Health and Human Services Issues Special Fraud Alert on Live Speaker Programs

On November 12, the Department of Health and Human Services Office of Inspector General (HHS-OIG) issued a rare Special Fraud Alert (the “Alert”). The Alert reinforces the inherent risks of anti-kickback statute violations when pharmaceutical or medical device manufacturers sponsor events in which physicians or other healthcare providers make speeches or presentations for which they receive remuneration. Given the pandemic, HHS-OIG also took the opportunity to urge companies to reconsider restarting in-person programs even when the pandemic abates.

We are issuing this alert during the pandemic emergency, which is necessarily curtailing many in-person activities…The risks associated with speaker programs will become more pronounced if companies resume in-person speaker programs or increase speaker program-related remuneration to HCPs [health care providers]. Companies should assess the need for in-person programs given the risks associated with offering or paying related remuneration and consider alternative less-risky means for conveying information to HCPs.

Over the course of many years, and to the tune of hundreds of millions of dollars in settlements, many pharmaceutical and medical device manufacturers have been caught out by the anti-kickback statute for rewarding speakers with lucrative speaker fees, trips, expensive dinners and other “red-flag” activities like fishing excursions, entertainment at adult venues, sporting events and the like. The speakers themselves are likewise subject to penalties for accepting anything of value, directly or indirectly, from such companies as inducements or rewards for referrals or orders of items or services.

While not all speaking engagements are in violation of the anti-kickback statute, sponsorship or participation in speaker programs are subject to increased scrutiny by HHS-OIG and the Justice Department, and this includes sponsors, speakers AND even attendees who receive something of value (including free food and drink) that could serve as an inducement to make referral or use a company’s drugs or medical devices. The Alert helpfully provides a bulleted list of characteristics that, taken together or separately, potentially indicate a program that may violate the anti-kickback statute. The Alert also notes that the list is illustrative, not exhaustive.

·        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;

·        HCPs 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 include individuals who don’t have a legitimate business reason to attend the program, including, for example, friends, significant others, or family members of the speaker or HCP 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 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 product(s) (e.g., a return on investment analysis is considered in identifying participants);

·        The company pays HCP 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 HCPs.

Pharmaceutical and medical device manufacturers should properly interpret the issuance of the Special Fraud Alert as a shot across the bow and an indicator that despite the pandemic and the lull in in-person events, HHS-OIG and the Justice Department have no intention of taking their eye off the ball when it comes to anti-kickback statute enforcement.

The FisherBroyles Pharmacy and Health Care Law team is pleased to keep you updated on events of interest to those in the healthcare, medical device, and pharmaceutical industries.

For a review of your existing compliance program or the creation of a new one, please contact any of the listed attorneys.