I'm aware of colleagues who've accepted trips and other expensive gifts from pharmaceutical companies. I understand that it's risky to accept perks like these. Am I right?
Yes, you are. Although some of these were once considered standard business practices between drug companies and physicians, recent government enforcement actions have made it clear that they are now strictly no-no's. This is because the U.S. government is cracking down on anything that might be interpreted as an inducement to prescribe or use a certain drug or device. The government's perspective is: "We want unbiased prescriptions when we are paying for them."
These restrictions apply to all Medicaid and Medicare reimbursed services and items (such as intraocular lenses). Also, some states have laws prohibiting inducements to health-care providers.
Is it safe for me to accept any type of gift at all?
Whether a "gift" to a physician may be problematic or not depends upon the facts and circumstances surrounding the gift. Given the enforcement climate, gift-giving practices must be carefully scrutinized.
It's best to stick by the AMA guidelines, "Gifts to Physicians from Industry" (http://www. ama-assn. org/ ama/ pub/ print/ article /4001-4236. html), which specifically prohibit cash payments and gifts with a market value over $100.
Never accept gifts with strings attached, such as achieving a certain level of prescribing or product use, or endorsing the company's products. The guidelines permit you to accept:
• Textbooks, modest meals, and other gifts, if they serve a genuine educational function (such as a medical textbook).
• Individual gifts of minimal value, as long as the gifts are related to the physician's work (e.g., pens and notepads).
• The Office of the Inspector General issued a Special Fraud Alert in 1994 (59 Fed. Reg. 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:
(1) made to a person in a position to generate business for the paying party;
(2) related to the volume of business generated; and
(3) 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 business.
Sometimes I'm invited by a sales rep to dinner, or to attend a meeting about a new drug or device. Could I get in trouble if I went?
It all depends on the nature of the dinner or meeting. The government looks with disfavor on the old "dash and dine" scenario—instances where physicians are actually paid to eat dinner (the pharmaceutical rep may not even be there).
It's one thing for the rep to bring by a pizza between cases, but it's another thing to sponsor a physician at the swankiest restaurant in town at great expense. As for meetings, they won't pass muster unless the primary purpose is educational. The American Medical Association guidelines say the "gathering should be (a)primarily dedicated, in both time and effort, to promoting objective scientific and educational activities and discourse (one or more educational presentations should be the highlight of the gathering), and (b) the main incentive for bringing attendees together is to further their knowledge on the topic(s) being presented. An appropriate disclosure of financial support or conflict of interest should be made."
What other situations should I avoid or evaluate with care?
Any time you are invited to participate in a clinical study, sit on an advisory board, or perform in some other professional capacity, be certain to ask, "What are my duties?" and "Am I receiving fair market value for these services?"
The government may challenge any situation where you are being paid more than is normally paid for the service, or being paid to basically do nothing. These situations are thinly veiled ways to pay you for using a company's product. The AMA guidelines also prohibit individual doctors from accepting reimbursement for "travel expenses, lodging or other personal expenses of attending conferences or meetings, or subsidies to compensate for the physician's time. Subsidies for hospitality should not be accepted outside of modest meals or social events held as a part of a conference or meeting."
What are the penalties for taking gifts from drug or device makers?
In certain circumstances, accepting inappropriate gifts could result in federal prosecution under the Medicare Anti-Kickback Statute. Violation of this statute constitutes a felony punishable by a maximum fine of $25,000, imprisonment up to five years, or both. Conviction also results in automatic exclusion from federal health-care programs (including Medicare and Medicaid), and the Office of the Inspector General could potentially initiate administrative proceedings to impose civil monetary penalties.
The most frightening part may be the knock on the door, which usually comes from the U.S. Department of Justice. In certain circumstances, the government may pursue a civil False Claims action, violations of which carry stiff civil monetary penalties and potential exclusionary action.
Many "perks" offered to physicians are handled privately. How would the government know if I were to accept them?
I get this question all the time, and my answer is that it's easy for the government to find out. Your employees, a jealous colleague, even reps from competing pharmaceutical companies may have a strong incentive to report any questionable activities. Most physicians don't know that whistle blowers are very well rewarded; they typically receive 15 to 30 percent of the fine that the government levies against the health-care provider. In the famous TAP Pharmaceutical case (See case below), the three whistle blowers (two individuals and an HMO) shared a reward of $95 million, or 17 percent of the nearly $875 million fine.
Ms. Poindexter is an attorney in the Health Law practice group at Shook, Hardy & Bacon, LLP. She frequently lectures on health-care legal issues.
TAP Pharmaceutical Case Shows the Feds Are Serious
The 2002 settlement of the U.S. government's case against TAP Pharmaceutical Products indicates how seriously the Department of Justice pursues allegations of health-care fraud. According to a DOJ press release, the company was fined $875 million for "fraudulent drug pricing and marketing conduct with regard to Lupron, a drug sold by TAP primarily for treatment of advanced prostate cancer in men." Five urologists were also charged as part of the case; four of the physicians pled guilty, and a fifth settled with the government at the same time as TAP.
Lupron must be injected under a physician's supervision, and so it is one of the few drugs reimbursed by Medicare. The government alleged that throughout the 1990s, TAP set and controlled the price at which the Medicare program reimbursed physicians for the prescription of Lupron by reporting its average wholesale price (AWP) at significantly higher amounts than the average sales price that physicians actually paid. The "spread" between what TAP charged the doctors, and what Medicare reimbursed for the drug was offered as an inducement to urologists to prescribe Lupron rather than Zolodex, a competing drug. The government alleged that TAP concealed the true discounted prices paid by physicians from Medicare, and advised physicians to report the higher AWP rather than the real, discounted price for the drug. The government alleged that TAP set its AWPs of Lupron at levels far higher than the price for which wholesalers or distributors actually sold the drug, resulting in falsely inflated prices that were neither the physician's actual cost nor the true wholesaler's average price.
The investigation began in 1997 after a urologist employed by Tufts Associated Health Maintenance Organization, Dr. Joseph Gerstein, reported to law enforcement authorities that he had been offered an educational grant if he would reverse a decision he had made on behalf of Tufts that it would only cover the less expensive drug Zolodex. Two TAP employees met with Dr. Gerstein after he began working with the FBI and the Office of Inspector General, and during those meetings, offered him $65,000 in educational grants that he could use for any purpose whatever, together with discounts on other products, if he would reverse Tufts' decision not to include Lupron on its formulary for treating patients that it insured who were suffering from prostate cancer. The investigation was also triggered by a civil False Claims Act suit filed in 1996 by Douglas Durand, who quit his job at TAP as vice president of sales after just one year because of his concerns about the illegal marketing conduct of some of TAP's employees.
"The urologists and the TAP employees who knowingly participated in this broad conspiracy took advantage of older Americans suffering from prostate cancer. The indictment alleges that TAP employees sought to influence the doctors' decisions about what drug to prescribe to patients by giving them kickbacks and bribes, from free samples to free consulting services to expensive trips to golf and ski resorts to so-called educational grants," said U.S. Attorney Michael J. Sullivan at the time. "In all instances where the kickbacks worked to ensure the prescription of TAP's product Lupron, the Medicare Program and the elderly Americans suffering from prostate cancer paid more for their care than if the doctor had prescribed the competitor's product."