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 drug 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 on the company’s drug or device product on behalf of the company may violate the anti-kickback statute (AKS). A party violates that AKS if it makes an offer, payment, solicitation, or receipt of any remuneration (defined as the transfer of anything of value) purposefully to induce or reward referrals of items or services 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 purportedly organized with the intent to induce HCPs to prescribe or order (or recommend the prescription or ordering of) the companies’ products paid for by Federal health care programs. The OIG provided examples of practices that were part of violative speaker programs: tying sales targets to HCP speaker recruitment or remuneration; holding programs at non-conducive venues or events; providing expensive meals; and repeat attendance by HCPs at substantially similar trainings, or 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.
Some of OIG’s “suspect characteristics” remind us of the Corporate Integrity Agreement (CIA) the OIG asked Novartis to sign as part of the parties’ settlement agreement in July 2020. Under that CIA, the OIG put unusually 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 OIG does not have express authority from Congress or the HHS Secretary to establish regulations or other policy defining acts prohibited by the Medicare and Medicaid fraud and abuse statutes. Nevertheless, the OIG has historically used Special Fraud Alerts to put providers on notice of what it viewed with skepticism, and what it considered to be suspicious and potentially indicative of an anti-kickback statute violation. These alerts are rare—there were only five such alerts issued in the last twenty years. They lay out the OIG’s rationale on expanding the interpretation of prohibited acts under the Medicare and Medicaid fraud and abuse laws and often suggest the general direction in which the Agency intends to shift its enforcement and litigation strategies. Taken together with OIG’s recent actions, and specifically in light of 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,” the OIG may be getting ready to set up the stage to increasingly scrutinize speaker programs for illegal kickbacks and erode the landscape of external speaker program in the industry.