Pharmacy owners should spend time reviewing marketing arrangements with an attorney who is well-versed in the anti-kickback law to avoid potential pitfalls.
At the heart of every successful specialty pharmacy is a robust marketing strategy. Oftentimes, business owners develop creative techniques to inform consumers about their products or services. However, specialty pharmacy owners must be cautious when marketing their business because of the many regulations that govern health care.
In particular, pharmacy owners should spend time reviewing marketing arrangements with an attorney who is well-versed in the anti-kickback law.
The Anti-Kickback Statute (AKS) prohibits persons from knowingly and willfully soliciting, making payment, or receiving remuneration “in return for referring or inducing reimbursable business under state or federal health care programs (See 42 U.S.C. § 1320a-7b[b]).” Under the statute, remuneration may be direct or indirect, overt or covert, in cash or in kind (See United States v. Greber, 760 F.2d 68, 71-72 [3d Cir. 1985]).
The AKS is an intent-based statute that contains both civil and criminal penalties. Violations of the statute constitute a felony and a conviction will lead to exclusion from federal health care programs.
Watch Out for White Coat Marketing
White coat marketing is defined as the practice of advertising or marketing pharmaceutical products by physicians, nurses, and other health care professionals. The government has given heightened scrutiny when advertising involves a health care provider.
Health care providers are regarded as trusted individuals and they may exert undue influence when recommending products. Most patients believe that when a health care practitioner recommends a product, it is in their best medical interests. Patients do not think their practitioner might have a financial incentive to recommend a product.
The Office of Inspector General has additionally been concerned when practitioners act as “consultants,” “advisors,” or “researchers” in connection with marketing and research activities. For example, the government often casts a skeptical eye on arrangements in which pharmaceutical manufacturers engage physicians to perform research, data collection, consulting services, serve on advisory boards, or to speak at meetings.
The AKS was created to ensure that the exercise of medical judgment is not corrupted by any outside considerations. The government asserts that fraud risks are lower when marketing is accurate, passive, and provided through general broadcast media, i.e., not directed to a particular patient.
Safe Harbor Provisions
The Department of Health and Human Services has promulgated safe harbor laws that identify actions that are not subject to the AKS statute since these actions would be unlikely to result in fraud or abuse (See 42 C.F.R. § 1001.952). For marketers, the pertinent regulatory safe harbor is the personal services and management contracts safe harbor provision.
The government sets out seven safe harbor provisions for marketers to follow. Here, even though safe harbor compliance is not mandatory, it creates a presumption of compliance and an affirmative defense if indicted.
When examining potential marketing agreements, spend some time reviewing provisions concerning these three areas:
Finally, in reviewing arrangements that do not fit safe harbor laws, the government has pointed out several arrangements that appear to be associated with fraudulent behavior. These characteristics include:
Doris O. Dike, Esq., is health care attorney at Friedman & Feige. LLP., a law firm based in Dallas, Texas. She represents specialty pharmacies, home health companies, healthcare entrepreneurs, and other health care providers nationwide. She can be reached at firstname.lastname@example.org.