Beware of "Speaker Fees" and other Kickbacks

Speaker programs are a widely used marketing tool in the pharmaceutical business. Drug makers enlist doctors to give paid talks about the benefits of a product to other potential prescribers, at a clinic or over dinner in a private room at a restaurant. But Krane and some fellow rookie reps were already getting a clear message from Burlakoff, she said, that his idea of a speaker program was something else, and they were concerned: It sounded a lot like a bribery scheme.

One of the most common varieties of False Claims Act cases, resulting in some of the biggest judgments, are kickback cases. Doctors, pharmacies, hospitals, etc. are not allowed to take gifts, including cash, that may influence their medical judgment. Patients are entitled to unbiased advice. But, for example, if a doctor gets a cut every time he sends a patient to John Doe Hospital, he is probably going to direct his patients to that hospital.

The ostensible purpose of a pharma-speaker program, as Krane understood it, was to spread the word about the drug through peer-to-peer marketing. With “honorariums” changing hands, the potential for a subtle corruption is clear, but Burlakoff was not subtle. He told Krane, she said, that the real target was not the audience but the speaker himself, who would keep getting paid to do programs if and only if he showed loyalty to Subsys. It was a quid pro quo or, as the Department of Justice later called it, a kickback. “He boiled it right down,” Krane recalled: We pay doctors to write scripts. That’s what the speaker program is.

If a doctor is receiving benefits from a pharmaceutical company, he is more likely to prescribe drugs from that company, even if the patient doesn't need them. And if the doctor is seen as prescribing more drugs, then the pharmaceutical company may be inclined to give even more benefits. It is this type of kickback that has not only defrauded Medicare and Medicaid out of millions of dollars, but, as this investigative report from Evan Hughes of the New York Times delves into, it has helped to fuel pill mills and the national opioid crisis.

The speaker events themselves were often a sham, as top prescribers and reps have admitted in court. Frequently, they consisted of a nice dinner with the sales rep and perhaps the doctor’s support staff and friends, but no other licensed prescriber in attendance to learn about the drug. One doctor did cocaine in the bathroom of a New York City restaurant at his own event, according to a federal indictment. Some prescribers were paid four figures to “speak” to an audience of zero.

If you are in the medical field, be on the lookout for such arrangements that appear to pay a medical practitioner something for nothing, or that are out of whack with what you would expect for the service being provided, especially if the payments are based on volume (e.g., the more referrals/prescriptions, the bigger the payment). These agreements frequently violate federal Stark and Anti-Kickback laws and can be the basis of a False Claims Act case.