HHS' inspector general's office issued its fourth "fraud alert" to consumers last week, and this time the target was drug company inducements to physicians or other providers to prescribe specific medications for patients.
Such inducements, as described in the two-page alert, "pose a danger to patients because the offering or payment of remuneration may interfere with a physician's judgment in determining the most appropriate treatment for a patient."
Such inducements, which often come in the form of elaborate drug company marketing campaigns targeted at physicians, may violate the anti-kickback provisions of the Medicare and Medicaid fraud-and-abuse statutes.
The provisions bar any form of remuneration to induce patient referrals or Medicare- or Medicaid-reimbursed services. Violations of the law can be civil and criminal. Civil violations are punishable by suspension or expulsion from Medicare and Medicaid; criminal violations are punishable by possible fines and imprisonment.
"Physicians, suppliers and, increasingly, patients are being offered valuable, nonmedical benefits in exchange for selecting specific prescription drug brands," the alert said.
The alert offered several examples:
Cash paid by a drug company to a pharmacy every time the pharmacy persuaded a physician to switch medications to the drug company's brand.
"Frequent-flier" credits awarded to physicians who prescribed a drug company's product.
Cash payments disguised as research grants to physicians who prescribed a drug company's product.
The federal alert comes at a time when such deals are attracting the attention of state law enforcement agencies.
For example, earlier this month, Upjohn agreed to pay $650,000 to New York and seven other states to reimburse them for their investigation of a drug marketing program the firm conducted (Aug. 8, p. 52).
The Kalamazoo, Mich.-based company paid pharmacists $8 each time they persuaded physicians to switch patients from one Upjohn diabetes drug to another. Although the drugs are similarly priced, one has several lower-priced generic competitors. The company discontinued its practice last March.
"We don't feel that it was improper or illegal to do what we did, which was to reimburse pharmacists for patient counseling," said Kaye Bennett, an Upjohn spokeswoman.
Upjohn designed its program specifically to exclude Medicaid patients because the Medicaid regulations aren't clear, she said.
The anti-kickback provisions apply only to Medicare and Medicaid patients.
The fraud alert also is specific to the practices of drug companies. But it isn't a stretch to apply the warnings to the everyday practices of pharmacy benefit managers. They make sure physicians prescribe from a set list of drugs, and they often call pharmacists to switch the prescriptions if they don't.
"At the very least, the warning that went out is a red flag," said Carl Seiden, a pharmaceutical analyst at Sanford C. Bernstein, a New York investment research firm. "It's just several shades of gray before you get to fundamentally what PBMs do, which is shift market share." The companies and federal agencies are aware that the law covering this activities is ill-defined, he said.
This is the latest in a series of consumer alerts issued by HHS' inspector general's office since 1989 (See chart, p. 26). The provider practices targeted in the other alerts include provider-owned joint ventures, waivers of Medicare Part B copayments and deductibles and financial incentives offered by hospitals to physicians.