Last month, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) issued a rare Special Fraud Alert highlighting the fraud and abuse risks associated with paid speaker programs offered by drug and medical device companies. In the last 3 years, according to the OIG, these companies have paid nearly $2 billion to physicians and other health care professionals (HCPs) for speaking about a drug or device at company-sponsored events. In certain circumstances, such arrangements can violate the federal anti-kickback statute.
The anti-kickback law is designed to protect patients from health care providers whose decision-making, such prescribing a particular drug or medical device, may be influenced by inappropriate financial incentives. It is a criminal offense to knowingly offer or receive anything of value in exchange for referrals for, or orders of, products or services paid for by a federal health care program. These programs include big spenders like Medicare, Medicaid, and Tricare, the military’s health insurance program. Convictions can result in jail time, fines, and exclusion from federal health care programs. The government can also pursue civil actions for anti-kickback law violations.
The anti-kickback law targets not only companies offering, and speakers receiving, remuneration, but attendees at these events as well. Not only is there no free lunch, accepting that wine-and-dine at a high-end restaurant compliments of a drug company could end up costing the diner a lot more than its worth.
The pharmaceutical industry trade group PhRMA describes these events as health care professionals participating “in company-sponsored speaker programs in order to help educate and inform other health care professionals about the benefits, risks, and appropriate uses of company medicines”. The OIG says it is “skeptical” about their educational value:
Our investigations have revealed that, often, HCPs received generous compensation to speak at programs offered under circumstances that are not conducive to learning or to speak to audience members who have no legitimate reason to attend. Such cases strongly suggest that one purpose of the remuneration to the HCP speaker and attendees is to induce or reward referrals. Furthermore, studies have shown that HCPs who receive remuneration from a company are more likely to prescribe or order that company’s products. This remuneration . . . may skew their clinical decision making in favor of their own and the company’s financial interests, rather than the patient’s best interest.
The Special Fraud Alert listed characteristics of a speaker program that might indicate a violation of the anti-kickback statute. (In a moment, we’ll find out how one pharmaceutical giant would appear to have used this list as a playbook to get itself nabbed by the feds.) The list includes:
- Little or no substantive information is presented at the program.
- Alcohol or a meal exceeding modest value is provided to attendees (“the concern is heightened when alcohol is free”).
- The program is held at a location not conducive to the exchange of educational information, such as restaurants or entertainment or sports venues.
- The company sponsors a large number of programs on the same or substantially the same topic or product, especially in the absence of substantive changes in relevant information, such as when a significant period of time passes with no new scientific information or a new FDA-approved indication for the product.
- Health care professionals attend programs on the same topics more than once, either as a repeat attendee or as an attendee after being a speaker on the same topic (an almost comical example of which we’ll get to in our discussion of the scofflaw pharmaceutical company).
- Attendees include those who don’t have a legitimate business reason to be there, such as friends, family members, and staff of facilities for which the speaker is medical director.
- Sales and marketing departments influence speaker selection, or speakers or attendees are selected based on expected revenue they will generate by prescribing or ordering the company’s products.
- Speakers are paid more than fair market value or based on the value of past or future business generation.
A law firm specializing in drug and device law, noting that Special Fraud Alerts are rare (only 5 issued in the last 20 years), warns that OIG has “historically used Special Fraud Alerts to put providers on notice of what it considers to be potentially violative” of the anti-kickback statute and that the Alerts often suggest where the government will focus its enforcement and litigation strategies.
Whose turn is it to be paid speaker?
I can see why the OIG might find a stern warning necessary, seeing as how pharmaceutical companies don’t seem to be getting the message from being pursued in court by the government with allegations of anti-kickback law violations arising from speaker programs and similar promotional events. In December, 2019, Teva settled with the government for $54 million to resolve claims that it induced doctors to write prescriptions for the company’s multiple sclerosis and Parkinson’s disease drugs by paying them in connection with sham speaker programs and like events. In 2013, Amgen paid almost $25 million in a settlement with the government addressing, among other skullduggery, an illegal kickback scheme that included dubious speaker events. The government has also pursued cases alleging improper remuneration to doctors via promotional events against Bristol-Meyers Squibb, GlaxoSmithKline, Biogen Idec, Forest Labs, Cephalon, and Pfizer.
In 2010, the Department of Justice announced that pharmaceutical giant Novartis had agreed to pay over $400 million to resolve criminal and civil liability arising from the illegal marketing of its drugs, including claims that the company tried to “cloud physicians’ medical judgment through kickback practices and illegal promotional activities”. As part of that settlement, Novartis also signed a Corporate Integrity Agreement committing to more stringent internal oversight and transparency. At the time, the HHS Inspector General said that
OIG will carefully monitor the Corporate Integrity Agreement to ensure that Novartis is more transparent in its business transactions, that its Board of Directors is held more accountable, and that the names of physicians receiving payments are publicly disclosed . . . The result will be stronger protections for patients and the nation’s taxpayers.
Maybe so. But, as the OIG was about to discover, there was even more nefarious activity going on at Novartis.
The very next year, in 2011, a whistleblower filed a civil case in the U.S. District Court for the Southern District of New York, joined by the government in 2013, alleging that, between 2002 and 2011, Novartis paid kickbacks to doctors to induce them to prescribe several more Novartis drugs, these for hypertension and diabetes. That case was just settled in June of this year. The settlement requires Novartis to pay close to $600 million to the federal government to resolve the kickback charges, as well as almost $40 million in civil forfeitures and $48 million to several states. (A separate settlement resolved allegations that Novartis illegally used three foundations as conduits to pay the copayments of Medicare patients taking the company’s drugs.)
According to a Justice Department press release announcing the settlement agreement, the complaint alleged
that Novartis hosted tens of thousands of speaker programs and related events under the guise of providing educational content, when in fact the events served as nothing more than a means to provide bribes to doctors. Novartis paid physicians honoraria, purportedly as compensation for delivering a lecture regarding a Novartis medication, but, as Novartis knew, many of these programs were nothing more than social events held at expensive restaurants, with little or no discussion about the Novartis drugs. Indeed, some of the so-called speaker events never even took place; the speaker was simply paid a fee in order to induce the speaker to prescribe Novartis drugs.
Several of the drugs promoted by Novartis at “educational” events had been on the market for years, indicating that new information about prescribing them was unlikely. Lotrel, for example, was approved by the FDA in 1995, Diovan in 1996, and Diovan HCT in 1998.
According to the settlement agreement, Novartis sales reps were evaluated in their performance reviews on how much of their promotional program budget they had used and failing to spend the entire budgeted amount could be a seen as a negative. Using prescribing data, some sales reps selected high-prescribing physicians as speakers at promotional events, intending the honoraria paid, which could amount to tens or even hundreds of thousands of dollars, to induce these doctors to continue to prescribe Novartis products.
For example, over the nine-year period covered by the agreement, Novartis paid over $320,000 to a physician who wrote over 8,000 prescriptions of Novartis drugs, and over $220,000 to a physician writing over 9,000 prescriptions.
More juicy details of the company’s profligate spending on “educational” programs appear under the heading “Excessive Meal and Alcohol Spend” in the agreement. Novartis sales reps conducted these programs “at venues where the focus was on entertainment, including fishing trips, sporting events, wine tastings, and hibachi tables” as well as “hundreds of events at wineries and golf clubs.” The list of restaurants reads like the Michelin Guide: among them, Masa, Daniel, Gramercy Tavern, Le Bernardin and Eleven Madison Park, all in New York City. On the other end of the spectrum, Hooter’s was an occasional venue as well.
Over 12,000 of these events exceeded Novartis’s own guidelines on expenditures of $125 per person. For example, a program at a Ruth Chris Steakhouse in Maryland, for which the speaker received a $1,000 honorarium, was attended by only one doctor, whose tab was almost $450. At some events, “doctors demanded expensive bottles of wine” and “sometimes consumed alcohol in large quantities . . . to the point of intoxication”.
At many of these events, according to the settlement agreement, there was little to no medical discussion. The sales rep host did not require the speaker, who was being paid an honorarium, to deliver a presentation or allowed the speaker to click through a power point in a few minutes. Sometimes the events didn’t take place at all. In New York, one sales rep organized fraudulent speaker programs by arranging for a restaurant to create fake receipts, then used the funds budgeted for the phantom events to buy gift cards for high-prescribing doctors. Doctors were paid honoraria for “speaking” at these sham events.
Novartis’s “marketing science group” would calculate the return on investment (ROI) from speaker programs and roundtables based on the number of new prescriptions for its drugs written by doctors in attendance. One analysis, for example, showed that “educational” events for the drug Lortel yielded an ROI of 1,200% for doctors attending more than one event.
To achieve sales goals, “many Novartis representatives would repeatedly invite the same doctors to attend promotional programs with the same title and for the same drugs.”
In thousands of instances, Novartis paid for the same group of doctors, often colleagues or friends, to have dinners together repeatedly . . . Doctors in these groups would sometimes rotate being the speaker and receiving the honorarium payment. For example, five doctors in Harrisburg, Pennsylvania went to more than 100 speaker program events at which some or all of the five doctors were in attendance over the course of five years, sometimes as often as five times a month. At these events, [they] would take turns being the designated speaker and receiving the honorarium payment.
Interestingly, the complaint in the case against Novartis lists numerous incidents that, like the one described, are of dubious educational value but identifies the doctors involved only by their initials. Thus, I was unable to find out whether these doctors were also pursued for civil or criminal liability by the government or excluded from any government health care programs. (It does happen: this year a Manhattan physician was sentenced to 5 years in prison for his participation in a “speakers bureau” designed to promote Subsys, a powerful painkiller which can cost thousands of dollars a month.)
Novartis also entered into another Corporate Integrity Agreement with the HHS OIG. The company is prohibited from holding any speaker events at restaurants and serving, or allowing the sale of, alcohol at any event. The speaker program budget is limited to $100,000 for any one product or indication for using that product, and a total of $10,000 per speaker for any one drug or indication. (This takes into account the fact that some drugs are used for more than one condition.) Speaker events must be held within 18 months of government approval for a product or indication for the product’s use.
In light of this repeated egregious conduct, it is understandable that the HHS OIG would find it necessary to issue the rarely used Special Fraud Alert to send a message to drug and device manufacturers. Whether it will do any good remains to be seen.
I find these payments to doctors and other providers for bogus educational activities troubling for the same reason the government does: they can cloud the physician’s medical judgment and cost taxpayers, who pay for federal health care programs. I’d add that they undermine public trust in the medical profession and provide fodder for alternative medicine proponents, who use distrust of physicians as a marketing tool for their nostrums.