Henry Schein 2014 Annual Report Download - page 38

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• require us to manage returns of products that have been recalled and subject us to inspection of our
recall procedures and activities; and
• impose reporting requirements if a pharmaceutical, HCT/P product or medical device causes serious
illness, injury or death.
Applicable federal, state, local and foreign laws and regulations also may require us to meet various standards
relating to, among other things, licensure or registration, sales and marketing practices, product integrity and supply
tracking to the manufacturer of the product, personnel, privacy and security of health or other personal information,
installation, maintenance and repair of equipment, and the importation and exportation of products. Our business
also is subject to requirements of similar and other foreign governmental laws and regulations affecting our
operations abroad. The FDA and DEA have recently increased their regulatory and enforcement activities.
The failure to comply with any of these regulations, or new interpretations of existing laws and regulations, or
the imposition of any additional laws and regulations, could negatively affect our business. There can be no
assurance that current government regulations will not adversely affect our business. The costs to us associated
with complying with the various applicable statutes and regulations, as they now exist and as they may be modified,
could be material. Allegations by a governmental body that we have not complied with these laws could have a
material adverse effect on our businesses. If it is determined that we have not complied with these laws, we are
potentially subject to penalties including warning letters, civil and criminal penalties, mandatory recall of product,
seizure of product and injunction, and suspension or limitation of product sale and distribution. If we enter into
settlement agreements to resolve allegations of non-compliance, we could be required to make settlement payments
or be subject to civil and criminal penalties, including fines and the loss of licenses. Non-compliance with
government requirements could adversely affect our ability to participate in federal and state government health
care programs, and damage our reputation.
If we fail to comply with laws and regulations relating to health care fraud or other laws and regulations, we
could suffer penalties or be required to make significant changes to our operations, which could adversely affect
our business.
We are subject to federal and state (and similar foreign) laws and regulations relating to health care fraud.
Some of these laws, referred to as “false claims laws,” prohibit the submission or causing the submission of false or
fraudulent claims for reimbursement to federal, state and other health care payers and programs. Other laws,
referred to as “anti-kickback laws,” prohibit soliciting, offering, receiving or paying remuneration in order to
induce the referral of a patient or ordering, purchasing, leasing or arranging for or recommending ordering,
purchasing or leasing, of items or services that are paid for by federal, state and other health care payers and
programs. Health care fraud measures may implicate, for example, our relationships with pharmaceutical
manufacturers, our pricing and incentive programs for physician and dental practices, and our dental and physician
practice management products that offer billing-related functionality.
The government has expressed concerns about financial relationships between suppliers on the one hand and
physicians and dentists on the other. As a result, we regularly review and revise our marketing practices as
necessary to facilitate compliance. In addition, under the reporting and disclosure obligations of the Physician
Payment Sunshine Act provisions of the Health Care Reform Law, discussed in more detail under “Government
Regulations - Health Care Reform” above, the general public and government officials are being provided with new
access to detailed information with regard to payments or other transfers of value to certain practitioners (including
physicians, dentists and teaching hospitals) by applicable drug and device manufacturers subject to such reporting
and disclosure obligations, which includes us. This information may lead to greater scrutiny, which may result in
modifications to established practices and additional costs.
The applicable requirements have been subject to varying interpretations, as well as heightened enforcement
activity, over the past few years. Also, significant enforcement activity has been the result of actions brought by
“relators,” who file complaints in the name of the United States (and if applicable, particular states) under federal
and state false claims laws, and under the federal False Claims Act can be entitled to receive up to 30% of total
recoveries. Violations of the federal False Claims Act can result in treble damages, and each false claim submitted
can be subject to a penalty of up to $11,000 per claim. The Health Care Reform Law significantly strengthened the
federal False Claims Act and federal anti-kickback law provisions, which could lead to the possibility of increased
whistleblower or relator suits, and among other things made clear that a federal anti-kickback law violation can be a
basis for federal False Claims Act liability.