Getting a doctor to change their ways is not always an easy task. Savvy entrepreneurs within the pharmaceutical and medical device industries know this and realize the benefit of bringing in a physician who has used their products to help explain the benefits to their peers.
Although the physician brought in by the company may truly believe in the benefits of the product, the slope is a slippery one. If the company pays the physician too little, it does not make sense to attend the speaking event; if they pay too much the government may move forward with allegations of a federal violation.
What federal regulations apply in these situations?
The most notable is likely the Antikickback Statute (AKS). This federal regulation essentially prohibits payment in exchange for qualifying referrals. A violation results in criminal charges and harsh penalties that can include potential imprisonment, a $50,000 penalty per kickback, and an additional financial fee of up to three times the payment in question.
The Office of the Inspector General of the Department of Health and Human Services (OIG) often initiates these investigations. The OIG has cracked down on drug and device companies paying unreasonable speaker fees. This is because the agency believes the company is not using these excessive fees to promote a beneficial product but instead to serve as an illegal kickback.
What are examples of a violation?
Examples of speaking events that can trigger an OIG investigation can include:
- Speaking arrangement connected to prescription rate. It is suspicious if the physician brought in to speak also has an overly high rate of prescriptions or purchases of medical devices from the company. Another example is an arrangement that includes conditions for meeting certain sales targets.
- Composition of the audience. If the goal is to educate fellow healthcare professionals, the audience should include physicians, nurses, pharmacists, and the like.
- Location of arrangement. The government believes that if the arrangement is meant as educational, it should occur in an educational setting. As a result, arrangements in golf resorts, fancy restaurants, or other entertainment venues are likely to raise suspicion.
In the event of an investigation, the OIG or other government authorities will likely review the content of the speech and the role the company played in putting together the content. It should be the physician’s words and experiences, not a marketing script.
What can I do to better ensure my engagements do not violate the law?
Watch out for two red flags:
- Excessive payment. Closely evaluate the arrangement if the speaker fee does not align with market value.
- Connection to use of the product. Another potential issue is a connection between the engagement offer and sales numbers or product use.
Because the stakes are so high, it is wise to have legal counsel review the engagement before moving forward to help better ensure it does not violate the AKS or other federal, state, or local regulations.