On November 16, 2020, the U.S. Department of Health and Human Services Office of Inspector General (“OIG”) released a Special Fraud Alert (the “Alert”) addressing speaker program payments made by pharmaceutical and medical device companies to health care professionals (“HCPs”). Specifically, the Alert focuses on company-sponsored events at which the HCP makes a speech or presentation about a drug or device product or disease state to other HCPs on behalf of the company (“Speaker Programs”). Over the last three years, drug and device companies have reported paying almost $2 billion in honorariums for speakers and remunerations for attendees. OIG was able to get visibility into the amount drug and device companies have paid to HCPs for such Speaker Programs through the Physician Open Payments Program (“Sunshine Act”), the national transparency program born out of the Affordable Care Act intended to highlight the financial relationships between HCPs, teaching hospitals and drug and device manufacturers. The Centers for Medicare & Medicaid Services makes this information publicly available on its Open Payments website.

In the Alert, OIG identifies a number of Speaker Programs that have been investigated for allegations of fraud and provides a list of characteristics of Speaker Programs that would be suspect under the federal Anti-Kickback Statute (“AKS”). The Alert can be found here.

Background

The AKS makes it a criminal offense to knowingly and willfully offer, pay, solicit or receive any remuneration to induce or reward referrals or items or services payable by a federal health care program. Even if only one purpose of an arrangement is to “pay for referrals,” the AKS is violated.

Remuneration, whether offered by a drug or device company or solicited by HCPs from drug and device companies, can potentially implicate the AKS. This risk is higher in the Speaker Program context, where remuneration is sometimes dressed up as educational learning.

OIG has long been skeptical over the practice of drug and device companies providing anything of value to HCPs in a position to make or influence referrals to such companies’ products. As far back as the 2003 OIG Compliance Program Guidance for Pharmaceutical Manufacturers, OIG warned that Speaker Programs could potentially implicate the AKS. In response, the respective trade organizations for the drug and device industries (Pharmaceutical Research, Manufacturers of America and Advanced Medical Technology Association respectively) issued codes to detail the appropriate interactions with health care professionals.

According to the Alert, studies have shown that HCPs who receive remuneration from a company are more likely to prescribe or order that company’s products. Putting these arrangements at further risk is that HCPs can often obtain information about available drug and device products and disease states through other means that do not involve remuneration to HCPs. As such, OIG asserts that it could be inferred that one purpose of the remuneration to HCPs for these Speaker Programs is to induce or reward referrals. According to the Alert, this could apply to either HCP presenters or HCP attendees at these events.

Characteristics of Suspect Speaker Programs

In this Alert, OIG noted that the drug and device companies and the HCPs could both face liability for remunerative Speaker Program arrangements that violate the AKS. In adding to previous guidance, the Alert provides the following illustrative list of potentially suspect characteristics for Speaker Programs:

  • There is little or no substantive information actually presented;
  • Alcohol is available (especially if it is free) or a meal exceeds modest value;
  • The venue is not conducive to the exchange of educational information;
  • A large number of programs on the same or substantially the same topic or product, especially in situations involving no recent substantive change in relevant information;
  • There has been a significant period of time with no new medical or scientific information nor a new FDA-approval or cleared indication for the product;
  • HCP attendees have attended a previous program on the same or substantially the same topics;
  • Attendees include individuals who do not have a legitimate business reason to attend the program, including, for example, friends, significant others or family members of the speaker or HCP attendee;
  • The company’s sales or marketing business units influence the selection of speakers or the company selects HCP speakers or attendees based on past or expected revenue that the speakers or attendees have or will generate by prescribing or ordering the company’s products; and
  • The HCP speaker is paid more than fair market value for the speaking service or the compensation was based on the volume or value of past business generated or potential future business generated by the HCPs.

Additionally, while not included in the illustrative list, OIG identified that the pandemic emergency may shape its future assessments of Speaker Programs. Specifically, OIG noted that drug and device companies that transitioned to virtual Speaker Programs during the pandemic emergency may need to demonstrate the need for a resumption of in-person Speaker Programs, when those virtual Speaker Programs were sufficient for conveying the information in question.

Practical Takeaways

OIG’s issuance of Special Fraud Alerts usually is a sign that OIG is paying close attention to the subject matter of the Alert and in turn putting the health care industry on notice to tread cautiously. The Alert sends an important reminder to drug and device manufacturers and HCPs about the risks involved in Speaker Programs. The Alert identifies a number of Speaker Program features that could invite investigation. Note, that Speaker Programs are not per se illegal. To avoid liability, drug and device companies should:

  • Carefully weigh the educational value of the Speaker Program against the remuneration provided to speakers and attendees;
  • Establish standard operating procedures (“SOPs”) that detail the permissible activities of sales and marketing units, specifically prohibiting their involvement in selecting HCPs for the Speaker Program as well as sharing information related to the HCP’s prescribing or ordering practices;
  • Establish an SOP for the selection of HCPs. The SOP should provide that (i) the Medical Affairs department rather than the Sales/Marketing department is the owner of the selection of HCP speakers; (ii) Speaker Programs will only occur if there is identification and documentation of a legitimate business need; (iii) the selection of HCP speakers is based on objective criteria consistently applied evaluating the HCP’s expertise, clinical knowledge and speaking experience; (iv) Speaker Programs are not to be used to induce or reward future prescriptions or ordering of company products; (v) all speaking engagements must meet the elements of the personal services arrangements safe harbor to the AKS; and (vi) documentation will be maintained to support the Speaker Program;
  • Include auditing of Speaker Programs to their Annual Work Plan; and
  • Carefully consider the resumption of in-person Speaker Programs.

Hospitals and health systems that employ physicians should consider reminding their physicians of the risks in participating in Speaker Programs and provide education to make them aware of OIG’s concerns. If hospitals do not already have a conflict of interest process that requires employed physicians to report their outside activities such as speaking engagements where they receive compensation, consider implementing such a program.

HCPs should carefully consider whether the event’s value resides in its educational opportunity or the non-substantive aspects of the Speaker Program. HCPs should also judiciously consider the risks of soliciting or receiving remuneration related to in-person Speaker Programs in light of the pandemic emergency.