DarshanTalks Podcast

Mergers and Acquisitions (M&A) in the healthcare sector can be highly profitable, but they carry significant legal risks, particularly for private equity investors and board members who hold excessive influence over operations. The case of US XRL Martino Fleming vs. South Bay Mental Health Centers serves as a cautionary tale, highlighting how overstepping operational boundaries can lead to False Claims Act (FCA) violations. Investors, eager to enhance efficiency and profitability, may inadvertently trigger scrutiny by imposing aggressive performance targets or controlling daily operations, which could cross the line into operational control. In this case, allegations of fraudulent billing practices arose due to the investor’s involvement in clinical and administrative operations. Such claims can result in severe financial penalties and irreparable damage to reputation, affecting future investment opportunities.

The key takeaway here is that undue influence by investors can unintentionally create compliance liabilities. It is crucial for private equity firms to maintain a balance between oversight and operational independence. As part of M&A due diligence, integrating compliance reviews is essential. The Department of Justice (DOJ) issued updated guidance in 2023 and 2024, emphasizing the need for these reviews to focus on federal healthcare program regulations. This includes everything from Medicare billing practices to compliance with the Stark Law and Anti-Kickback Statute. Investors must conduct operational audits, understand the limits of control in regulated industries, and set up post-acquisition compliance frameworks to avoid liability. Ultimately, proactive compliance strategies are crucial to safeguarding against FCA violations and ensuring M&A transactions remain successful. Reach out to the Kulkarni Law Firm for tailored legal guidance and subscribe to the DarshanTalks Podcast for more insights into healthcare M&A best practices.

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Most clinical trial site mergers focus on patient databases, sponsor contracts, and geographic expansion. While those are important, the real risks lie elsewhere—buried in compliance issues that can derail your deal before it even closes. Imagine acquiring a site that looks great on paper, only to face FDA or DOJ scrutiny months later due to undisclosed 483s, protocol deviations, or even kickback violations. Instead of scaling operations, you're dealing with regulatory investigations and potential fraud issues.

These risks are avoidable—if you know where to look. Before merging clinical trial sites, conduct thorough due diligence:
1. IRB Approvals and Regulatory Compliance History – Review IRB approvals and study regulatory compliance history.

2. 483s and FDA warning letters- Review past 483s, and FDA warning letters.

3. IRB approvals- Ensure that all ongoing studies have IRB approvals.

4. Ensure Past Deviations & Adverse Events Are Resolved – Review all protocol deviations and adverse event reports to confirm they have been properly addressed. Compliance violations don’t disappear after a merger—they become your responsibility.

5. Site Contracts & Investigator Agreements – Ensure contracts transfer post-merger and aren’t tied to individual physicians.

6. Verify Financial Disclosure Reporting – Ensure all financial disclosures are accurate and complete to avoid undisclosed conflicts of interest post-merger.

7. Clinical Staff & Oversight – Verify investigator credentials, GCP training, and past compliance violations.

8. Verify PI Credentials – Confirm that the Principal Investigator’s credentials, licenses, and certifications are valid and up to date.

9. Confirm GCP Training Compliance – Ensure all investigators have completed the required Good Clinical Practice (GCP) training.

10. Review Investigator-Specific Protocol Violations – Identify any past protocol violations linked to individual investigators.

11. Assess Payment Structures & Financial Arrangements – Review whether payments are percentage-based or fee-for-service, and check for any financial perks like free rent.

12. Data Integrity & Patient Safety – Look for missing consent forms, protocol adherence issues, and any history of data fabrication.

13. Verify Informed Consent Documentation – Ensure all informed consent forms are properly documented and complete.

14. Review Protocol Adherence Records – Verify that the site consistently follows approved protocols.

Hidden compliance risks don’t disappear after a merger—they become your problem. The Kulkarni Law Firm helps clinical research sites, CROs, and investors identify and mitigate these risks before closing a deal. Contact us to safeguard your next clinical trial site merger.

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Today we're diving into a critical issue that has shaken the pharmacy world. Recently, a pharmacy owner was sentenced for paying illegal kickbacks and engaging in a money laundering conspiracy. This case has significant implications for promotional compliance within the pharmacy industry, and we're here to explore them in detail.
In a landmark case, the Department of Justice sentenced Richard Hall, a 53-year-old pharmacy owner from Fort Worth, to several years in prison. The charges? Hall paid illegal kickbacks to patient recruiters and physicians, leading to unnecessary prescriptions and defrauding federal healthcare programs. Court documents and trial evidence revealed that Hall, along with others, created and marketed expensive compounded medications. These medications, meant to be custom-tailored to individual patient needs, became the focal point of the fraud. Hall paid marketers to recruit doctors to write prescriptions for these costly compounded medications, offering "investment opportunities" that allowed the doctors to profit from the pharmacy operations. Furthermore, Hall engaged in a conspiracy to launder the unlawful proceeds of this scheme.
The Anti-Kickback Statute is explicit – financial incentives should never influence healthcare decisions. Yet, Hall crossed this line, resulting in severe legal consequences. This case was not just about kickbacks; it also involved money laundering to conceal the origins of the illicit funds. Such actions undermine the integrity of the healthcare system and highlight the critical need for strict compliance with legal and ethical standards.
This scandal emphasizes the importance of ensuring that: Every prescription dispensed is medically necessary and appropriately documented. As pharmacists and pharmacy marketers, it is our duty to prioritize patient care and uphold the highest ethical standards. The ramifications of failing to do so can be devastating, both legally and professionally.
So, what steps can you take to avoid similar pitfalls? First, steer clear of any financial incentives that could be construed as kickbacks. Second, ensure that every prescription is justified by medical necessity. Third, closely monitor financial transactions to ensure they comply with all legal requirements.

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Stephanie Trunk and Darshan Kulkarni discuss the evolving landscape of the pharmaceutical industry under the Trump Administration in 2025. They highlight the uncertainty surrounding regulatory changes, particularly with new leadership at the FDA, CMS, and HHS (with RFK confirmed). There is concern over shifting prosecutorial priorities, overturned FDA diversity initiatives, and potential scrutiny of diversity efforts in private companies.

A major focus is the changing environment of off-label marketing, where reliance on FDA guidances is being replaced by stricter adherence to statutory regulations due to court rulings like Coronia and Loper Bright . This shift creates uncertainty for regulated industries, as enforcement becomes less predictable.

Key Topics Discussed:

Off-Label Promotion & Enforcement:

• Off-label use is legal, but off-label promotion remains a complex issue.
• Enforcement is increasingly driven by the False Claims Act, with oversight from multiple agencies (FDA, FTC, DOJ, OIG, CMS).
• The blurring of lines between medical and sales functions is a growing concern, especially with AI chatbots playing a role in medical communications.

Compounding & the GLP-1 Market:

• The discussion explores drug compounding, particularly regarding GLP-1 weight loss medications.
• Regulatory challenges stem from drug shortages, compounding rules, and market competition, with potential Lanham Act violations and unfair competition claims.
• The Inflation Reduction Act and its implications for drug shortages and penalties are also considered.

Key Compliance Considerations:

• Maintaining clear separation between sales and medical functions.
• Ensuring compliance with FDA promotional material regulations.
• Managing risks related to AI chatbots and speaker programs.
• Implementing robust compliance programs in line with DOJ, OIG, and FDA guidelines.
• Understanding the growing role of state attorneys general and competitor-driven enforcement actions.

The overall sentiment reflects industry uncertainty as pharmaceutical companies navigate regulatory and legal shifts in this new landscape.

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Citizen biohacking is an empowering movement where individuals take medical innovation into their own hands, often stepping in when traditional medicine falls short. Driven by necessity, love, and a desire for survival, many have solved complex medical problems themselves, leading to groundbreaking discoveries. This trend raises important questions about safety, ethics, and the future of healthcare, with both promise and complexity.

One of the most well-known examples is Lorenzo’s Oil, where Michaela and Augusto Odone developed a treatment for their son Lorenzo, who was diagnosed with a rare and fatal genetic disorder. Their research and persistence led to a groundbreaking treatment that helped slow the disease's progression. Another inspiring story is that of Dr. David Fajgenbaum, who, after being diagnosed with Castleman’s disease, repurposed existing drugs to stabilize his condition, saving his life and offering hope to others. These remarkable examples demonstrate how determination and innovation can lead to life-saving breakthroughs.

However, citizen biohacking raises crucial concerns, such as safety and ethics. Operating outside the traditional medical system, it challenges regulatory bodies to reconsider how innovation is validated and tested. Despite these challenges, citizen biohacking is changing the landscape of medicine, pushing the medical community to think differently, adapt more quickly, and collaborate with unconventional innovators. If you’re interested in exploring these stories and the legal implications of this trend, tune in to our Darshan Talks podcast or reach out to Kulkarni Law Firm for expert guidance.

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