OIG Warns Healthcare Providers on Speaker Fees Paid by Pharmaceutical, Medical Device Companies
- The U.S. Department of Health and Human Services' Office of Inspector General (OIG) has issued a Special Fraud Alert to highlight and warn healthcare professionals of inherent fraud and abuse risks associated with speakers fees, honorariums and expenses paid by pharmaceutical and medical device companies to healthcare professionals participating in company-sponsored events.
- Although educational programs sponsored by a company may serve a worthwhile purpose and are not altogether discouraged by the OIG, such programs will face increased scrutiny due to significant company resources being used to host such events. Two enforcement actions by the U.S. Department of Justice (DOJ) in the past two months have highlighted the serious risk associated with such programs.
- Consistent with its previous Alerts, the OIG emphasized that remuneration offered and paid to healthcare professionals implicate and may violate the anti-kickback statute if the purpose and intent of the payment is to induce or reward referrals.
The U.S. Department of Health and Human Services' Office of Inspector General (OIG) issued a Special Fraud Alert on Nov. 16, 2020, to highlight and warn healthcare professionals of inherent fraud and abuse risks associated with speakers fees, honorariums and expenses paid by pharmaceutical and medical device companies to healthcare professionals participating in company-sponsored events. These events, often referred to as "speaker programs," involve a healthcare professional giving a presentation to other professionals about drug or device products, or disease states, on behalf of the company. While educational programs sponsored by a company may serve a worthwhile purpose and are not altogether discouraged by the OIG, such programs will face increased scrutiny due to significant company resources being used to host such events. Reports submitted by drug and device companies to the Centers of Medicare & Medicaid Services (CMS) during for a three-year period revealed nearly $2 billion was paid to speakers and attendees in relation to these company-sponsored events.
Consistent with its previous Alerts, the OIG emphasized that remuneration offered and paid to healthcare professionals implicate and may violate the anti-kickback statute if the purpose and intent of the payment is to induce or reward referrals. The anti-kickback statute makes it a crime to knowingly and willfully solicit, receive, offer or pay remuneration to induce or reward referrals for items or services reimbursable by a federal healthcare program. In the OIG Alert, a non-exhaustive list of activities considered as suspect that create liability risk for enforcement action were outlined:
- speaker programs where little or no substantive information is actually presented
- expensive meals with alcohol provided to attendees of the program
- the event is held at sought-after venues not conducive to the exchange of educational information (e.g., wineries, sports stadiums, expensive restaurants, golf clubs and adult entertainment facilities)
- the same or substantially the same topic or product information being presented to same or repeat attendees at different company-sponsored speaker programs
- attendees include individuals who do not have a legitimate business reason to attend, such as family and friends of speakers or attendees; employees or medical staff of speakers; and other individuals with no use for the information
- selection of attendees based on past or expected revenue that 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)
- selection of speakers and compensation for their services takes into account the value or volume of past business generated or potential future business to be generated
Recent enforcement actions by the U.S. Department of Justice (DOJ) highlight the serious risk associated with drug and device speaker programs. On Oct. 29, 2020, Medtronic USA Inc agreed to pay $9.2 million to settle allegations that it violated the anti-kickback statute and False Claims Act by knowingly hosting over 130 speaker programs designed to induce and reward physicians for referrals of federal healthcare items and services. On Sept. 24, 2020, it was announced that Novartis agreed to pay $678 million to the DOJ, 28 states and the District of Columbia to resolve allegations that the company systematically paid kickbacks to doctors to speak about certain drugs at sham events, with a veneer of education applied in an attempt to avoid scrutiny, and covered the costs of lavish meals and entertainment for attendee doctors to induce the referral of prescriptions for drugs marketed by Novartis.
Takeaways from OIG's Alert
- The OIG is skeptical about company-sponsored speaker programs that involve compensation to speakers and free meals to attendees.
- Companies should assess the need for in-person programs given the risks associated with offering or paying related remuneration.
- Remuneration paid by drug and device companies relating to the training of speakers to present at company-sponsored events may also raise fraud and abuse risks.
- Companies should assess other available means to provide information about drug and device products for the treatment of patients.
- Questions regarding the risk associated with a contemplated speaker program arrangement can be submitted to the OIG for an Advisory Opinion.
If you have questions about whether a specific event or policy for your organization is in compliance with the OIG's guidance, or if you would like assistance requesting an Advisory Opinion from the OIG, contact the author or another member of Holland & Knight's Healthcare & Life Sciences Team.
Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.