Explicit policies can help ensure compliance
Three years ago, compliance infractions related to life science speaker programs led to an investigation by the Office of the Inspector General (OIG). This investigation revealed that drug and medical device companies had paid nearly $2 billion to healthcare providers for speaking engagements. Many of these payments violated the federal anti-kickback statute, 42 U.S.C. § 1320a-7b, prompting the OIG to issue a fraud alert in November of 2020, putting those companies and healthcare companies on notice that the OIG will be scrutinizing future speaker engagements.
The investigation uncovered speaking engagements at inappropriate venues such as golf tournaments, fishing trips, wineries, and even adult entertainment centers. Offers to speak were conditioned on minimum prescription requirements and the achievement of sales targets. Events often included lavish dining and alcohol consumption with the average expenditure per attendee exceeding $500. Attendees often brought friends, significant others, and family members with no legitimate business reason to attend.
Four guiding principles of the PhRMA Code
The results of the investigation prompted the Pharmaceutical Research and Manufacturers of America (PhRMA) to update their Code on Interactions governing such events. The updated code focuses on four key principles:
- Hold events at appropriate educational venue. Determine what constitutes an appropriate educational venue. No wineries, fishing trips, golf tournaments, or adult entertainment centers.
- Further an educational purpose. Document the specific educational purpose–and explain why an in-person presentation was the best way to deliver the material. In addition, meals must be modest and alcohol is prohibited. Keep receipts for all expenses, to demonstrate that they meet these criteria.
- Document speakers and attendees. Record presentations. Preserve handouts, leave-behinds, and any other educational materials. Keep a sign-in sheet to help establish that they have a reason to be there. List speakers, so it’s clear that they were not selected because they were high volume prescribers. Note fees, to establish that they were not excessive.
- Develop explicit policies. It’s not enough to do all of the above. You should have explicit policies in place detailing how you intend to do it. At the very least, your policy should state that you seek appropriate educational venues, that certain enumerated venues—such as wineries—are not appropriate, that meals will be modest and alcohol will be prohibited, that attendees need a legitimate business reason to attend, and that all expenses and educational content will be documented.
Creating a process that serves the principles
Even if there is no intention of wrongdoing, speaker programs can lead to compliance infractions if there is insufficient planning around the design of the programs. A thorough process includes clearly designating an individual as the business sponsor, who is ultimately responsible for the planning of the event, having a sufficient review process, and defining all of these details in documented policies.
Grant Thornton Manager, Forensics, Keith Mellott has assisted clients in rectifying issues with their speaker programs. For example, one client had allowed their Commercial team to select speakers without review and approval from any other departments. Mellott discussed these observations and others at a recent Grant Thornton webcast, “Revising Your Speaker Program.”
“Unfortunately, without meaning to run afoul of the PhRMA Code, the Commercial team members will naturally favor those healthcare practitioners with whom they have strong relationships,” Mellott said. And that is just one way that good intentions can go astray in this area.
Mellott suggested five process improvements to strengthen this client’s speaker selection process.
- Make medical affairs drive speaker selection. This means both the acquisition of a roster of experts and the selection of experts to address particular issues. Commercial can certainly recommend speakers but medical should have the final call. Legal, compliance, and other appropriate departments should sign off.
- Create a tiering process for experts. It should consider factors such as expert publications, previous speaking engagements, institutional affiliations, leadership positions held, and other relevant medical qualifications. Update the tiers as speakers gain new qualifications.
- Add explicit language to policies. Note that you are creating these review processes, these roles, and these criteria.
- Ensure you monitor any outside contractors. Some life science companies delegate some or all of their sales functions, including the selection of speakers, to contract sales organizations. For various reasons, oversight of their activities can slip. For example, if one or two people take personal responsibility for oversight, their departure can leave you vulnerable. Build oversight into a role, so it is not tied to any one person.
- Look closely at overages. Events which would be within the PhRMA Code if conducted as originally planned can violate the code if change orders inflate speaker fees or increase expenses.
The new PhRMA Code, and the federal anti-kickback statute, clearly prohibit using speaker programs as a means of paying healthcare providers in exchange for writing prescriptions. Fortunately, there are principles to follow to help ensure that organizations comply with the requirements and avoid infractions.
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