ResMed: ‘We’re committed to compliance’

Friday, August 26, 2016

SAN DIEGO – Will ResMed become the second major manufacturer to get a slap on the wrist from the government for its resupply program?

ResMed disclosed in an annual report this month that it has received a federal administrative subpoena from the Office of Inspector General requesting documents and other information related to its resupply program. The program, ResMed ReSupply, helps HME providers automate the process of replenishing CPAP supplies for their patients.

“Our industry is highly regulated, and we take steps to ensure we comply with all applicable laws and regulations,” said David Pendarvis, ResMed global general counsel and chief administrative officer, in a statement to HME News. “We’re committed to compliance with the law.”

Earlier this year, one of ResMed’s competitors, Philips Respironics, paid out $34.8 million to settle a whistleblower lawsuit and Department of Justice investigation that alleged the company provided its resupply program for free to HME providers that bought its products.

The OIG’s decision to subpoena ResMed is another example of how the government is scrutinizing manufacturer-provider relationships more closely.

“This type of relationship between manufacturers and providers has been under scrutiny for several years now,” said Jeff Baird, chairman of the Health Care Group at Brown & Fortunato, who has defended a number of companies involved in these types of investigations. “If not put together correctly, it could be construed as a kickback.”

While manufacturers can offer volume discounts to providers, where they can get into trouble is by offering providers other incentives to get them to buy their products or to convert them from another manufacturer’s products, Baird says.

“Those are the two big things the government looks at,” he said.

It’s possible the Respironics case turned the government’s eyes to ResMed. It’s also possible, like with Respironics, that there is a whistleblower involved in the ResMed case, Baird says.

“Often, the OIG gets involved when there is someone out there who believes that what the company is doing is wrong,” he said. “That person goes to an attorney and files a lawsuit, but no one knows about it because it’s under seal, and the government does an investigation.”

The government scrutiny of Respironics and now ResMed could have an impact on their respective positions in the hyper-competitive sleep market.

“It absolutely affects how we choose a vendor,” said Lisa Feierstein, co-founder and president of Active Healthcare, a provider in Raleigh, N.C., that specializes in sleep therapy. “We look at the integrity of our partners. We feel that when we get into a vendor relationship, we’re partners together and we make choices accordingly.”