM sion of CVS Health, is the leading retail
health care provider in the United States, with services, including mail order and spe- medical clinic provider in the United States.
integrated offerings across the entire spectrum cialty pharmacy services, plan design and MinuteClinic launched the first retail medi-
of pharmacy care. Through our unique suite administration, formulary management, cal clinics in the United States in 2000 and
of assets, we are reinventing pharmacy to discounted drug purchase arrangements, now has more than 800 locations in 28 states
offer innovative solutions that help people Medicare Part D services, retail pharmacy and the District of Columbia. By creating a
on their path to better health. We are focused network management services, prescription health care delivery model that responds to
on enhancing access to care, lowering overall management systems, clinical services and patient demand, MinuteClinic makes access
health care costs for plan members and pay- disease management services. Our clients to high-quality medical treatment easier for
ors, and improving health outcomes. are primarily employers, insurance compa- more Americans. Nationally, the company
nies, unions, government employee groups, has provided care through 20 million patient
We are uniquely positioned to deliver signifi- managed care organizations and other spon- visits, with a 95% customer satisfaction rat-
cant benefits to health plan sponsors through sors of health benefit plans, and individuals ing. MinuteClinic is the only retail health
effective cost management solutions and inno- throughout the United States. care provider to receive three consecutive
vative programs that engage plan members accreditations from The Joint Commission,
and promote healthier, cost-effective behav- CVS/pharmacy, the retail division of CVS the national evaluation and certifying agency
iors. Our integrated pharmacy services model Health, is America’s leading retail pharmacy for nearly 15,000 health care organizations
enhances our ability to offer plan members with more than 7,600 CVS/pharmacy and and programs in the United States.
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WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL
JACK FRIEDMAN: Good morning. I am
Jack Friedman, Chairman of the Directors
Roundtable. We are a civic group that
has done 800 events in 23 years around
the world for boards of directors and their
advisors. We have never charged anyone to
attend the programs.
Boards of Directors tell us that companies
rarely get favorable reviews about anything
that they do. We are a neutral forum to tell
people that businesses are socially conscious
and that their leaders are proud of how
their companies operate, as well as giving
you a chance to meet some of these lead-
ers personally. Today’s program is of special
interest, because the healthcare industry
is going through important changes and
developments. Healthcare is universally
of interest to almost any company. Their
program beyond this important breakfast wrote what I thought was the perfect memo
employees are concerned about healthcare
meeting and projects it out on a global for the senior partner. I researched it, cite
coverage and healthcare services. It is a very
basis, which makes it very special. checked it — everything was in perfect order.
important issue at this time.
I handed it in. The next day, I reviewed it
Without further ado, I would like Tom to with the most senior partner of the firm. His
We will start with our Guest of Honor,
make his opening remarks. office overlooked the Brooklyn Bridge down
then we will have the panelists speak to
on Wall Street — it was a real power center.
make opening remarks, followed by a
THOMAS M. MORIARTY: Good morn- He said, “This is a very good memo — it’s
roundtable discussion and questions from
ing everyone, and thank you, Jack. I see a lot
very well-written, but there’s something miss-
the audience.
of old friends in the room. Before I begin, I
ing from it.” I am sitting there as a first-year
want to thank Creighton Condon and every-
associate thinking, “What did I do?” What
I would like to introduce our Guest of
one here at Shearman & Sterling for this
he said — and I’ve never forgotten it — is,
Honor, Thomas Moriarty, who is the venue and for all the support you have given
“You tell me in this memo what the law says.
Executive Vice President, Chief Health for this program. I really appreciate it. I also
But what is very important is to always tell
Strategy Officer and General Counsel of want to thank our panelists. We have a great
clients what the law means.” That is some-
CVS Caremark. We keep the introductions group here. What is important to me is we
thing that I’ve never forgotten, and it’s really
to a minimum, so we can discuss content have a great group of not only legal minds,
become a cornerstone of how I’ve practiced.
instead of the great achievements of the peo- but also non-legal minds. With Mary and
ple who are up here. Joe, the whole purpose of my talk and, hope-
Many years later — as my family will note,
fully, this program, is to emphasize that legal
Tom has incredible credentials in terms of decisions really are not made in isolation. with a lot less hair — the maxim still holds
service with different companies, and I will Looking at the broader ecosystem in which true. I would argue today — as we go forward
mention some of them. Chronologically, a company operates is a focus for me in the — it is even more important, given the com-
after graduating from Lafayette College and role that I play every day. plex ecosystem in which heavily regulated
University of Virginia School of Law he companies, like CVS Caremark, operate.
worked in a law firm, Merck, Medco, and I would like to start my remarks by sharing
Celgene serving as General Counsel and in a quick story as a first-year associate fresh out Put simply, legal work cannot be done in iso-
the Executive Committee. of law school. Actually, one of my first-year lation. Each analysis must take into account
classmates from that experience is in the the broader environment in which a com-
We’ll be preparing a full-color transcript audience so he may appreciate this story. pany operates, the industry it is in, and the
which will be made available to 150,000 I was given a research assignment and, as number of what I call “non-regulators” who
leaders on a global basis. This takes the usual, in a very convoluted area of the law. I have a say in the products that you sell, the
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WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL
reputation that you enjoy, and ultimately, an environment where consumers are play-
the standing you have in the community ing an increasingly active role in healthcare
that you serve. decisions. This is a new trend and a new
development. As consumer-directed health
This necessitates to me — and to others as plans shift the balance of accountability and
well, who serve in these roles — an increas- decision-making to consumers, you should
ingly strategic role for the General Counsel, expect that consumers will increasingly seek
one that encompasses not only the tradi- greater value for those healthcare dollars,
tional legal and corporate legal work, but which in turn will push greater transparency
also public policy, public affairs, govern- — not just on issues of cost, but also out-
ment affairs and regulatory affairs. All of comes and quality. This is a very clear trend,
these must come together as you sit in this and it’s one that we refer to as the “retail-
chair to advise and counsel a company as ization of healthcare” — that all companies
it goes forward. It requires an understand- involved in healthcare are focused on and
ing of how they intersect and how they can developing products and services to address.
impact the company’s overall strategy and
the products that it brings to market. It is against this backdrop that I evaluate issues
and provide advice and counsel every day. The
Nowhere is this trend and this factor more core guiding principle that I use for all profes-
apparent than in healthcare. The Affordable sionals that are part of the CVS Caremark
Our MinuteClinics, which now number over
Care Act, regardless of your politics on the legal team — whether it’s the in-house counsel
800 locations, are the nation’s largest retail
issue, has accelerated a number of health- or the outside experts who we retain to help
clinic providers. They deliver convenient,
care trends that all companies, whether in us with complex issues — is that we are part of,
affordable primary care solutions to patients
healthcare or not, have had to address. As and a partner with, the business teams. We
for common conditions, replacing the use of
everyone grapples with the need to do more need to truly understand how the business
higher-cost sites, such as emergency rooms,
with less, and to ensure value to healthcare operates and its goals to help develop strategy
dollars spent, this has prompted a surge and to avoid pitfalls. Some examples from my and extending the reach of primary care to
of activity in the private sector. We see a CVS Caremark experiences will resonate with millions of Americans every day.
slew of mergers and acquisitions — and each of you as you address the challenges that
I’ve been through one myself as a result of your companies face today. Through our Caremark Pharmacy Services
this — strategic alliances and innovative new Unit, we provide prescription drug benefit
business models that have touched every Undoubtedly, many of you have visited coverage to more than 60 million people,
aspect of healthcare, from hospitals, phy- one of our pharmacies or MinuteClinics at helping to ensure that they use their medica-
sician practices, health insurers, pharmacy some point in your life. We are a little hard tions safely and effectively. Also as important,
benefit managers, retail pharmacies and to miss, since we are a part of almost every we ensure that the government health plans
drug wholesalers. Each is being reshaped community across the country. and employer-sponsored benefit programs
and reformed to address the new paradigm have effective prescription drug benefits that
in the healthcare environment that we serve When I joined CVS Caremark, I was struck keep patients compliant with their medi-
in today. That evolution will continue. — and I continue to be struck — by the scale cations. Lack of adherence to medication
of the company’s engagements. Over the last therapy costs the United States healthcare
The post-Affordable Care Act environment 50 years, the company has built a $120+ system almost $300 billion every year.
has underscored the need for private sector billion-a-year business enterprise that spans
leadership to advance efforts to improve the almost 8,000 locations, and is the largest These solutions address traditional con-
quality of patient care and outcomes, and integrated pharmacy company in the United ditions like diabetes, hypertension and
reduce costs, because cost, ultimately, is a States. Over 5 million people come through cholesterol, but increasingly, as you’ve
real focus as we look at healthcare dollars our pharmacies every day. Through our seen in the press and with many stories,
and how they’re spent. retail, mail order and specialty pharmacies, we’re focused on specialty conditions like
we dispense over 1 billion prescriptions multiple sclerosis, rheumatoid arthritis
There is also a focus to develop new and more every year. As healthcare continues to evolve, and cancer, and meeting these needs with
effective means of communication, coordina- so does CVS Caremark and the services that infusion therapies, injections and other spe-
tion and integration among providers. It is we will provide to meet these demands. cialized delivery methods.
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WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL
While it would be easy to think of us as only The core guiding principle that I use for all professionals
a domestic company, it’s important to keep in
that are part of the CVS Caremark legal team — whether it’s
mind that we are one of the largest, if not the
largest, commercial purchaser of prescription the in-house counsel or the outside experts who we retain to
pharmaceuticals anywhere in the world. As a
help us with complex issues — is that we are part of, and a
result of that, we have a global supply chain
that needs to be managed and addressed. partner with, the business teams. — Thomas M. Moriarty
We have also extended our footprint into
Nowhere has the ability been better repre- Jack, thank you again for this opportunity
Brazil, making an acquisition a little while
sented than in our recent decision to stop and for honoring me today. I do look for-
back of a regional chain there of about 40
the sale of tobacco products in our phar- ward to hearing from our panel. They are
pharmacies, all as part of our business
macies. In many ways, that decision is the not a shy group. They are very good at tell-
extension strategy.
ultimate example of how important it is to ing me where I miss things and where I
Each of these areas requires not only fully understand and appreciate the ecosys- need to focus. I know the thoughts they’ll
an understanding of the regulatory tem in which companies like ours operate. offer will be compelling.
environment in which these companies When we looked broadly at our nation’s
operate, but also the broader global public health needs and our own purposes Thank you all very much. [Applause]
marketplace. Additionally, each healthcare at CVS Caremark — helping people on
marketplace in which we operate comes the path to better health — we recognized JACK FRIEDMAN: Thank you. I would
with its own unique set of challenges. To the fundamental inconsistency of selling like to start with a couple of questions for
say that healthcare is a heavily regulated
our Guest of Honor.
tobacco in a healthcare setting. Aligning
sector of our economy doesn’t do it justice,
our businesses more fully with the goals
and the implications of these regulations
First, healthcare is intensely personal for
to our business, and how we evolve as of consumers and those entities that fund
individuals. Could you talk about how that
a company, cannot be understated. As a healthcare benefits, to us, is an important
plays a role in how healthcare is delivered?
result, it is critical that we engage with the component for long-term success. Our work
government at multiple levels to help shape in this area isn’t done. Later this year, we’ll
a constantly evolving regulatory landscape. be launching a national smoking cessa- THOMAS M. MORIARTY: It’s a great
As a large, publicly traded company, we must question. If you look over the years, health-
tion program that will be designed to help
simultaneously ensure that the interests of care has always been very personal. Each of
millions of Americans meet their goal of
our shareholders are addressed, and that us in this room has different views in terms
stopping smoking.
their investment provides a competitive, of what they seek to achieve, what they want
fair-market return. to attain from a healthcare provider, and
In summary, it’s clear to me — and hope-
perhaps most importantly, how you access
fully to all of you, as you’ve listened here
The next point I want to make is perhaps the healthcare system. There are many dif-
and will listen this morning — that the role
the most important. CVS Caremark’s size ferent ways today and going forward, to
that the General Counsel plays in corpo-
and unique combination of businesses access health care. Some like the face-to-face
has positioned the company to lead and to rate America today has evolved significantly. interaction and want to sit across the table
accelerate positive change as the healthcare The skills required for this position have from their physician, from their pharmacist,
system continues to evolve. Our company changed dramatically over the years, and or from their nurse practitioner. For oth-
is dedicated to meeting one of our nation’s have changed what once may have been ers, mobility, market shortage or geography
greatest challenges — the delivery of afford- viewed and perceived as a largely tactical might be an issue, so the patient may wish
able, quality healthcare. Importantly, both role into one that is deeply strategic and to access health care by telephone, video
market trends and the passage of the presents a compelling career opportunity. or other telehealth options. What is very
Affordable Care Act have given pharmacies interesting to see in the marketplace today is
and pharmacists a much broader role in All of us in this room are fortunate — and how each of those points of access is evolv-
that healthcare delivery system. When we I mean fortunate — to have the kinds of ing and solutions are being brought to bear.
look, as a leadership team — while there responsibilities we face. They challenge the
are many challenges — we also see so many mind and invigorate us each day with What we are seeing is an evolution from a
opportunities to have a positive impact on the opportunities that they present. All of system where employers or the government
our customers, our communities, our more us do understand what is at stake, and do made the decisions regarding what you
than 200,000 employees, and the country. our best to meet those obligations. should access and how you should access,
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WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL
place at the start and not wait for the crisis. role in healthcare. Whether it’s the role
If you’re reacting to a crisis, that’s not when that our pharmacists play or the role of our
the best thinking, necessarily, can be done. nurse practitioners in MinuteClinics, CVS
Caremark is now engaged in health care
It has been a fundamental part, for me, over delivery, pharmacy care, infusion therapies
the last several years, to ensure that we have and other services such as Pharmacy Advisor,
resources aligned and all working in sync. The health risk assessments or formulary
best example of this is our decision to stop management. Fundamentally, smoking
the sale of tobacco products. We considered simply exacerbates all the conditions that
the numerous constituencies that the decision we are being retained to treat. That core
potentially touched, and we did the work in contradiction was something that we felt we
advance to think through the issues and have had to address in a deliberate, direct, and
the scenarios prepared. It was a very powerful meaningful way.
decision, and by having the work done ahead
of time, it became an even more powerful JACK FRIEDMAN: I assume a lot of people
decision once it was announced. are commending you for it. Can you tell us the
feedback you have received for that decision?
JACK FRIEDMAN: I remember a specific
to an environment where the individual is in
moment, when the questioning of tobacco THOMAS M. MORIARTY: The out-
greater control. The growth of the high-de-
became part of popular culture. I was watch- pouring, frankly, has been tremendous and
ductible health plan and consumer-directed
ing the Today show on NBC, and Bryant overwhelming on a lot of levels.
health plan is putting a lot more power and
Gumbel was one of the co-hosts and they
decision-making in each of our hands. That is
were interviewing a very famous law pro- There has been an outpouring of support,
both compelling and scary at the same time.
fessor, who was talking about legal liability not only on Capitol Hill, but elsewhere,
Offering solutions at an individual and con-
and what should be done on public policy. from clients, customers and the public. We
sumer level will be increasingly an important
Gumbel said, “Why do we call these people have been honored by a number of state
part of the healthcare delivery system.
‘tobacco activists’? (as if there was something legislatures with joint resolutions and com-
JACK FRIEDMAN: Can you give us an wrong with them, or that they were trouble- mended by 32 State Attorneys General in a
example where the approach of combining makers) Why don’t we call them ‘healthcare joint letter to recognize our decision.
legal issues with broader context was successful? experts’ or something like that?” The female
co-host turned to him, spontaneously, on JACK FRIEDMAN: Thank you very
THOMAS M. MORIARTY: I will start television and looked shocked. She said, much. I will ask one more question before
where we did not have it fully in place at the “Did you clear this with management?” He we move ahead with the panelists.
start — because you often learn best from said, “No.” She said, “We’re going to be hear-
your mistakes — and then talk about a sit- ing from some sponsors.” At that moment, I When Hurricane Sandy hit the East Coast,
uation where we did have it in place and it knew that the culture was in for some public I was in Boston, and I was waiting three
made a huge difference. debate and was going to start changing. or four days until the planes could leave. I
needed some medicine, and the hotel was
I was part of a very large merger in the Could you tell us about how the decision checking around because the whole city was
healthcare arena a few years ago. When the was made and financially, the pros and shut down. Where do you get medicine
deal was announced, we knew there would cons, what’s at stake, and the commentary during a hurricane? How does the staff even
be opposition and had a plan to address you’ve gotten back? get to the pharmacy, because you’re not sup-
that opposition. We didn’t realize though posed to be driving. They checked around,
how vociferous and well-organized the THOMAS M. MORIARTY: In terms and in downtown Boston, the only place
opposition would be, and we were caught a of the financials, it’s roughly $2 billion a that was open was CVS Caremark.
little off guard. Over the course of six weeks year in revenue for the company that we
to two months, we put additional pieces in have chosen to forsake. In terms of the What is the role that the company plays in
place to address the opposition’s tactics. philosophy behind how the decision was emergencies — fires, earthquakes, and other
Ultimately, the merger went back fully on made, if you look at the footprint of the unusual situations — when people are des-
track, but it was really a learning lesson for company — where it is today and where it’s perate to get their medicine? How are you
me: you need to have all of the pieces in going — it’s increasingly playing a greater organized to handle these circumstances?
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WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL
THOMAS M. MORIARTY: We are part I cannot state this enough; we see it in our
of the first responder systems as our phar- day-to-day practice with companies; we see
macies are a critical aspect in emergency companies being very successful at it; we see
response. We have several mobile pharmacy companies being not too successful at it. The
units that we can deploy, and did, during difference is huge, and it is worth a tremen-
Hurricane Sandy. Our area managers and dous amount of time, energy and resources if
our pharmacists in charge at each of the you do not adequately plan for and take the
pharmacies have the discretion to meet the policy environment into account.
local needs.
I will mention three main areas where this
is important. The first is risk management.
One quick story I’ll tell is about the ice
If you look at companies that are effectively
storms that hit in Atlanta this past win-
incorporating policy into their business
ter. The city was literally shut down. You
strategy, they’re managing risk much more
couldn’t move, because the streets were
effectively. There are sectors that are not
coated in ice. Several of our pharmacies
doing this as effectively and are spending
essentially turned into overnight shelters
a lot of money they probably wouldn’t have
and were kept open for folks to stay.
to spend. If you look at the spectrum, and
you watch policy trends and regulatory
JACK FRIEDMAN: I can visualize the
trends, very often you can predict litigation
head of the pharmacy calling the local MARY LANGOWSKI: Thank you, Jack.
trends that are coming. At times, you can
policemen and saying, “I have to get to the I’m happy to be on this distinguished
actually prevent litigation trends from
pharmacy or people won’t get their medi- panel. Tom — congratulations; this is a
happening. It can be a very good investment
cine,” and the police immediately reacting well-deserved honor. I think it is worth
to pay attention.
and saying, “We’ll get you there!” reinforcing what an important decision
CVS just made with its decision to remove
One example is the food industry. The food
THOMAS M. MORIARTY: Exactly. tobacco from its stores. I’ve spent many years
industry is being beat up for salt, sugar,
in healthcare, and things start to get really fat, and genetically modified organisms.
JACK FRIEDMAN: I will mention our exciting when the private sector takes a large In some ways, the debate is driven by a
different speakers and then they will each leadership role to improve public health and very vocal minority that is effectively using
introduce their topics. population health. That’s the kind of thing social media, communications, lobbying
that will actually change the nation’s health- and advocacy tactics. The food industry has
We have Mary Langowski with DLA Piper; care. Congratulations to Tom and to CVS. been very effective over the years at speak-
Enu Mainigi of Williams & Connolly; both
ing to its consumer, but largely ignored its
of them came up from Washington, D.C. I am Mary Langowski, and I chair the policy audience. The move to communicate,
Creighton Condon, who is the senior part- Healthcare Group and the Food & Beverage not just to one stakeholder at the consumer
ner here at Shearman. I do want to thank Sector at DLA Piper. DLA is one of the larg- level, but to a broader regulatory and pol-
your staff very much; they are very effective est law firms in the world. We have a host icy audience, is extremely important, and
and efficient and pleasant to work with. of traditional attorneys, but as Tom noted in to understand their connection to other
his opening remarks, I serve as a “hybrid” — sectors. The food sector thinks like a food
Matthew Hurd of Sullivan & Cromwell; policy, strategy and legal. We have a group sector would, but failed to use their connec-
Vincent Cino, who is the Chairman of of “hybrid” types in D.C. who focus on tion to broader healthcare trends. As long
Jackson Lewis; and Joe Lockhart, who is the policy, government affairs, advocacy, com- as we have major deficits in this country,
Founding Partner and Managing Director munications, corporate development, giving healthcare is going to be a big deal, and
of Glover Park Group, and also came from and business strategy. We basically take and anything that drives up healthcare costs is
Washington. I remember Joe from when use all those tools in the toolbox to work going to be a big deal. Chronic disease is
he worked at the White House and was on with C-suites to drive business strategy. My costing this country an enormous amount
television. As a result, we can consider him remarks — and I’ll try to keep them brief — of money, much of which is preventable.
to be a celebrity panelist. are going to build on what Tom was saying So food is front and center. That’s one
about the importance of incorporating policy example of an industry that is trying to
Let us start with Mary Langowski. into your overall business strategy. handle this situation, and spending many
Spring 2014 8
WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL
millions of dollars reactively on the pol- Over the last 50 years, the company has built a $120+
icy space, the regulatory space, lobbying,
billion-a-year business enterprise that spans almost 8,000
and now on litigation.
locations, and is the largest integrated pharmacy company in
The second area is really reputation and
the United States. Over 5 million people come through our
relationship management. Joe is going to
speak to reputation management more, pharmacies every day. — Thomas M. Moriarty
but it is important — and I just mentioned
this with the food sector — to think of a
Opportunities can come in the form of For example, there are a number of subpoenas
policy audience very differently than your
clearing regulatory hurdles. If you’re trying that have come out to several healthcare com-
consumer audience. You may be effective
to enter global markets, they can come in panies in the last two years or so, related to
as an organization in communicating with
the form of changing reimbursement struc- the Anti-Kickback Statute. I have been doing
your day-to-day consumers, while simulta-
tures to open a market. A lot of people see Anti-Kickback Statute work since 1997. There
neously worrying policymakers. A recent
the policy environment as something to just was a lot of it in the 1990s and the early 2000s,
example is 23andMe. This interesting little
stay away from and ignore, but that is a mis- as it related to hospitals and physicians; and
company sells direct-to-consumer genetic
take. It is ripe with opportunity. then there was nothing. If you go back and
testing kits. They have been very focused on
look, you can absolutely tie together why you
marketing and talking to consumers about
We can talk in more detail, but I’ll pass the are getting Anti-Kickback subpoenas now,
their kits and how you, as a consumer, can
baton so we can do that. Thank you. across the board, at all healthcare companies. It
figure out what you’re at risk for from a
is because, in 2009, when Congress passed the
genetic perspective. It’s a really interesting
JACK FRIEDMAN: Thank you very FERA legislation, it included certain amend-
and exciting organization. Meanwhile, the
much. The whole area of public policy ments to the False Claims Act which resulted
FDA and regulators were concerned and
linked to reputation through social media in the intent requirement of the Anti-Kickback
watched what was happening, and recently
is something Joe and other people here will Statute essentially being removed for the pur-
clamped down on the organization. They
discuss. Those issues can come up even in pose of False Claims Act cases.
sent letters without any real engagement
M&A deals. It is a bit ubiquitous that in
from the company. That’s an example
every area you have to put attention on the The specific intent requirement — which
of a regulatory action that can be mar-
message that you’re sending and have an was critical, frankly, for the defense bar in
ket-breaking instead of market-making. It is
intelligent, proactive policy. Instead of wait- defending those cases when all the hospi-
important to understand that you’ve got to
ing for somebody to criticize you and then tals were sued and the physicians were sued
develop a reputation and relationships early
say, “We didn’t think about that!” We will — Congress just plucked right out of there
and often, so that you’re not knocking just
be taking that up later. and said, “For False Claims Act cases, the
when you need something.
government doesn’t need to demonstrate
Enu Mainigi is our next speaker. specific intent.” As a result, you have a lot
Third and finally, is the most important: of government agencies and investigators
the opportunity and competitive edge that ENU MAINIGI: My name is Enu Mainigi. out there recognizing this and basically
can result from incorporating policy into I am a partner at Williams & Connolly in seeing what may exist. You are all familiar
your business strategy. You want to be in Washington, and my focus is healthcare with the pharmaceutical industry and the
a position where you’re driving policy. You litigation. Primarily, I work on government fact that the off-label cases have wound their
want to watch policy and forecast trends investigations, False Claims Act cases and way from one pharma company to another,
that are going to affect your company so overseeing all of those types of cases. and everybody has come to the table and
that you can pivot and adjust your business had a case and ultimately entered into what
strategy accordingly. The area that I am going to focus on is usually is a pretty enormous settlement.
obviously litigation and the concept that
In the healthcare space, you see a lot of orga- it’s very important for us as litigators not to The same is now happening with the Kick-
nizations which were prepared before the just think about the case when you get it, Back cases. It all goes back to the fact that
Affordable Care Act even passed, which were and to consider, “What’s the case law that there was, at some point, an amendment
changing their business models and looking relates to this and what can I do with this that was accepted, passed, but probably did
at acquisitions very early on to take advantage particular case?” but to step back and ask not get much attention at the time from
when the bill actually passed. Those organi- the broader question of, “Why am I getting those of us who will have to defend cases
zations are doing very well right now. this subpoena?” when they come down the pike.
Spring 2014 9
WORLD RECOGNITION of DISTINGUISHED GENERAL COUNSEL
flow through the system, one court may widened the pool greatly of the type of peo-
answer this question this way, and another ple who can serve as whistleblowers. The
court may answer the question another way. level of knowledge that they need to bring
to the case is significantly less than had
There was a court in Wisconsin last year been traditionally understood.
that found that even though defendants had
identified and corrected specific overpay- There was a case in 2012 out of the Fifth
ment during an audit, because they made no Circuit, where the court found that even
effort to go back and look for other errors, auditors who work for the United States
that that was enough to say that they had Government could file a qui tam action
acted with reckless disregard under the stat- against a private company. The interesting
ute. Understandably, courts, without much thing was, in that case, the federal gov-
direction from Congress on these issues, ernment actually filed a brief saying, “We
are going to be all over the map. already support this.” Because of the word-
ing of the statutes, and because no one
Another example is public disclosure. A had really thought about this unintended
great defense to False Claims Act cases consequence at the time the legislation was
has always been: these allegations have drafted, the Fifth Circuit said, “Nothing we
been out there for a while; cases have been can do about it. These people are clearly
I’ve known Tom for 10 or 11 years, and filed about this already. This is not new persons under the False Claims Act; so
one of the things that he has always been news; this is not something that needed they therefore have standing to file a whis-
excellent at doing — and others are coming to be filed under seal by a whistleblower; tleblower action.”
to the table and doing it, finally, now — is but this is something that everybody has
focusing on the broader picture. How will known about. Congress has tightened that What are the implications? Obviously, the
what we say to DOJ affect how HHS or now, as a result of the Affordable Care Act, top implication of some of this recent leg-
CMS is going to look at us? If we go out and has basically given the government islation is a significant increase in False
and say this, what will our competitors say? power to stop dismissal of those lawsuits Claims Act cases in recent years. In 2009,
He learned well from his first year law stu- if they want. They said, “It only counts if there were 433 cases; in 2013, there were
dent experience to step back and ask those we look at these issues at the federal level.” 752 cases filed. The government has
bigger picture questions. It is critical for all Anything that gets filed in state proceedings found that their return on investment only
of us who are litigators to ask that. — even a case that is virtually the same as increases; for every dollar that they put in,
a whistleblower case that was filed at the they get $20 back, usually in the form of a
A couple of other examples — and there federal level — doesn’t count. settlement. There’s really no downside in
is a PowerPoint that is available for you to pursuing these cases.
pick up — in addition to the Anti-Kickback The net result of that action, now, is that
Statute, is the Affordable Care Act basically you have an increase, not just in the num- The government has a fairly significant back-
codified overpayments as merely a per se ber of False Claims Act cases coming log of cases, over a thousand at this point,
violation of the False Claims Act. That’s through, but you have an increase in the and is still continuing to intervene in a large
going to be critical for healthcare compa- t ype of whistleblowers that exist. Your typ- number of cases, about 20 to 25%. One of
nies moving forward, because there are a ical whistleblower in 2004, for example, the things they are doing as a result of this
lot of unanswered questions about how it was a former disgruntled employee of the backlog is saying, “We don’t have time to
is going to be applied. What does “knowl- company. Whistleblowers today can be that, investigate this case right now before this
edge” mean? What intent do you have to but they can also be the company’s auditor. judge makes us intervene or not intervene
have? Who at the company is sufficiently They can be a contractor. They can be a in the case, so we’re going to file something
high enough to know that there has been vendor. They can be a competitor who over- that says, ‘We’re not intervening now, but we
an overpayment vs. not an overpayment? heard something from somebody. reserve the right to intervene later for good
When you look at an overpayment, how cause.’” That leaves everybody in limbo for a
far back do you have to go? These are all The net result of several of these amend- while, because the private litigant takes over
questions created by this legislation that was ments that were affected as part of the the case, litigates the case, and gets well into
passed; that don’t necessarily have answers Affordable Care Act, and then the FERA discovery. You always have the possibility that
now, but they will. As whistleblower cases legislation the year before, is that you have the government may choose to jump in at
Spring 2014 10