On Monday, the Office of Inspector General (OIG) at the U.S. Department of Health and Human Services (HHS) issued a Special Fraud Alert highlighting “some of the inherent fraud and abuse risks” associated with in-person speaker programs, a widely used channel to educate physicians and other health care professionals (HCPs) that prescribe the products of pharmaceutical and medical device manufacturers. According to the OIG, drug and device companies reported paying nearly $2 billion to HCPs for speaker-related services in the past three years. While most companies have switched to virtual programs due to the COVID pandemic, OIG seems to be taking advantage of the pause in the action to fire what is likely the opening salvo in their renewed focus on speaker programs.
The alert noted OIG’s “significant concerns” that company-sponsored speaker programs that remunerate external HCPs to speak about the company’s drug or device product on behalf of the company may violate the Federal health care program anti-kickback statute (AKS). A party violates that AKS if, among other things, it knowingly and willfully makes an offer, payment, solicitation, or receipt of any remuneration (defined as the transfer of anything of value) to induce purchasing, ordering, recommending, or arranging for the use of items payable by a Federal health care program such as Medicare and Medicaid. See Social Security Act 1128B(b)(1)-(2), 42 U.S.C. § 1320a-7b(b)(1)-(2). The alert warned that all parties involved in speaker programs may be subject to increased scrutiny, including any “drug or device company that organizes or pays remuneration associated with the program, any HCP who is paid to speak, and any HCP attendees who receive remuneration,” such as free food and drink.
The OIG expressed skepticism whether such programs have any educational value, referring to its large number of investigations where speaker programs were allegedly organized with the intent to induce HCPs to prescribe or order (or recommend the prescribing or ordering of) the companies’ products paid for by Federal health care programs. The OIG provided examples of practices that are common in violative speaker programs: tying sales targets to HCP speaker recruitment or remuneration; holding programs at non-conducive venues or events; providing expensive meals; repeat attendance by HCPs at substantially similar trainings; and attendance by the HCP friends or families. According to the OIG, these examples “strongly suggest that one purpose of the remuneration to the HCP speaker and attendees is to induce or reward referrals.” The OIG noted that “[t]he availability of [educational and training] information through means that do not involve remuneration to HCPs further suggests that at least one purpose of remuneration associated with speaker programs is often to induce or reward referrals.”
The alert acknowledged that companies may engage in “meaningful HCP training and education” programs, and a remunerative arrangement may be lawful, depending on the particular facts and circumstances and the intent of the parties. Nevertheless, it presented a non-exhaustive list of “suspect characteristics” that may indicate whether a speaker program arrangement could violate the AKS. Many of the suspect characteristics mirrored the OIG’s examples of violative behavior (no substantive information presented; expensive meal; non-conducive venue for an education event; repeat attendees or attendance by HCP family or friends). Some additional “suspect characteristics” mentioned were the following:
- 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 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;
- 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 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.
The OIG acknowledges in the Fraud Alert that many in-person activities have been curtailed by the pandemic, but cautions that the risks of these programs will increase once in-person programs resume, and encourages companies to consider less risky means of conveying information to HCPs.
Requirements to correct some of OIG’s “suspect characteristics” were incorporated into a Corporate Integrity Agreement (CIA) that the OIG entered into with Novartis as part of a July 2020 settlement agreement. The settlement resolved a qui tam False Claims Act case targeting Novartis’ speaker programs under the AKS. Under the CIA, the OIG put strict restrictions on the company’s speaker programs, including prohibitions on holding any speaker events at restaurants and on serving or allowing the sale of alcohol. The CIA also limited the speaker program budget to $100,000 per product or indication (no more than $10,000 per speaker per drug or indication) and only permitted the company to hold such events within eighteen months of approval of such product or indication. The Novartis settlement is the latest in a long line of settlements involving drug company speaker programs.
The OIG has historically used Special Fraud Alerts to put providers on notice of what it considers to be potentially violative of the AKS. These alerts are rare—there have been only five such alerts issued in the last twenty years. They often suggest the general direction in which the government intends to focus its enforcement and litigation strategies. The Fraud Alert together with recent DOJ enforcement against speaker programs, specifically the Novartis CIA, which required all External Speaker Programs to be “conducted in a virtual format meaning that the External Speakers shall be remote and shall not be in the same location as any audience member,” indicate that the government will be continuing to scrutinize speaker programs, especially once in-person programs resume after the pandemic.