HHS-OIG issues alert warning pharmaceutical and device manufacturers about the kickback risks of speaker programs

Anti money laundering

Life Sciences Alert

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On November 16, 2020, the United States Department of Health and Human Services, Office of Inspector General (HHS-OIG) issued a Special Fraud Alert regarding the fraud and abuse risks associated with pharmaceutical and device manufacturer speaker programs. HHS-OIG noted that pharmaceutical and medical device manufacturers have reported paying over $2 billion to physicians for speaker programs over the past three years.

In addition to expressing general skepticism about the “educational value of such programs,” HHS-OIG identified particular circumstances that it believes warrant closer scrutiny – in sum, the more that speaker programs resemble mere social events, the more skeptical the government will be about their true purpose.  Given that such Special Fraud Alerts are not everyday occurrences – HHS-OIG issued its last one in 2014 – prudent manufacturers will be sensitive to HHS-OIG’s comments but also view it in its proper context and understand that in-person programs are not categorically improper. 

The HHS-OIG Special Fraud Alert

The government’s longstanding scrutiny of speaker programs and the coronavirus disease (COVID-19), which has significantly reduced the occurrence of speaker programs in 2020, likely motivated the Special Fraud Alert.  HHS-OIG noted that, once the pandemic emergency is over, 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.  Furthermore, it advises companies to rethink the need for such programs and “consider alternative less-risky means for conveying information to HCPs.

Notwithstanding the reasons for its issuance, the new alert highlights particular facts that suggest a company’s speaker program may not be bona fide and may constitute improper HCP inducement under the Anti-Kickback Statute (AKS).  Although the HHS-OIG calls out a variety of questionable “facts and circumstances,” the identified risk areas essentially fall into one of two categories:

1.  Programs that are essentially an excuse to hold social events and entertain HCPs.

In this first category, HHS-OIG calls out programs in which little or no substantive information is being shared, but also programs in which attendee HCPs repeatedly attend the same program or in which there is very little new information to be shared.  Note that the HHS-OIG focus here is on the value that attendee-HCPs are receiving as much as the speakers.  Not surprisingly, HHS-OIG also suggests that HCP family members, their office staff and others without a “legitimate business purpose” attending a program could trigger scrutiny.

Similarly, the more lavish the food, the more plentiful the alcohol and the more entertainment provided at a particular venue – such as fancy restaurants and sporting events – the more likely the government will view the purpose of the event as being something other than the legitimate sharing of information – in other words, providing remuneration, not education.

2.  Programs in which speakers are selected to reward past or future business, especially if the fees are not appropriately tied to fair-market value.

HHS-OIG is warning companies not to allow their sales-and-marketing functions to influence the selection of HCP speakers based on past or expected revenue that the speakers or attendees have or will generate by prescribing or ordering the company’s product(s) and to ensure that fees are tied to bona fide, fair-market-value assessments.  While HHS-OIG is understandably concerned about selection of speakers to reward past, present or future prescribing, it is not clear precisely what HHS-OIG’s concern is in its reference to attendees in the context of sales and marketing influence over the selection of speakers, except HHS-OIG may be concerned about HCPs who attend programs on topics for which they are also paid speakers.  To the extent that companies are seen as choosing to reward HCPs for past or future prescription or referral volume by engaging them as speakers, the risk that the government will view such arrangements as illegal inducements significantly increases.  HHS-OIG suggests companies will also be safer if they institute arms-length, routinized policies and processes for calculating the fair market value of services provided by all HCP consultants.   

It should be noted that return-on-investment analyses can be problematic.   The logic follows that, if the purpose of the training is education, then conducting an analysis of how the training is driving sales of the speaker seems to point to an ulterior motive. 

HHS-OIG’s narrow view of speaker value

HHS-OIG’s skepticism about the value of speaker programs may owe, at least in part, in its narrow focus of what the value proposition is.  The agency appears to believe that the only value speaker programs provide is medical education and information to attendees about the product.  Thus, HHS-OIG expresses grave doubts about the propriety of repeat programs or the propriety of HCPs attending more than one program, questioning what additional educational value such programs might have.

However, in addition to providing information about a manufacturer’s product in a manner that is consistent with its FDA-approved labeling, speaker programs are also designed, for example:

  • To reinforce the approved messaging regarding the product, irrespective of whether new information or data has emerged regarding the product.
  • To allow HCPs to hear from fellow HCPs who have experience with the product.
  • To ensure, as new treatment options might emerge, that HCPs also consider the efficacy of the manufacturer’s product for those particular disease states or conditions.

In short, the AKS prohibits the unlawful inducement of prescribers; it does not prohibit paying prescribers to engage in bona fide educational activities on behalf of a company.

Takeaways

Given the facts-and-circumstances analysis required by the AKS, the risk factors identified by the HHS-OIG are worth considering.  Indeed, many manufacturers recognize the risks associated with any financial arrangement HCPs and have implemented controls to mitigate the risks associated with such programs such as:

  • Controls/policies to manage the logistical aspects of programs including selection of venues, selection of speakers for inclusion in the speaker bureau and selection of speakers for particular programs
  • Maintaining per person limits regarding the dollar value of meals
  • Training for speakers regarding their obligations when conducting speaker programs on behalf of the company
  • Live monitoring of programs
  • Review of data (eg, reviewing frequent attendance, appropriate attendees)
  • Implementing caps on the aggregate honoraria a speaker may receive in a particular year for speaking on behalf of the company
  • Implementation of fair market value methodologies for speaker honoraria
  • Review of materials by legal, medical or regulatory and
  • Eliminating sales and marketing roles in selection of health care professionals for inclusion in a company’s speakers bureau.

Given that HHS-OIG has issued only 11 Special Fraud Alerts since 1994, with the last being in 2014, prudent manufacturers will recognize that speaker programs remain a particular enforcement priority.  HHS-OIG and prosecutors are likely to use this alert to guide future enforcement activity.  Thus, manufacturers may consider taking a second look at the value propositions underlying their speaker activities and to implement, maintain or enhance controls so that they appropriately correspond with the size, scope and design of those programs.