On November 16, 2020, the Office of the Inspector General of the United States Department of Health and Human Services (OIG or Agency) published Special Fraud Alert: Speaker Programs (Alert). The Alert addresses the fraud and abuse risks inherent in remuneration associated with events (Speaker Programs) sponsored by pharmaceutical and medical device companies (Pharma Companies) where a physician or other healthcare professional (HCP) makes a presentation to other HCPs focusing on a drug or device, or a related disease state, on behalf of a Pharma Company.
Experienced healthcare fraud and abuse practitioners likely need no introduction to the warning alarm of an OIG Special Fraud Alert. The Agency has published only 16 alerts since 1994, meaning each publication is an extraordinary occurrence. Although not binding, an alert generally outlines OIG’s legal position on a frequently encountered arrangement—and signals an enforcement priority going forward.
This article reviews the main points of the Alert, highlights recent government enforcement actions targeting Speaker Programs, and outlines practical marketing alternatives to Speaker Programs.
Special Fraud Alert: Speaker Programs
OIG focuses on what it considers “inherent fraud and abuse risks” associated with Speaker Programs.1 The Agency notes that, over the last three years alone, Pharma Companies paid almost $2 billion to HCPs for speaker-related services.2 Meanwhile, OIG and the United States Department of Justice (DOJ) expended considerable resources investigating and resolving numerous healthcare fraud matters alleging that remuneration offered and paid in connection with Speaker Programs violated the Anti-Kickback Statute (AKS).3 OIG and the DOJ have pursued AKS enforcement both civilly and criminally, against Pharma Companies and individual HCPs, involving myriad arrangements connected to Speaker Programs.4
OIG contends that Speaker Programs inherently risk violating the AKS, which Congress enacted to protect patients from referrals by HCPs whose medical decision-making might be influenced by improper financial incentives rather than their best medical judgment.5 To that end, the AKS criminalizes a knowing and willful kickback transaction, including solicitation, receipt, offer, or payment of any remuneration, to induce or reward referrals for services, or orders for items, reimbursable by a federal healthcare program (e.g., Medicare, Medicaid, and TRICARE).6 The Agency also emphasizes that the AKS applies to all parties involved in a kickback transaction, and that an AKS conviction is a felony punishable by fines up to $10,000, imprisonment up to 10 years, or both, and results in exclusion from federal healthcare programs7—the death knell for an HCP’s medical business. The pharmaceutical industry asserts, however, that Speaker Programs are not intended to induce or reward referrals, instead maintaining that HCPs “participate in [Speaker Programs] to help educate and inform other [HCPs] about the benefits, risks, and appropriate uses of [Pharma Company] medicines” and devices.8
The Agency’s experience causes it to doubt the pharmaceutical industry’s asserted educational value of Speaker Programs. First, OIG’s investigations often reveal that HCPs receive generous compensation to speak at programs offered under circumstances not conducive to learning and to audience members without any legitimate reason for attending.9 Further, OIG suggests that studies showing that HCPs who receive payment from a particular company are more likely to prescribe that company’s products bolster the idea that an HCP’s clinical decisions can be skewed in favor of their financial interests rather than the patient’s best medical interests.10 The Agency also notes that the availability of alternatives to Speaker Programs achieving the same educational value without the same fraud risks suggests that at least one purpose of remuneration connected to Speaker Programs is to induce or reward referrals.11
Perhaps most importantly, OIG promulgated a list of red flags—albeit a non-exhaustive list containing no one determinative red flag—that it considers when investigating AKS violations related to Speaker Programs:
- The program presents little or no substantive information;
- Alcohol is available, or a meal exceeding modest value is provided, with heightened concern when the alcohol is free;
- The program is held in a location not conducive to exchanging educational information (e.g., restaurants or entertainment or sports venues);
- A large number of the same Speaker Program topics continue over a significant period with no new medical or scientific information, nor a new Food and Drug Administration (FDA)-approved indication for the product;
- HCPs attend programs covering the same topics repeatedly;
- Attendees include individuals without a legitimate business reason for attending (e.g., friends, significant others, or family members of the speaker or an HCP attendee, and administrative clinic staff of HCP attendees);
- A Pharma Company’s sales or marketing units influence the selection of speakers or attendees based on past or expected revenue generated by prescribing the Company’s product(s) (i.e., conducting a return on investment analysis on speakers and attendees); and
- A Pharma Company pays HCP speakers more than fair market value for the speaking service or pays compensation that takes into account the volume or value of past or future business generated by the HCPs.12
Hesitantly, the Agency admits that lawful remuneration arrangements surrounding Speaker Programs may theoretically exist, but reiterates that a Speaker Program exhibiting any of the above-listed characteristics, taken separately or together, risks violating the AKS and triggering enforcement action.13
Finally, OIG is mindful that this Alert comes during a global pandemic when a Pharma Company’s in-person Speaker Programs are likely temporarily halted.14 The Agency politely advises that Pharma Companies and HCPs consider making that change permanent, warning “the risks associated with speaker programs will become more pronounced if companies resume in-person speaker programs or increase speaker program-related remuneration to HCPs.”15
Recent Speaker Program AKS Enforcement
As mentioned above, OIG frequently teams up with the DOJ on healthcare fraud enforcement actions tied to Speaker Programs. The last two years alone yielded several notable successful actions involving both Pharma Companies and individual HCPs.16
Insys marketed Subsys, a sublingual fentanyl spray that is both highly powerful and highly addictive.17 In May 2019, eight Insys executives were convicted in a Boston federal court for crimes relating to the marketing of Subsys.18 The following month, Insys agreed to resolve separate civil and criminal investigations into Insys’ use of Speaker Programs to market Subsys.19 Insys admitted it used Speaker Programs from 2012 through 2015 as a vehicle to pay kickbacks to HCPs for increased Subsys prescriptions and increased prescription dosages.20
In the civil settlement, Insys agreed to pay $195 million to settle claims arising under the False Claims Act (FCA).21 Insys also entered into a five-year Corporate Integrity Agreement (CIA) and Conditional Exclusion Release with OIG allowing Insys to escape exclusion from federal healthcare programs, but only after Insys completely satisfies its obligations under the CIA.22 Under the criminal resolution, Insys agreed to a $2 million fine and forfeited $28 million to defer prosecution.23 A major component of the agreement was an extensive statement of facts by Insys outlining its illegal Subsys marketing.24
With Insys’s detailed factual admissions in hand, the government quickly turned its attention to the individual HCPs participating in the Subsys Speaker Programs. Several prominent Manhattan physicians involved with Insys’s Speaker Programs who were indicted25 more than a year before the government’s resolution with Insys began agreeing to plea deals mere days after the government procured the settlement agreement and factual admissions from Insys.26 First, the U.S. Attorney’s Office for the Southern District of New York (SDNY) announced that Todd Schlifstein, a physical medicine and rehabilitation physician, pled guilty to conspiracy to violate the AKS for receiving sham speaker fees from Insys in exchange for prescribing large volumes of Subsys.27 The court sentenced Schlifstein to two years in prison and ordered him to forfeit $127,100 which he illegally received from Insys.28
Following Schlifstein, SDNY announced that Dialecti Voudouris, an oncologist, also pled guilty to conspiracy to violate the AKS.29 Voudouris, who prescribed very little Subsys before becoming involved with Insys’s Speaker Programs, quickly became the 10th highest prescriber of Subsys in the nation in exchange for nearly $120,000 in sham speaker fees.30 The court sentenced her to one year of supervision and ordered her to forfeit $119,400 in payments from Insys.31
Jeffrey Goldstein was the next domino to fall. The Manhattan osteopath also pled guilty to conspiracy to violate the AKS and admitted to receiving approximately $196,000 in Speaker Program fees.32 Goldstein’s sentencing has been delayed due to the ongoing COVID-19 pandemic and is currently scheduled to take place on April 30, 2021.33
The final HCP from this Manhattan indictment, Gordon Freedman, took his case all the way to trial—albeit unsuccessfully.34 A jury convicted Freedman, a pain management physician, anesthesiologist, and clinical professor, of conspiracy to violate the AKS, violating the AKS, and conspiracy to commit honest services wire fraud.35 Trial evidence demonstrated that Freedman received more than $300,000 in sham speaker fees from Insys in exchange for prescribing increasingly large volumes of Subsys at the request of Insys sales representatives.36 Freedman’s sentencing hearing, which has also been delayed due to COVID-19, is currently scheduled for May 17, 2021.37
Insys’s Speaker Program kickback scheme reached well beyond Manhattan. The federal government has continued to prosecute individual HCPs all over the country: a physician practicing in Pennsylvania and New Jersey pled guilty to conspiracy to defraud the United States and to pay and receive healthcare kickbacks in the District of New Jersey;38 a Florida pain physician was indicted for conspiring to violate the AKS in the Middle District of Florida;39 and a grand jury returned an indictment against a pain specialist charging AKS violations in the District of Colorado.40
Insys was not the only opioid manufacturer that used problematic Speaker Programs. In November 2020, Purdue Pharma, the makers of the now infamous opioid painkiller OxyContin, pled guilty to criminal charges, including conspiracy to violate the AKS. Among other illegal kickback arrangements, Purdue admitted to paying at least two physicians to lead Speaker Programs in order to induce them to write more OxyContin prescriptions. As part of the plea deal, Purdue will pay more than $3.5 billion in criminal fines, plus a $2 billion criminal forfeiture. Purdue also settled civil FCA claims arising from the same conduct with an unsecured bankruptcy claim for $2.8 billion.
In July 2020, the DOJ announced that Novartis would pay a total of $678 million to the federal government, and several state governments, to resolve FCA allegations that Novartis paid kickbacks in the form of sham speaker fees to HCPs to reward high-prescribers, and to induce increased prescriptions of its cardiovascular and diabetes drugs. Novartis also entered into an extensive CIA with OIG requiring Novartis to significantly reduce its number of Speaker Programs and paid HCP speakers. The CIA explicitly forbids Novartis from paying for “inherently-risky in-person programs.”
Novartis, like Insys, also made extensive factual admissions as part of its settlement with the federal government. Novartis admitted that from 2002 through 2011, its sales representatives intended the “honoraria” they paid to HCPs involved with Speaker Programs to be an inducement for the HCPs to prescribe more Novartis drugs, and that Novartis paid many high prescribers tens or hundreds of thousands of dollars in sham speaker fees. In thousands of instances, Novartis paid for the same group of HCPs—often colleagues or friends—to have dinner together where the HCPs would rotate being the “speaker” and receive the sham speaker fees from Novartis. Novartis admitted its sales representatives hosted programs at some of the most expensive restaurants in the country, including multiple restaurants in New York City, Chicago, Washington, D.C., Miami, Dallas, San Francisco, and Los Angeles, among others. At many of its Speaker Programs, Novartis admitted that the representative hosting the event did not require the paid HCP speaker to deliver a presentation at all, or allowed the speaker to quickly click through the presentation so the group could socialize and enjoy dinner. Finally, Novartis admitted that in a number of instances it paid HCPs sham speaker fees for events that never took place at all.
Practical Alternatives to Speaker Programs
With the massive penalties noted above in mind and OIG signaling increased government scrutiny in this area with the Alert, Pharma Companies may wish to consider how they can reduce their AKS enforcement risk with effective marketing alternatives to Speaker Programs.
In the Alert, OIG announces “HCPs can access the same or similar information provided in a speaker program using various online resources, the product’s package insert, third-party educational conferences, medical journals, and more.43” Admittedly, these alternatives seem less effective at increasing drug and device sales than Speaker Programs at lavish restaurants. But starting with the premise that a physician should prescribe a treatment based on the patient’s individual needs and the efficacies of various treatment options available and not the potential financial incentives for the physician—the same premise underlying the AKS—some of these alternatives are more than adequate to drive sales for Pharma Companies.
A Pharma Company can get its product information in front of target HCPs with numerous effective—and compliant—methods. Pharma Companies often produce the slide decks used in Speaker Program presentations, make them available to HCPs online, and email blast a link to the slide deck to every practice with a legitimate reason for prescribing the product. Pharma Companies can also record video presentations of the slide deck and make those available to watch online. As we are all now painfully aware after the COVID-19 pandemic forced people to stay home during 2020, several quality online video conferencing platforms are available to host virtual presentations for HCPs. Even if a Pharma Company pays an HCP presenter—so long as the payment is fair market value and not based on past or future prescriptions—the educational value is the centerpiece of the presentation, not any social or financial inducements which typically lead to enforcement risk.
Medical journals can also be an effective tool in the Pharma Company marketing toolbox. Pharma Companies already provide research grants to academic institutions; instead of pouring hundreds of millions of dollars into Speaker Programs as Novartis did, Pharma Companies could increase academic research funding for their products.44 This research could produce findings published in prominent medical journals read by HCPs. Specific research like comparison studies showing a Pharma Company product’s edge compared to competitor treatments, and research into expanded indications and patient populations could both be excellent ways to induce an HCP to increase prescriptions of the Pharma Company’s product while reducing fraud enforcement risk.
Building off the idea of comparison studies, Pharma Companies operating in the medical device space could hold comparison surgeries. Invite HCPs to an operating room gallery to observe a standard surgery using the company’s device side-by-side the same standard surgery using a competing device. This gives Pharma Companies the opportunity to promote their products while giving HCPs the opportunity to learn why the company’s product is better than the competitor’s product. Moreover, this would be an environment much more conducive to learning than a private room at a luxurious restaurant for a slide deck viewing. This arrangement may be difficult to put together, but could be extremely valuable for both Pharma Companies and individual HCPs if properly executed.
When OIG publishes a Special Fraud Alert, the healthcare industry must take note. In this instance, the Agency has made itself crystal clear that it will scrutinize all Pharma Company-sponsored Speaker Programs for compliance with the AKS. Pharma Companies and individual HCPs must evaluate whether the risk of government fraud enforcement is worth the increased sales or the value of the remuneration involved. Pharma Companies should develop and institute alternatives to Speaker Programs or institute and maintain a robust compliance program tailored to the red flags outlined in the Alert. Likewise, HCPs should reevaluate any Speaker Program relationships they may already have, and carefully weigh whether participating in any Speaker Program is worth the risk going forward.
- Special Fraud Alert: Speaker Programs (SFA), United States Department of Health and Human Services, Office of Inspector General (Nov. 16, 2020), at 2, https://oig.hhs.gov/fraud/docs/alertsandbulletins/2020/SpecialFraudAlertSpeakerPrograms.pdf .
- SFA, at 1.
- Id. at 1–2.
- Id. Noted arrangements include: (1) rewarding high-prescribing HCPs with lucrative speaker deals, with some HCPs receiving up to hundreds of thousands of dollars for speaking; (2) conditioning a speaker honorarium on a required minimum number of prescriptions; (3) hosting Speaker Programs at high-end entertainment venues or recreational events like wineries, sports stadiums, golf clubs, adult entertainment facilities, or other places not conducive to an educational presentation; (4) hosting Speaker Programs at high-end restaurants where expensive meals and alcohol were served; and (5) inviting HCP attendees who had previously attended the same program, or HCPs’ friends, significant others, or family members who had no legitimate reason for attending the Speaker Program other than their social or familial relation to an HCP attendee.
- Id., at 2.
- Id.; 42 U.S.C. § 1320a-7b(b)(1)–(2).
- SFA, at 3.
- Id. at. 3–4.
- Id. at 4.
- Id. at 4–5.
- Id. at 5.
- Id. at 6.
- Id. at 7.
- Although the examples cited here involve only pharmaceutical manufacturers, there are enforcement examples involving medical device manufacturers as well. See Medtronic to Pay Over $9.2 Million To Settle Allegations of Improper Payments to South Dakota Neurosurgeon, United States Department of Justice, Office of Public Affairs (Oct. 29, 2020), https://www.justice.gov/opa/pr/medtronic-pay-over-92-million-settle-allegations-improper-payments-south-dakota-neurosurgeon; and Medical Device Maker Merit Medical To Pay $18 Million To Settle Allegations Of Improper Payments To Physicians, United States Department of Justice, Office of Public Affairs (Oct. 14, 2020), https://www.justice.gov/opa/pr/medical-device-maker-merit-medical-pay-18-million-settle-allegations-improper-payments.
- Opioid Manufacturer Insys Therapeutics Agrees to Enter $225 Million Global Resolution of Criminal and Civil Investigations, United States Department of Justice, Office of Public Affairs (June 5, 2019), https://www.justice.gov/usao-cdca/pr/opioid-manufacturer-insys-therapeutics-agrees-enter-225-million-global-resolution.
- Five Manhattan Doctors Indicted For Accepting Bribes And Kickbacks From A Pharmaceutical Company In Exchange For Prescribing Powerful Fentanyl Narcotic, United States Department of Justice, Offices of the United States Attorneys, Southern District of New York (Mar. 16, 2018), https://www.justice.gov/usao-sdny/pr/five-manhattan-doctors-indicted-accepting-bribes-and-kickbacks-pharmaceutical-company; See also United States v. Freedman, et al., 2019WL2590747 (S.D.N.Y. 2019).
- One of the indicted physicians, Alexandru Burducea, pled guilty to AKS charges relating to Insys’s Speaker Programs a few months prior to the government’s successful convictions of Insys executives and its settlement with Insys. See Manhattan Doctor Pleads Guilty To Accepting Bribes And Kickbacks From Pharmaceutical Company In Exchange For Prescribing Fentanyl Drug, United States Department of Justice, Offices of the United States Attorneys, Southern District of New York (Feb. 14, 2019), https://www.justice.gov/usao-sdny/pr/manhattan-doctor-pleads-guilty-accepting-bribes-and-kickbacks-pharmaceutical-company.
- Manhattan Doctor Pleads Guilty To Accepting Bribes And Kickbacks From Pharmaceutical Company In Exchange For Prescribing Fentanyl Drug, United States Department of Justice, Offices of the United States Attorneys, Southern District of New York (June 26, 2019), https://www.justice.gov/usao-sdny/pr/manhattan-doctor-pleads-guilty-accepting-bribes-and-kickbacks-pharmaceutical-company-0.
- Schlifstein Judgment at 1 and 7, United States v. Freedman, et al., 2019WL2590747 (S.D.N.Y. 2019) (No. 1:18-cr-217-KMW), ECF No. 180.
- Manhattan Doctor Pleads Guilty To Accepting Bribes And Kickbacks From Pharmaceutical Company In Exchange For Prescribing Fentanyl Drug, United States Department of Justice, Offices of the United States Attorneys, Southern District of New York (Aug. 2, 2019), https://www.justice.gov/usao-sdny/pr/manhattan-doctor-pleads-guilty-accepting-bribes-and-kickbacks-pharmaceutical-company-1.
- Voudouris Judgment at 3 and 7, United States v. Freedman, et al., 2019WL2590747 (S.D.N.Y. 2019) (No. 1:18-cr-217-KMW), ECF No. 273.
- Fourth Manhattan Doctor Pleads Guilty To Accepting Bribes And Kickbacks From Pharmaceutical Company In Exchange For Prescribing Fentanyl Drug, United States Department of Justice, Offices of the United States Attorneys, Southern District of New York (Aug. 16, 2019), https://www.justice.gov/usao-sdny/pr/fourth-manhattan-doctor-pleads-guilty-accepting-bribes-and-kickbacks-pharmaceutical-0#:~:text=Berman%2C%20the%20United%20States%20Attorney,spray%2C%20in%20exchange%20for%20bribes.
- Order on Goldstein’s Motion to Delay Sentencing, United States v. Freedman, et al., 2019WL2590747 (S.D.N.Y. 2019) (No. 1:18-cr-217-KMW), ECF No. 325.
- Manhattan Doctor Convicted In Manhattan Federal Court Of Accepting Bribes And Kickbacks From A Pharmaceutical Company In Exchange For Prescribing Fentanyl Drug, United States Department of Justice, Offices of the United States Attorneys, Southern District of New York (Dec. 15, 2019), https://www.justice.gov/usao-sdny/pr/manhattan-doctor-convicted-manhattan-federal-court-accepting-bribes-and-kickbacks.
- Order on Freedman’s Motion to Delay Sentencing, United States v. Freedman, et al., 2019WL2590747 (S.D.N.Y. 2019) (No. 1:18-cr-217-KMW), ECF No. 322.
- New Jersey/Pennsylvania Doctor Indicted For Accepting Bribes And Kickbacks From A Pharmaceutical Company In Exchange For Prescribing Powerful Fentanyl Drug, United States Department of Justice, Office of Public Affairs (June 25, 2019), https://www.justice.gov/opa/pr/new-jerseypennsylvania-doctor-indicted-accepting-bribes-and-kickbacks-pharmaceutical-company.
- Sarasota Pain Doctor And Former Insys Sales Representative Charged In Health Care Fraud Kickback Conspiracy, United States Department of Justice, Offices of the United States Attorneys, Middle District of Florida (Sept. 16, 2020), https://www.justice.gov/usao-mdfl/pr/sarasota-pain-doctor-and-former-insys-sales-representative-charged-health-care-fraud.
- Kesten Indictment, United States v. Jeffrey Kesten, (D. Colo. 2020) (No. 1:20-cr-291-DDD), ECF No. 1. (Not reported on Westlaw; indictment is located here: https://www.justice.gov/criminal-fraud/file/1321276/download).
- Opioid Manufacturer Purdue Pharma Pleads Guilty to Fraud and Kickback Conspiracies, United States Department of Justice, Office of Public Affairs (Nov. 24, 2020), https://www.justice.gov/opa/pr/opioid-manufacturer-purdue-pharma-pleads-guilty-fraud-and-kickback-conspiracies.
- Novartis Pays Over $642 Million to Settle Allegations of Improper Payments to Patients and Physicians, United States Department of Justice, Offices of the United States Attorneys, Southern District of New York (July 1, 2020), https://www.justice.gov/opa/pr/novartis-pays-over-642-million-settle-allegations-improper-payments-patients-and-physicians.
- SFA at 4.
- Note that this arrangement, like paying honoraria for Speaker Programs, will trigger reporting requirements under the Physician Payments Sunshine Act (Open Payments). See 42 C.F.R. § 403.904. Open Payments is beyond the scope of this article, but an excellent discussion of the reporting requirements can be found in the January 2020 ABA Health eSource. See Ashlie Heald, Esq., CMS Finalizes Changes to Open Payments Reporting Requirements, ABA Health eSource, January 2020, https://www.americanbar.org/groups/health_law/publications/aba_health_esource/2019-2020/january-2020/cms-finalizes/.