Physician-industry collaborations are customary, and when properly structured, promote medical innovation and improve patient care. Nonetheless, these types of business arrangements may face scrutiny from federal regulators if the compensation structure is not carefully tailored to fit within one of the Anti-Kickback Statute “Safe Harbors” or exceptions.
Last month, the United States Department of Justice (DOJ) announced a $39 million settlement agreement with pharmaceutical company, Daiichi Sankyo, Inc., resolving allegations that the company submitted false claims to federal healthcare programs by paying kickbacks to physicians to induce them to prescribe drugs. The DOJ alleged that Daiichi violated the Anti-Kickback Statute by disguising kickbacks as legitimate business engagements. Specifically, Daiichi engaged physicians as participants in various speaker programs, offering honoraria, payments, meals and other remuneration in return for the physicians’ services. The settlement agreement highlights the following activities which the DOJ found particularly offensive:
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- honoraria was paid where recipient spoke only to members of his or her own staff in his or her own office
- the physician participants took turns accepting “speaker” honoraria for duplicative discussions
- the audience included the honoraria recipient’s spouse
- the honoraria recipient did not speak at all because the event was cancelled beforehand
- the associated dinners were lavish and at times exceeded Daiichi’s internal cost limitation of $140 per person
The federal Anti-Kickback Statute imposes criminal and civil penalties for offering, paying, soliciting or receiving anything of value to induce or reward referrals or generate federal health care program business. Although fair market value payments to physicians for bona fide consulting services will generally not raise concerns, the OIG has indicated that compensation relationships for services related to a manufacturer’s marketing and sales activities, such as speaker programs, may be suspect. Physicians presented with industry business arrangements should query whether their services are actually needed by their industry partner and whether the compensation is fair, appropriate, and commercially reasonable for the services provided.
While certain compensation arrangements may appear to be an obvious kickback, others may require more careful examination to determine if the arrangement is suspect. Frier Levitt provides legal counsel on federal and state fraud and abuse laws and can ensure your agreement passes regulatory scrutiny. Contact us to speak to one of our attorneys.
