Industry-Sponsored Speaker Programs in Healthcare: OIG Is Watching

Before accepting your next speaking engagement sponsored by a pharmaceutical or medical device company, consider the risks of a potential kickback violation. OIG’s latest special fraud alert highlights the peril.

It’s an opportunity that can be too tempting to pass up for some physicians and other healthcare professionals: an all-expenses-paid trip to a desirable location to bolster visibility among one’s peers and earn extra income at the same time. In exchange, the professional speaks or presents to fellow clinicians about a product manufactured by the pharmaceutical or medical device company sponsoring the event.

It may seem like a no-brainer to accept an industry-sponsored speaker or presentation opportunity on these terms. However, healthcare professionals should beware: the Office of Inspector General (OIG) within the U.S. Department of Health and Human Services (HHS) could construe such an engagement as a disguised kickback scheme to reward prescriptions of the sponsor’s pharmaceutical or medical device products. 

In a special alert on industry-sponsored speaker programs published on November 16, 2020, OIG warned of the “inherent” risks of violating the federal Anti-Kickback Statute (AKS) that arise from the “offer, payment, solicitation, or receipt of remuneration related to company-sponsored speaker programs.” 

This latest alert marks the first time in more than six years that OIG issued a special fraud alert. Rarely issued, OIG’s special fraud alerts tend to focus on widespread industry practices that are “suspect or of particular concern.” Thus, OIG’s special fraud alert on speaker programs suggests this will likely be an area of sustained attention and enforcement activity—even as the federal government continues to deploy significant amounts of resources responding to the COVID-19 pandemic. 

The Anti-Kickback Statute and Industry-Sponsored Speaker Programs

Under the AKS, it is a criminal felony to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services payable by a federal healthcare program, such as Medicare and Medicaid. “Remuneration” means the transfer of anything of value, including any kickback, bribe, or rebate, directly or indirectly, overtly or covertly, in cash or kind. Parties on both sides of a kickback transaction—that is, the party who pays the remuneration or who receives it—are subject to liability.

Penalties of Anti-Kickback Statute Violations

A violation of the AKS is punishable by a maximum fine of $100,000, imprisonment up to 10 years, or both. Additionally, a conviction will lead to automatic exclusion from Medicare, Medicaid, and other federal healthcare programs. 

Even if no criminal conviction occurs but a violation of an impermissible kickback transaction can be established, a party may be liable for a civil monetary penalty of up to $100,000 per violation and an additional amount equivalent to three times the illegal remuneration. OIG may also initiate administrative proceedings to exclude a violator from participating in any federal healthcare programs.

Why Speaking Engagements Can Implicate the Anti-Kickback Statute

Industry-sponsored speaker programs may implicate the AKS to the extent they involve the exchange of remuneration—often in the form of speaker fees characterized as an “honorarium”—between manufacturers of products that are reimbursable by federal healthcare programs and healthcare professionals who are in a position to prescribe, order, or recommend those products.

 While industry groups tout the benefits of peer-to-peer dissemination of information about manufacturers’ products, OIG remains skeptical about these program’s educational value. OIG notes that healthcare professionals often earn “generous compensation to speak at programs offered under circumstances that are not conducive to learning or to speak to audience members who have no legitimate reason to attend.” 

In the government’s view, the combination of the speaker’s generous compensation, taken alongside the program’s other circumstances, may suggest that the speaker is trying to incentivize attendees to make referrals to the sponsoring company. This could lead the government to pursue possible AKS violations against the company sponsoring the program and against the speaker.

Key Risk Factors of a Kickback Violation 

While the risks of an AKS violation are always fact-specific, the special fraud alert includes numerous factors that suggest that an industry-supported speaker program qualifies as a kickback scheme:

• The company sponsors speaker programs that present little substantive information.
• Alcohol is available, especially free of charge, or a meal “exceeding modest value” is offered to attendees.
• The program occurs in a setting “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.”
• A significant amount of time has passed with no new medical or scientific information nor a new Food and Drug Administration (FDA)-approved or cleared indication for the product. 
• The speaker program draws repeat attendees or those who have attended very similar talks.
• The attendees include individuals without a legitimate business reason for attendance,  such as friends, family, and office colleagues of the healthcare professionals speaking at or attending the event. 
• The sponsoring company’s sales or marketing business units influence the selection of speakers. Alternatively, the company selects speakers or attendees based on the past or expected revenue they have generated or will generate by prescribing or ordering the company’s products.
• The sponsoring company pays more than fair market value for the speaking service or pays compensation based on the volume or value of past business generated or potential future business generated by speaker or attendees.

Speaker Programs in the Era of COVID-19

As these guidelines show, social interactions and group settings are common traits of many speaker programs. At the same time, social-distancing policies and practices remain in effect across much of the United States amidst the COVID-19 pandemic. Why, then, is OIG concerned about these events now?

In the special fraud alert, OIG acknowledged that with fewer in-person activities taking place during the pandemic, some companies have dialed back their speaker programs. Yet, OIG anticipates that such programs, and the remuneration, will resume. In the meantime, OIG cautioned that “risks remain whenever payments are offered or made to [healthcare professionals] who generate Federal health care program business for the company.” In other words: OIG is giving no break for suspect speaker arrangements, regardless of the impact of the pandemic.

The Open Payments Program: An Information Pipeline to OIG

While COVID-19 has caused a significant scaling back of industry-sponsored speaker events, the period immediately before the pandemic was a markedly different story. As OIG’s special fraud alert notes, between 2017 and 2019, pharmaceutical and medical device companies reported paying nearly $2 billion to healthcare professionals for speaker-related services. 

What is notable about this figure is not only the dollar amount but its source: the Centers for Medicare & Medicaid Services’ Open Payments website. Created by the Affordable Care Act of 2010, the Open Payments program attempts to promote transparency in industry-provider relationships by requiring pharmaceutical and medical device manufacturers to annually report to CMS their payments and “other transfers of value” to physicians, including compensation for “serving as faculty or as a speaker at an event other than a continuing education program.” 

Beginning in 2021, as a result of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act) of 2018, the Open Payments program will expand to include reporting of payments and transfers of value to include physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse-midwives. 

Once CMS receives information from reporting parties, it then makes the information publicly available on the Open Payments website. In aggregate, this trove of data can be critical to the work of researchers, as well as to regulatory enforcers like OIG. If the special fraud alert is any indication, OIG will likely continue to access Open Payments data to scrutinize industry-supported speaker programs—and industry-provider financial relationships more generally. 

Does the First Amendment Protect Industry-Sponsored Speaker Programs?

The OIG’s latest special fraud alert does not address whether the First Amendment provides any free speech protection to parties involved in an industry-sponsored speaker program. 

In recent years, stakeholders within the pharmaceutical and medical device sectors have achieved noteworthy First Amendment court victories. In the case of Sorrell v. IMS Health Inc., 131 S.Ct. 2653 (2011), the U.S. Supreme Court declared emphatically in striking down a Vermont law that restricted the sale, disclosure, and use of pharmacy records to data miners and other commercial parties that “[s]peech in aid of pharmaceutical marketing . . . is a form of expression protected by the Free Speech Clause of the First Amendment.” More recently, some courts – like the U.S. Court of Appeals for the Second Circuit in United States v. Caronia, 703 F.3d 149 (2d Cir. 2012) – have invalidated on First Amendment grounds actions by the FDA to sanction pharmaceutical companies and their representatives for promoting off-label use of FDA-approved drugs. 

The risk factors OIG outlines when describing a potentially problematic speaker program strongly suggest that both the content of the presentation and the speaker’s identity would be important in influencing the agency to initiate an enforcement action. Yet, as the Supreme Court explained in IMS Health, a regulatory burden “based on the content of speech and the identity of the speaker” triggers “heightened judicial scrutiny”—an exacting standard that the government in that case could not satisfy with its disfavored treatment of “marketing, that is, speech with a particular content” and of “specific speakers, namely pharmaceutical manufacturers.”

So how would OIG navigate these First Amendment principles in carrying out enforcement? The answer is unclear. Depending on the particular circumstances, a party may have a viable free speech defense against an AKS enforcement action by OIG to challenge an industry-supported speaker program. 

Staying Compliant

If you have questions about how OIG’s guidance on industry-sponsored speaker programs may affect your practice or business, reach out to the experienced attorneys at Jackson LLP Healthcare Lawyers. Whether you are a healthcare professional or a pharmaceutical or medical device company, our attorneys can assist you in: 

• designing legally compliant speaker programs 
• reviewing your speaker program contracts
• providing representation in any regulatory investigation or enforcement action relating to a speaker program

During a phone consultation, you’ll get to know more about our team and learn how we can support you.

This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader and should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.