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January 13, 2022

Pharmaceutical Research and Manufacturers of America's Revised Code Takes Effect

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Key Takeaways

  • On January 1, 2022, the updated Code on Interactions with Health Care Professionals, published by the Pharmaceutical Research and Manufacturers of America (PhRMA), became effective. The updates reflect fraud and abuse concerns voiced by the Department of Health and Human Services’ Office of Inspector General (OIG) in its November 2020 Special Fraud Alert.
  • The code is an unofficial rulebook designed to help pharmaceutical companies maintain the highest legal and ethical standards in their relationships with the medical community. While it is not a legal document, companies that adopt its rules are more likely to comply with federal fraud and abuse laws like the Anti-Kickback Statute. Several states have even incorporated it into their own laws, including California, Connecticut, Massachusetts and Nevada, as well as the District of Columbia, giving the code the force of law in those jurisdictions.

On January 1, 2022, the updated Code on Interactions with Health Care Professionals, published by the Pharmaceutical Research and Manufacturers of America (PhRMA), became effective. The updates reflect fraud and abuse concerns voiced by the Department of Health and Human Services' Office of Inspector General (OIG) in its November 2020 Special Fraud Alert.

The code is an unofficial rulebook designed to help pharmaceutical companies maintain the highest legal and ethical standards in their relationships with the medical community. While it is not a legal document, companies that adopt its rules are more likely to comply with federal fraud and abuse laws like the Anti-Kickback Statute. Several states have even incorporated it into their own laws, including California, Connecticut, Massachusetts and Nevada, as well as the District of Columbia, giving the code the force of law in those jurisdictions.

This recent update came less than a year after OIG issued an alert on the fraud and abuse risks associated with company-sponsored speaker programs. The Special Fraud Alert, issued November 16, 2020, addresses company-sponsored events where a healthcare professional presents to other healthcare professionals on a company product, often in exchange for an honorarium. OIG notes that it "is skeptical about the educational value of such programs," listing alternative means of obtaining information on pharmaceutical products and citing studies showing that healthcare professionals who present at such events are more likely to prescribe those companies' products. In addition to describing how those situations can subject all parties involved (company, speaker and attendees alike) to federal scrutiny, OIG lists specific characteristics that could indicate that a speaker program might violate the Anti-Kickback Statute. These include, in roughly the following categories:

  • Speaker: The company pays healthcare professional speakers above market value or bases their compensation in part on the volume or value of past or future business they generate; the company selects healthcare professional speakers based on past or future revenue generated by the speaker through ordering the company's products; or the company's sales or marketing team influences the selection of speakers.
  • Event: Little or no substantive information is presented at the event, or the company sponsors many programs on similar topics, especially when no recent legal or scientific developments have occurred in those topics.
  • Venue: The program is held at a location not conducive to the exchange of educational information.
  • Food: Alcohol is provided, especially if provided for free, or a meal exceeding modest value is provided.
  • Attendees: Attendees include individuals with no legitimate business reason to attend, or healthcare professionals attend multiple programs on similar topics, including those who attend programs discussing topics on which they have presented.

Finally, the alert notes that kickback risks remain whenever money is offered to healthcare professionals who work with federal healthcare programs—even for virtual events.

The updates in the revised code that PhRMA released on August 6, 2021, address each of these concerns. The code itself covers more situations than just the company-sponsored speaker programs discussed in the Special Fraud Alert, such as healthcare professional consulting or presentations at internal company events. The updates appear throughout the code, but cover the same categories:

  • Speaker: The amount of revenue that a healthcare professional has generated for the company in the past, or the future revenue that they could generate by ordering the company's products in the future, may not be taken into consideration when selecting a speaker or when determining their compensation.
  • Event: The purpose of a program should be to present substantive educational information designed to address a bona fide educational need.
  • Venue: The event must take place in a manner and at a venue conducive to informational communication. The venue must not be extravagant, nor may it be the main attraction of the event or even perceived as such. High-end restaurants, "luxury" resorts, sporting events and entertainment or recreational venues are not permitted.
  • Food: No alcohol. Food may be served only if there is a reasonable expectation—with reasonable steps taken to confirm—that each attendee receiving a meal has a substantive interaction with the company representative. And the food must be subordinate in focus and incidental to the educational presentation. Such incidental meals must be modest as judged by local standards. Any events providing food must be no more than occasional.
  • Attendees: Only those with a bona fide educational need for the information presented should attend. Friends, significant others, family members or other guests of attendees are therefore not allowed unless they have an educational need themselves. Repeat attendance at the same or a similar event is also not allowed, nor may speakers attend programs on topics the same as or similar to topics on which they have presented.

The updated code also emphasizes that its rules apply equally to virtual as well as in-person events.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

ALM expressly disclaims any express or implied warranty regarding the OnPractice Content, including any implied warranty that the OnPractice Content is accurate, has been corrected or is otherwise free from errors.

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