Mitchell Warner, P.A. - Medical Law Alert

Health Law Matters

BEWARE OF DETAILERS BEARING GIFTS
PHYSICIANS AND PHARMACEUTICAL MARKETING PRACTICES

By Edward E. Hollowell and Kenneth A. De Ville, Mitchell Warner, P.A.

The American Medical News reports that pharmaceutical industry representatives spend more than $5 billion annually or about $9,000 per practicing physician on visits to hospitals, doctors' offices and other health care institutions. Promotional efforts may take the form of office visits by drug detailers, and gifts of pens, note pads, free samples, office or departmental lunches, sponsored lectures and conferences, books, paid attendance at sporting or cultural events, or conference travel expenses. Physicians are paid to serve as research investigators, speakers, consultants, and as members of industry-sponsored advisory boards. While many of these practices may be unobjectionable, others under some conditions, raise serious issues of ethical and legal propriety. Professional organizations and government regulatory and enforcement officials are focusing new scrutiny on pharmaceutical market campaigns aimed at physicians.

The AMA recently announced plans to launch a "Gifts to Physicians Campaign" in order to emphasize its own Ethical Opinion 8.061: Gifts to Physicians from Industry,which it believes is either unknown or widely ignored. AMA Ethical Opinions are not binding on physicians, but medical societies, judges, attorneys and regulators rely upon them as guides to appropriate physician behavior. Opinion 8.061 provides a series of guidelines to aid in evaluating whether a gift or payment provided by a pharmaceutical agent is acceptable. For example:

Gifts accepted by physicians should primarily entail a benefit to patients and should not be of substantial value (under $100).
Individual gifts to physicians of minimal value are permissible as long as the gifts are related to the physician's work (e.g. pens and notepads).
Pharmaceutical subsidies to underwrite the cost of attending meetings or professional conferences may be acceptable if paid to the conference sponsor who uses the funds to reduce registration fees.
Physicians should not accept payment for the costs of travel, lodging, or other expenses for merely attending conferences. Hospitality and entertainment at meetings should not be accepted outside of modest meals or social events held as part of a conference meeting.
Faculty at conferences and consultants may accept reasonable reimbursement for their expenses if they provide genuine services commensurate with the payment.
Pharmaceutical companies may provide funds for student/trainees to attend selected educational conferences as long as the selection of those attendees is made by the educational institution.
No gifts should be accepted if there are strings attached.
The receipt of gifts cannot be related in any way to physician prescribing practices.
Educational conference grants are acceptable only if the conference organizers have full responsibility and control over the faculty, content and materials.

There are also compelling legal reasons for physicians and health care institutions to scrutinize carefully their relationships with pharmaceutical representatives. Government regulators and attorneys are actively increasing the attention paid to pharmaceutical marketing agents and the physicians and institutions with which they do business. The Office of the Inspector General (OIG), the Department of Justice and government attorneys at both the federal and state level have made it clear that prescription drug and medical device marketing practices will be a growing focus. The OIG, for example, is responsible for monitoring and prosecuting Medicare and Medicaid fraud and abuse. One area of increased activity will likely be practices that violate the Federal Anti-kickback provisions (42 U.S.C 1320a- 7b(b)). Anti-kickback law prohibits payment or receipt of anything of value to induce, or in return for, patient referrals or the recommending of a good or service that is payable by Medicare or Medicaid. Physicians and healthcare providers, as well as pharmaceutical marketers, may be prosecuted under this statute. Violations can result in criminal prosecution, monetary fines, and serious administrative sanctions including exclusion from participation in the Medicare and Medicaid programs.

The OIG issued a Special Fraud Alert in 1994 (59 FR 65372) emphasizing that while not all promotional gift-giving is prohibited, a number of common marketing practices will be considered violations of the anti-kickback law and subject to prosecution. As guidance, the Special Fraud Alert explained that a payment or gift might be considered improper if it is:

Made to a person in a position to generate business for the paying party
Related to the volume of business generated; and
More than nominal in value and/or exceeds fair market value of any legitimate service rendered to the payer, or is unrelated to any service at all other than the referral of patients.

According to the Special Fraud Alert: "If one purpose of these marketing schemes is to induce the provision of a prescription drug item reimbursable by Medicaid, then the criminal anti-kickback statute is implicated. There is no statutory exception or 'safe harbor' to protect such activities." In addition, prosecutors may be able to pursue charges against health providers under fraud and a number of other statutes as well. Recently, the U.S. attorneys charged TAP Pharmaceutical Products with bribing physicians to prescribe Lupron, a prostate cancer drug, by providing the doctors with free samples. Some of the physicians involved billed patients and Medicaid for the drug. Defendants will reportedly pay a settlement in excess of $800 million dollars. At least one of the physicians involved has pled guilty to conspiring to receive kickbacks.

Given these and other recent developments, great care is in order. Some guidance can be gleaned from the types of activities the OIG has chosen to prosecute in the past, but the intensity of enforcement is changing and the full implication of the anti- kickback statute remains in flux and uncertain. Ethical Opinion: Gifts to Physicians from Industry, may also serve as a key guide for physicians and institutions in evaluating their legal and ethical obligations regarding the marketing activities of pharmaceutical agents. A full version of AMA's Ethical Opinion 8.061 as well as extensive useful analysis is available at the AMA's web site: http://www.ama-assn.org/cmeselec/cmeres/cme-6.htm

Physicians should review their relationships with the pharmaceutical industry and adhere to the provisions of Ethical Opinion 8.061 and the guidance in the Special Fraud Alert. A good, practical test for physicians to use is: "If the physician must ask himself or herself if the conduct is prohibited, most likely it is."

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The Medical Law Alert is a publication of the Mitchell Warner Health Law Group. Its purpose is to provide general information about significant legal developments, and should not be construed as legal advice on specific factual scenarios. For more information on the issues discussed in this publication, please contact Edward E. Hollowell, JD, FCLM or Kenneth A. De Ville, JD, PhD, Co-Editors at (800) 662-7403.