With hospital group purchasing organizations positioning themselves to respond to an expansion of the congressional investigation into their practices, few in the industry had any reaction to new federal guidance for pharmaceutical manufacturers.
HHS Inspector General Janet Rehnquist last week strongly encouraged drugmakers to shape up their relationships with doctors and purchasers, including GPOs and pharmacy benefit managers, or risk triggering federal antikickback statutes.
"Time and time again we discover the government doesn't pay appropriate prices for drugs," Rehnquist said at a healthcare fraud conference in Washington last week, citing a doctor who paid $7.50 for a dose of a drug he gave to a Medicare patient. The doctor billed Medicare $750 for administering the drug and the patient paid a $150 copayment.
According to new draft compliance guidelines released last week, pharmaceutical price discounts, "value-added" services, consulting and advisory payments, and gifts of entertainment, travel and meals are all suspect. Incentive payments to GPOs, pharmacy benefit managers and others in a position to influence a purchase also potentially trigger the antikickback statute. Drugmakers were encouraged to adopt basic compliance measures such as staff and physician education, development of policies, appointment of compliance officers and adoption of standards of conduct.
The sometimes cozy relationships between gift-giving pharmaceutical manufacturers and prescription-writing physicians have been a matter of public debate in recent months as a mini-reform movement gets under way (Feb. 4, p. 22). The draft guidance suggests that "a good starting point" for getting into compliance is a voluntary code developed by the Pharmaceutical Research and Manufacturers of America that took effect in July. But the guidance also indicates that PhRMA's code for evaluating such relationships establishes the floor, not the ceiling.
Sponsorships by pharmaceutical manufacturers and other suppliers are a staple of hospital alliance VHA's annual leadership conference, "but it remains to be seen how the draft guidance might impact us," said Lynn Gentry, a VHA spokesman.
Officials at the two largest GPOs, Premier and Novation, which are also grappling with newly minted codes of operating principles they recently adopted, said they had not gone through the 46-page document carefully yet, but they nevertheless voiced few concerns.
"The (inspector general's) guidance in itself will have little effect, if any, on Premier's practices," said Pat Poston, a Premier spokeswoman, in an e-mail. Obviously, Premier will be mindful of the final guidance document as it reviews its policies and practices, she added.
The draft guidance was published in the Federal Register on Oct. 1, launching a 60-day comment period. It is voluntary and also encourages manufacturers to report accurate drug pricing information.
Although the guidance is not mandatory, Lewis Morris, chief counsel to Rehnquist, said he views it as a starting point for a set of best practices. "The guidance itself is not a panacea," said Morris, noting that it would take congressional action or federal regulatory changes to alter the reimbursement formulas governing how Medicare pays for drugs. While he said abuses of those pricing formulas are not widespread, he observed: "Their attention to compliance issues is spotty."