On November 16, 2020, the Office of Inspector General of the Department of Health and Human Services (OIG) issued a Special Fraud Alert addressing the fraud and abuse risks of speaker programs that are commonplace in the pharmaceutical and medical device industries. Although government scrutiny of speaker programs is nothing new, the alert emphasizes OIG’s continuing concerns with these arrangements and highlights specific program characteristics that can trigger scrutiny from enforcement authorities.
OIG generally defines speaker programs as company-sponsored, in-person events at which a physician or other healthcare professional makes a speech or presentation to other healthcare professionals about a drug or device product or a disease state on behalf of a company. The company generally pays the speaker an honorarium, and often provides free meals, drinks and potentially other entertainment to attendees. OIG noted that in the last three years drug and device companies have reported paying nearly $2 billion to providers in speaker-related services.
Although speaker programs have been the subject of numerous enforcement actions over the past several years, including a blockbuster $678 million False Claims Act settlement in July of this year, the Special Fraud Alert marks the first time OIG has detailed its specific concerns with speaker programs in general terms. The Special Fraud Alert is therefore important because it puts the industry on notice of suspect characteristics that will attract scrutiny from OIG and other enforcement authorities. Additionally, Special Fraud Alerts are routinely used to demonstrate that a company should have known better than to engage in the highlighted practices. Enforcement authorities are thus better able to establish the necessary scienter or state of mind for civil and even criminal liability.
This Special Fraud Alert generally notes that “OIG is skeptical about the educational value of [speaker] programs.” OIG notes that, in its view, much of the educational value of such programs can be communicated in other ways, such as publications, online resources, package inserts, and third-party educational conferences. Importantly, OIG makes clear that all parties involved in speaker programs may be subject to increased scrutiny, not just the companies sponsoring the programs. Accordingly, individual physicians should be aware of the risks involved in serving as a speaker. Attendees should also be aware of the risks of attending lavish events. Additionally, although hospital systems and other physician employers may not be directly involved in speaker programs, they should consider the risk associated with participation by physician employees.
OIG outlines several suspect characteristics of speaker programs that, in its view, potentially indicate an intent to induce referrals, rather than merely provide education, including the following:
- The company sponsors speaker programs where little or no substantive information is actually presented;
- Alcohol is available or a meal exceeding modest value is provided to the attendees of the program (the concern is heightened when the alcohol is free);
- The program is held at a location that is not conducive to the exchange of educational information (e.g., 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 situations involving no recent substantive change in relevant information;
- There has been a significant period of time with no new medical or scientific information nor a new FDA-approved or cleared indication for the product;
- Healthcare providers attend programs on the same or substantially the same topics more than once (as either a repeat attendee or as an attendee after being a speaker on the same or substantially the same topic);
- Attendees include individuals who do not have a legitimate business reason to attend the program, including friends, significant others, or family members of the speaker or attendee; employees or medical professionals who are members of the speaker’s own medical practice; staff of facilities for which the speaker is a medical director; and other individuals with no use for the information;
- The company’s sales or marketing business units influence the selection of speakers, or the company selects speakers or attendees based on past or expected revenue that the speakers or attendees have generated or will generate by prescribing or ordering the company’s products (e.g., a return on investment analysis is considered in identifying participants);
- The company pays speakers more than fair market value for the speaking service or pays compensation that takes into account the volume or value of past business generated or potential future business generated by the healthcare providers.
OIG is quick to note that the list above is not exhaustive, and the lawfulness of any arrangement under the Anti-Kickback Statute depends on the facts and circumstances surrounding the arrangement, including the intent of the parties. Nevertheless, this list provides a useful tool for companies to re-evaluate their speaker programs.
At minimum, the Special Fraud Alert indicates a heightened focus on speaker programs by enforcement authorities. More ominously, the alert can be read to suggest that OIG is highly skeptical that these programs serve legitimate educational purposes. Given the alternative means available for conveying information to healthcare professionals, companies that offer programs along the lines of those described in the alert may find that the burden is on them to convince enforcement authorities that the programs are not illegal inducements in disguise. Companies that choose to offer speaker programs should carefully construct and monitor them through robust compliance programs designed to detect, prevent, and correct arrangements that might put the company at risk for allegations of fraud and abuse.