The Office of Inspector General for the United States Department of Health and Human Services announced a special fraud alert last month. Special fraud alerts serve as a warning on particular practices that the agency plans on investigating further. In this first warning issued in six years, pharmaceutical companies are under scrutiny for offering financial incentives to physicians to increase profit.

Although reduced due to the current pandemic, speaking engagements are a longstanding practice in the healthcare field. Physicians and other healthcare professionals often receive an honorarium for speaking about a product. Although this act alone is not necessarily illegal, the alert emphasizes that legality is dependent on intent. In addition, the alert warns against problematic factors such as the lack of substantive information presented, overpaying speakers above fair market value, and the presence of free alcohol at such engagements.

Speaker programs are especially at risk of violating the Anti-Kickback Statute. Created to minimize the financial incentive in making decisions in healthcare, the Anti-Kickback Statute prohibits the intent to increase referrals for products that are paid for by federal healthcare programs. This includes medication, supplies, or services for patients under Medicare or Medicaid.

On November 24th, Purdue Pharma pleaded guilty to violating the Anti-Kickback Statute on two counts. Between June of 2009 and March of 2017, Purdue Pharma admitted to paying two doctors to incentivize them to write more prescriptions for its opioid products. Purdue Pharma also disclosed that in 2016, the corporation made payments to an electronic health records company in exchange for promoting its products.

Under the plea agreement, Purdue Pharma was sentenced to a criminal fine of $3.44 billion and an additional $2 billion in criminal forfeiture, marking the largest penalty against a pharmaceutical corporation and effectively bankrupting the company.

In July, after nearly a decade of litigation, Novartis Pharmaceuticals Corporation agreed to pay $678 million to settle similar allegations. This Swiss company faced accusations of providing kickbacks to thousands of doctors in the form of exorbitant speaker fees and lavish dinners to increase the sale of certain drugs. According to court filings, such events included $10,000 meals at Nobu, a high-end restaurant, and numerous wine tasting trips. It is also recorded that some physicians who promoted Novartis products collected up to $220,000 in honorariums. In addition to the cost of settlement, Novartis has also entered a corporate integrity agreement with the Office of Inspector General.

The numerous court cases and the issuance of a special fraud alert illuminate the need for pharmaceutical companies to rethink their practices in order to remain compliant with federal laws.