On Nov. 16, 2020, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services issued a special fraud alert addressing fraud and abuse concerns with speakers programs conducted by pharmaceutical and medical device companies. While the fraud alert reiterates historical OIG and Department of Justice (DOJ) concerns regarding speakers programs, it also challenges certain common industry practices as suspect under the Federal Anti-Kickback Statute (AKS), raising the bar for pharmaceutical and medical device companies seeking to implement compliant speakers programs.

The fraud alert provides that the OIG now considers the following characteristics of speakers programs to be suspect under the AKS: (i) holding speakers programs at a restaurant, (ii) holding a large number of programs on the same or substantially the same topic, and (iii) holding a program where there have not been any new recent medical or scientific developments or U.S. Food and Drug Administration (FDA)-approved or cleared indications for a product. Given recent enforcement actions regarding allegedly inappropriate speakers programs, including the OIG’s recent enforcement action against Novartis, pharmaceutical and medical device companies should carefully review their speakers programs with counsel to address concerns raised by the Nov. 16 fraud alert.

In July 2020, Novartis entered into a $642 million dollar settlement with the DOJ to resolve allegations that included conducting an inappropriate speakers program. In its settlement agreement, Novartis admitted that the majority of its speakers programs were organized by sales representatives who selected the venue, chose the speakers, and determined which physicians to invite. Novartis also admitted that its sales force used prescribing data to select high-prescribing physicians to become speakers and evaluated programs on a return-on-investment (ROI) basis. Speakers programs were held at some of the most expensive restaurants in the United States and at sporting events, wineries, and golf clubs. Many programs involved little or no scientific or medical discussion, and sales representatives invited prescribers to repeatedly attend the same program.

Even where the government declines to intervene in a lawsuit filed by a whistleblower, pharmaceutical and medical device companies may be subject to significant liability. For example, in January 2020, Teva Pharmaceuticals, USA, Inc. paid $54 million dollars to settle allegations raised by whistleblowers regarding its speakers program, and the federal government declined to intervene in the case. The whistleblowers alleged that Teva’s sales representatives tracked speakers’ prescription activity and selected and paid speakers on the basis of an ROI calculation. Allegations also included that programs were repeatedly attended by the same individuals, that numerous programs had low or no attendance, and that healthcare providers reversed roles at sequential Teva programs, attending one as a speaker and another as an audience member.

Pharmaceutical and medical device companies should be aware of the significant negative ramifications that may result from failing to comply with the guidance set forth in the fraud alert. In addition to substantial fines, penalties, and potential imprisonment for violating the AKS, manufacturers may be subject to a corporate integrity agreement (CIA) that places significant restrictions on their ability to operate. Novartis was required to enter into a CIA that included substantial restrictions on its speakers programs, including: (i) prohibiting programs at restaurants or where alcohol is served, (ii) requiring all non-employee speakers to participate virtually, (iii) prohibiting programs with non-employee speakers that occur more than 18 months after FDA approval, and (iv) limiting total non-employee speaker compensation to $100,000 per product and $10,000 per speaker. Similarly, in 2019, in connection with a $15 million dollar settlement paid by ACell, Inc. that addressed allegations including an inappropriate speakers program, ACell entered into a CIA that required ACell to establish an administrative system for overseeing its speakers programs, including requiring compliance personnel to attend and audit speakers events.

In addition to raising general concerns regarding speakers programs, the fraud alert identifies the following characteristics as illustrative of potentially suspect speakers programs under the AKS:

  • Presentation of little to no substantive information
  • Serving meals that exceed modest value or serving alcohol
  • A venue that is not conducive to the exchange of educational information, including restaurants and entertainment and sports venues
  • A large number of programs on substantially the same topic or product
  • Presentations where there is no new recent medical or scientific information and no new FDA approval
  • Repeat attendees or attendees with no legitimate reason to attend, such as friends, significant others, family members, members of the speaker’s own medical practice, or staff of facilities at which the speaker is a medical director
  • Selection of speakers by sales or marketing personnel or on the basis of ROI
  • Paying speakers more than fair market value or in a manner that takes into account the volume or value of past or future business generated by the speaker

Pharmaceutical and medical device companies should carefully consider the fraud alert and related OIG and DOJ guidance in structuring their speakers programs. McGuireWoods has a dedicated team of compliance and regulatory lawyers who serve the pharmaceutical and medical device industries. Please do not hesitate to contact the authors of this article if you have any questions regarding the fraud alert or the characteristics of a compliant speakers program.