Skip to Content

OIG Special Fraud Alert Targets Speaker Programs and Fees Paid by Pharmaceutical and Medical Device Companies

on Tuesday, 8 December 2020 in Health Law Alert: Erin E. Busch, Editor

The Office of Inspector General, U.S. Department of Health and Human Services (“OIG”) issued its first Special Fraud Alert since 2014, on November 16, 2020. Recognizing that the COVID-19 pandemic has caused cancellation of speaker programing on products sold by pharmaceutical and medical device companies (“vendor companies”), OIG questions the propriety of and need for such programs, in an effort to discourage them from reconvening when social distancing is no longer necessary.

The Fraud Alert is addressed to physicians and other health care professionals as well as the vendor companies. It points out that the payment of speaker fees in excess of fair market value (to reward historic prescriptions and orders, or to induce them in the future) constitutes a violation of the Anti-Kickback Statute, which imposes both civil and criminal penalties on both parties to the kickback. This means that both the vendor company and the physician engaged to speak to other health care professionals about the vendor company’s product can be prosecuted for a violation of the Statute. As a practical matter, it has been the vendor companies that have been pursued most aggressively in the enforcement of Medicare and Medicaid fraud and abuse laws.

Some of those prosecutions have developed as whistleblower claims under the False Claims Act. As an example, it was announced on July 1, 2020 that Novartis entered into a settlement with the Department of Justice (“DOJ”), paying $591.4M in response to allegations that it paid kickbacks to entice physicians to prescribe several of its drugs (Lotrel, Valturna, Starlix, Tekturna, Tekamlo, Diovan and Exforge). The precise allegation was that Novartis hosted tens of thousands of speaker programs and related events under the guise of providing educational content, when in reality, they served as a basis for paying bribes to physicians in the form of honoraria. Some of the speaker events never even took place; so the payments were a thinly veiled payment to induce the “speaker” to prescribe Novartis drugs.

Some whistleblower claim settlements bring the focus on specific kickbacks paid to individual physicians. In a DOJ settlement announced in May 2019, US WorldMeds, LLC paid $17.5M to resolve allegations of kickbacks to physicians for prescribing Apokyn and Myobloc to treat Parkinson’s disease. The allegations focused on two physicians who were paid significant consulting fees and luxury vacations, including an all-expense paid trip to the Kentucky Derby for the physicians and their wives.

The Fraud Alert directly states the OIG’s skepticism on the educational value of such programs, noting that they are often offered in settings that are not conducive to learning, or to speak to an audience with no legitimate reason to attend. Since studies show that recipients of these payments are more likely to prescribe the vendor company’s drugs, the result may be to skew clinical decision-making in favor of the physician’s and vendor company’s financial interests rather than the patient’s best interests.

The OIG notes that there are many alternative sources for information on the vendor companies’ products, making these speaking engagements entirely unnecessary. The Fraud Alert threatens that participants in these speaker programs “may be subject to increased scrutiny,” including physician speakers and attendees (receiving free food and drink), as well as the vendor companies. 

Under the Patient Protection Affordable Care Act, vendor companies were required to report to the Centers for Medicare and Medicaid Services (“CMS”) certain payments made to physicians and teaching hospitals. The reported data has been used to establish a database open to the public at openpaymentsdata.cms.gov, where patients, physicians, physician employers and other health care institutions can search for the cumulative payments made by all vendor companies to individual physicians since 2014.

For institutional compliance committees, it would be a worthy project to check the CMS website for data on physicians affiliated with those institutions to determine whether there are any who are vulnerable due to their receipt of payments from vendor companies. Any physicians with significant reported payments on the website should be made aware of the Fraud Alert and of the list of suspect characteristics indicating that a speaker program fee could constitute an illegal kickback:

  • The company sponsors speaker programs where little or no substantive information is actually presented;
  • Alcohol is available or a meal exceeding modest value is provided to the attendees of the program (the concern is heightened when the alcohol is free);
  • The program is held at a location that is not conducive to the exchange of educational information (e.g., restaurants or entertainment or sports venues);
  • The company sponsors 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-approved or cleared indication for the product;
  • Physicians attend programs on the same or substantially the same topics more than once (as either a repeat attendee or as an attendee after being a speaker on the same or substantially the same topic);
  • Attendees 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 physician attendee; employees or medical professionals who are members of the speaker’s own medical practice; staff of facilities for which the speaker is a medical director; and other individuals with no use for the information;
  • The company’s sales or marketing business units influence the selection of speakers or the company selects physician 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 product(s) (e.g., a return on investment analysis is considered in identifying participants);
  • The company pays physician speakers more than fair market value for the speaking service or pays compensation that takes into account the volume or value of past business generated or potential future business generated by the physicians.

 

1700 Farnam Street | Suite 1500 | Omaha, NE 68102 | 402.344.0500