Special Fraud Alert: OIG Raises Concerns with Speaker Programs

On November 16, 2020, the Office of Inspector General (OIG) at the US Department of Health and Human Services issued a Special Fraud Alert concerning speaker programs hosted by pharmaceutical companies and medical device manufacturers. OIG issued the Special Fraud Alert to 1) draw attention to what OIG believes are inherent fraud and abuse risks of speaker programs, 2) encourage pharmaceutical and medical device companies to re-assess the need for in-person and virtual programs where remuneration may be paid to speakers and attendees, and 3) encourage healthcare professionals (HCPs) to consider the risks of soliciting and receiving remuneration tied to speaker programs. OIG acknowledges that the risks posed by speaker programs depend on the facts, circumstances and intent of the parties and provides a list of factors that may increase the enforcement risk of such programs.

Renewed Focus on Speaker Programs

Speaker programs are a standard way for pharmaceutical and devices manufacturers to educate and inform HCPs about the risks, benefits and expected clinical outcomes of FDA-regulated products. FDA has long recognized certain so-called “bona fide scientific exchanges” among HCPs as beyond the purview of traditional advertising and promotion restrictions when certain guardrails are in place. Nonetheless, these programs have long been the target of Department of Justice (DOJ) and OIG investigations.

At a typical program, an HCP gives an educational presentation about a drug, device or disease state to attendees. The sponsoring pharmaceutical or medical device company pays a speaker honorarium and often provides meals for the attendees. OIG notes that drug and device companies have spent nearly $2 billion compensating speakers for such events in the past three years. The COVID-19 pandemic has caused many companies to cancel in-person events and instead offer virtual conferences, webinars and other online methods of educating healthcare providers.

The timing of the Special Fraud Alert seems to indicate that OIG intends to renew its focus on in-person speaker programs that occurred prior to the pandemic and will likely focus on the ways in which companies have adapted and addressed compliance for virtual programs during the pandemic. In an interview with Law360, OIG Chief Counsel Gregory E. Demske suggested drugmakers “think very carefully about the risks of speaker programs, and in particular in-person speaker programs.” In a post-COVID-19 environment, in-person speaker programs may be especially scrutinized, and companies should be mindful that both virtual and in-person speaker programs are subject to DOJ and OIG review.

Fraud and Abuse Risks

The Anti-Kickback Statute makes it a criminal offense to knowingly and willfully solicit, receive, offer or pay any remuneration to induce or reward, among other things, referrals for, or orders of, items or services reimbursable by a federal healthcare program. “Remuneration” includes the transfer of anything of value, whether it be indirect, covert, in cash or in kind.

The Special Fraud Alert emphasizes that many DOJ and OIG investigations have involved allegations that speaker programs are designed “with the intent to induce HCPs to prescribe or order the companies’ products.” Despite characterizations of speaker programs as educational, OIG is “skeptical” of their true educational value.

OIG’s skepticism is rooted in its experience investigating numerous speaker programs where the HCP was generously compensated and the environment was “not conducive to learning.” These programs also included attendees with no legitimate reason to attend the event. In support of its skepticism, OIG points to studies showing that HCPs who receive remuneration from a company are more likely to prescribe that company’s products. Such remuneration may cause HCPs to prioritize their financial interests over a patient’s best interests.

OIG emphasized its belief that the educational objective of speaker programs can be accomplished through other means such as online resources, the product’s package inserts, third-party educational conferences and medical journals. OIG states that the existence of other widely available means of HCP education suggests that at least one purpose of speaker program remuneration is often to induce or reward referrals.

Characteristics of Suspect Speaker Programs

OIG recognizes that whether a remuneration arrangement is lawful under the Anti-Kickback Statute depends on the facts and circumstances and the intent of the parties. The intent of the parties is evidenced by the speaker program’s specific characteristics and the “actual conduct” of the parties. Examples of characteristics, taken separately or together, that potentially indicate a violation of the Anti-Kickback Statute include the following:

1. A program where little or no substantive information is actually presented
2. Alcohol is available or elaborate meals beyond a modest value are provided to attendees (especially where alcohol is free)
3. Holding the program at a venue not conducive to education (e.g., restaurants, sports or entertainment venues)
4. Large numbers of programs on the same or substantially the same products, especially where there is no new substantive information presented
5. A significant period of time has passed since new medical or scientific information or a new FDA-approved or cleared indication has become available
6. HCPs attend the speaker programs on the same or substantially the same topics more than once (either as a repeat attendee or as an attendee after being a speaker on the same or substantially the same topic)
7. Attendees include those without a legitimate business reason to attend the program (e.g., friends, family members, or significant others of the speaker or HCP attendees; employees or professionals from the speaker’s own practice; facility staff where the speaker is a medical director; and others with no use for the information)
8. The company’s marketing or sales units influence the selection of speakers or the company selects speakers based on past or expected revenue generated by the speaker or attendees from prescribing or ordering company products (e.g., considering an ROI analysis in selecting the speaker)
9. Paying the HCP more than fair market value for the speaking service or paying compensation that takes into account the volume or value of past business or potential future business

Implications

Pharmaceutical and device companies have traditionally relied on guidance in the PhRMA Code and AdvaMed Code, as well as OIG’s historical acknowledgement of these industry codes of conduct, when formulating policies for conducting compliant speaker programs. Pharmaceutical and device companies also take into account guidance from DOJ and OIG enforcement in this area, which has focused on programs that have many of the “suspect” characteristics listed above.

Notwithstanding the guidance contained in the PhRMA Code and AdvaMed Code, OIG implies that the mere fact of conducting speaker programs may subject a company to scrutiny, perhaps even when such programs do not reflect “suspect” characteristics. At the same time, OIG notes that the Special Fraud Alert is not intended to discourage meaningful provider training and education. OIG encourages companies to assess the need for speaker programs and consider the risks associated with paying remuneration, particularly since there are alternative means for conveying information. Healthcare providers and speakers are similarly encouraged to “consider the risks” of receiving remuneration for speaking and attending such events.

While the Special Fraud Alert largely deals with in-person speaker compensation, OIG indicates that similar risks still exist with online conferences. For instance, high compensation for speakers at webinars may be even less permissible in the opinion of OIG, as these online events do not involve the travel and time commitment that in-person events require.

Companies should evaluate their speaker programs in light of the Special Fraud Alert and determine whether adjustments need to be made. Specifically, companies should review their current “fair market value” databases and compensation models to ensure they have appropriate guidelines and justifications for the compensation models they are using for both in-person and virtual speaker programs. Companies should also examine their existing guardrails and requirements surrounding the need for a speaker, selecting and paying such speakers, and providing remuneration to HCP attendees to ensure such policies align with OIG’s Special Fraud Alert.

McDermott Will & Emery law clerk Evelyn Atwater also contributed to this article.