by Stephen A. Jonas, Ericka Aiken, and Athena Katsampes

In December 2019, Teva settled with DOJ for $54 million to resolve False Claims Act (FCA) allegations that, among other things, Teva induced physicians to write prescriptions for drugs that treat multiple sclerosis and Parkinson’s disease by paying them as “speakers” or “consultants” in connection with sham speaker programs and events.  The Teva settlement was one of a wave of settlements in 2019 that involved allegations of pharmaceutical companies improperly compensating physicians through sham speaker programs. 

Speaker and educational programs are common tools by which pharmaceutical companies pay healthcare providers, including doctors and nurse practitioners, to speak about the benefits, risks, and best practices of prescribing companies’ drugs.  While most frequently intended to educate the medical community, these programs could give rise to liability under the federal Anti-Kickback Statute (AKS) and FCA if used by companies to induce providers to write prescriptions for companies’ drugs.

Speaker events pose a risk under the AKS because intent to induce can be shown even without evidence of a quid pro quo for prescriptions.  Thus, speaker programs can open a company up to liability even without evidence that a speaker event actually resulted in an increase in prescriptions.  Moreover, inducing referrals need not be the only or even primary purpose of speaker programs to give rise to AKS liability.  In its denial of defendants’ motion for summary judgment, the Teva court highlighted several factors considered evidence of intent, including that management was “basing representatives’ compensation on doctors’ prescription-writing; failing to monitor events; and imposing no discipline when sales representatives were reported for non-compliance with [the company’s] policies and the anti-kickback laws.”  Throughout the lawsuit, plaintiffs painted a vivid picture of an ineffective compliance program and a company-wide apparatus that rewarded “speakers” based on their prescription of Teva’s drugs.

Suggested Practices for Pharmaceutical Companies Hosting Speaker Programs

Here are six sound practices companies can use if they choose to host speaker events:

1. Maintain presentations, recordings, and other distributed materials from events.

First, to avoid any allegations of presentations being shams, companies should regularly update content and ensure that each presentation is designed appropriately for the occasion.  In particular, presentations should have clear educational value and reflect careful consideration of the roles of individuals in the audience and the type of information they should receive.  For example, information should not be overly simplistic if the audience primarily contains physicians.  Second, speakers should present the materials thoroughly during the event, as truncating the presentation or failing to present at all may raise red flags.

2. Track and document the attendees at each event.

Recent cases indicate that repeatedly showing the same program to the same audience triggers suspicion.  For example, the Teva court cited records showing 1,500 examples of health care providers attending three or more events related to the same drug within six months as evidence of a sham event.  Courts are also skeptical of events with very few attendees (i.e. zero or one attendee) or events attended only by members of a speaker’s medical practice.  Companies should ensure that events garner a healthy level of attendance by providers.  Companies should always require attendees to sign in and conduct periodic checks to verify attendance at events.

3. Establish and adhere to a procedure for nominating and selecting speakers.

Companies should impose limits on the number of events a provider can attend and the number of times a provider may speak at the same type of event.  Criteria for selecting speakers should be based on merit, and favoring a speaker based on his or her prescribing volume of the companies’ drugs should be strictly prohibited.  Merely tracking the volume of prescriptions written by speakers can raise red flags.  In the Teva case, for example, the court considered evidence of the sales team tracking speakers’ prescriptions sufficient to create a genuine issue of material fact that defeated summary judgment. 

4. Select a venue that is appropriate for an educational event.

Companies should host speaker programs in traditional venues such as hotel conference centers, libraries, or educational institutions.  Hosting events in venues that are not conducive to learning may cause concern.  For example, in last year’s Novartis case, the relator alleged that Novartis held most of its speaker programs in restaurants without the requirement that the restaurant have a private room or quiet atmosphere for the event.  Other venues that have raised suspicions include fishing trips, high-end restaurants, sports bars, dining experiences that promote sex appeal, and sports games.

5. Ensure that speakers are compensated at fair market value and in line with the compensation of other speaker programs. This includes compensation in the form of alcohol, food, and entertainment.

The clearest example of illicit remuneration is compensation tied to the number of prescriptions a healthcare provider writes.  But expensive events involving food, alcohol and entertainment have also been considered evidence of intent to influence.  For example, the Teva court highlighted events where food and alcohol costs exceeded Teva’s company policy of $125 per person limit as evidence of intent to influence.  Companies should ensure that events comport with their policies on gifts and entertainment and that the dining experience remains secondary to the educational experience. 

6. Maintain and enforce a robust compliance program to prevent and deter the improper use of speaker programs.

Companies should:

• Maintain a clear policy on gifts, including limits on the value of gifts and compensation given to doctors and other health care representatives. These limits should be strictly enforced and audited on a regular basis.  The company should also maintain and regularly update a gifts log used to track gifts given to and received from physicians and other health care representatives.
• Maintain a written protocol regarding investigation and remediation of instances of misconduct. Courts will discount even the strongest of written policies as evidence of a lack of intent if the policies go unenforced.  The company’s compliance department should periodically send representatives to attend events to monitor conduct and ensure that any misconduct is addressed with a sanction commensurate with the violation. 
• Distribute these policies to all employees and post the policies at an easily accessible location on the company’s internal website.
• Train employees regularly on relevant policies to ensure that employees can spot red flags connected to speaker events. Employees should receive information about the policies during onboarding training and should receive refreshers trainings on the policies.  Following the training, employees should certify in writing that they understand and have completed the training.
• Consider retaining outside counsel to conduct a full review of and stress test compliance programs related to speaker and educational programs.

Stephen A. Jonas is a partner, Ericka Aiken is counsel, and Athena Katsampes is an associate at WilmerHale.

Disclaimer

The views, opinions and positions expressed within all posts are those of the author alone and do not represent those of the Program on Corporate Compliance and Enforcement (PCCE) or of New York University School of Law.  PCCE makes no representations as to the accuracy, completeness and validity of any statements made on this site and will not be liable for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with the author.