Doctors interest of
Recipients of suspect drug-company payments drawing attention of federal fraud enforcers
It takes two sides to create a kickback. But until recently, the recipients of illegal payments in healthcare have faced far fewer legal consequences than the huge corporations accused of handing out the forbidden lucre. Many possible reasons have been offered as to why physicians and other healthcare providers have historically faced little, if any, scrutiny in cases of alleged kickbacks and bribery and subtler forms of manipulation of drug-prescribing patterns. But that may be changing.
The federal government’s focus on waste in healthcare spending has never been more intense, owing to the growing cost pressures and concern over Medicare’s future. Insiders in the enforcement and legal defense communities in healthcare say there’s reason to expect the scrutiny will trickle down to indi- vidual physicians and other providers, though such cases are often tough to prove in court.
“Even though there have been a lot of highprofile prosecutions and other civil and criminal agreements with companies, the physicians or providers absolutely should not be lulled into believing that they are not targets,” said Roderick Thomas, chairman of the whitecollar and government investigations practice for Wiley Rein in Washington. “It is critically important that physicians have a strong compliance program.”
Hospitals, including many academic medical centers, have begun to monitor their physicians’ financial relationships through reporting programs that require disclosures of compensation from healthcare manufacturers. One such system is the Cleveland Clinic, which in 2008 began publishing physicians’ compensation from industry and equity ownerships in medical product companies (July 5, 2010, p. 6).
“It behooves academic medical centers to stay on top of this kind of information and consider what kinds of relationships are appropriate and not appropriate for their
physicians,” said Harvard assistant professor Aaron Kesselheim, also a lawyer and an internist in pharmaco-economics at Brigham and Women’s Hospital, Boston.
“They don’t like it when they open the newspaper and see a story about one of their physicians’ financial entanglements that they didn’t know about,” he said.
Billions of dollars have flowed into federal coffers in recent years from pharmaceutical companies accused of using underhanded tactics to manipulate how doctors prescribe drugs, whether though alleged violations of the AntiKickback Statute, the False Claims Act or the Foreign Corrupt Practices Act, or other laws.
This month, Pfizer agreed to pay $60 million to settle allegations without admitting wrongdoing that it had long maintained a system of bribing doctors in eight countries to prescribe its drugs. In July, GlaxoSmithKline agreed to pay a record $3 billion in fines and settlements in an agreement that included the corporation pleading guilty to misbranding drugs by publishing misleading medical research and paying influential physicians to promote off-label uses (See chart).
Dr. John Santa, a former internist who is director of the Consumer Reports Health Ratings Center, said physicians who take money to allow drugmakers to boost sales through inappropriate means should be held accountable, especially if they work for the manufacturers directly or as highly paid “de facto” employees.
“It’s bad for the profession,” Santa said. “And the profession needs to realize that doctors who do inappropriate things and, as a result, make a lot of money should be held to criminal standards, whether they do it individually or in a company.”
Santa said that even the doctors who lend their influence to a drug company by publicly reciting marketing points ought to share blame when problems with the drugs turn up: “They’re doctors that other doctors listen to. And in my mind, that is a (group) that we don’t hold accountable. In part, we haven’t known who they are. We are going to know who they are now.”
In 2008, HHS’ inspector general’s office started including requirements in corporate integrity agreements with large drug companies that any and all payments to doctors be publicly disclosed on their websites.
Two years later, a similar requirement was enshrined industrywide in the Patient Protection and Affordable Care Act. Known as the Physician Payments Sunshine Act, the reform provision kicks in March 31, 2013, and will require all drug companies and devicemakers to disclose payments to doctors. Those disclosures will be published online annually, according to the law (Dec. 19, 2011, p. 12).
Mary Riordan, a senior counsel to HHS’ inspector general’s office who has helped write corporate-integrity agreements with several large drug companies, including GSK’s in July, said public disclosures may lead to patients questioning their physicians’ financial arrangements with drugmakers.
“And sometimes those are perfectly legitimate relationships for a doctor to have with a manufacturer,” Riordan said. “There are other situations where the relationship between the doctor and the manufacturer is suspect.”
Experts say large companies offer much more attractive targets, financially and in the pursuit of the wider goal of changing industry practices. Companies may also be easier to dig up incriminating evidence against, and they may actually tend to want to settle a case faster because the professional damage to a corporation may not be as severe as to an individual doctor.
Riordan acknowledged that she has heard representatives for pharmaceutical companies grouse about the lack of cases filed against doctors when manipulation of medical judgment is alleged.
“My response to that is typically, if there is a doctor you’d like us to look at, give us a name,” she said.
Spokespeople with the American Medical Association and the Pharmaceutical Research and Manufacturers of America did not return requests for interviews.
Several large healthcare manufacturers with U.S. operations are currently under investigation for alleged transactions with doctors in other countries.
In November 2009, the Justice Department’s Assistant Attorney General for the Criminal Division, Lanny Breuer, announced a new focus on healthcare companies that do business overseas. The investigations would be conducted by a group of prosecutors with deep experience using the Foreign Corrupt Practices Act, he said.
At least half a dozen drugmakers have reported receiving requests for information related to FCPA probes, including Teva Pharmaceuticals, which disclosed a probe just this month.
On Aug. 7, New York-based Pfizer and its subsidiary Wyeth agreed to pay more than $60 million to settle allegations without admitting wrongdoing that the two companies maintained an extensive program to bribe doctors to buy its products in countries including Bulgaria, China, Croatia, the Czech Republic, Italy, Kazakhstan, Russia and Serbia.
A statement from Pfizer said the company self-reported the violations and noted that investigators praised its “thorough and responsive” handling of the allegations.
The first pharmaceutical maker to settle such a case was New Jersey-based Johnson & Johnson, which in April 2011 took responsibility for the bribing charges it self-reported in 2007 that its employees in Greece, Poland and Romania violated the law by bribing doctors to induce them
to buy and use the company’s drugs and devices.
The U.S. Securities and Exchange Commission complaint against J&J quoted a 2005 email from a vice president at the company’s DePuy subsidiary as saying that no one in the industry complied with European antibribery laws, and that doing so would cause a corporation to lose 95% of its business.
The J&J deferred-prosecution agreement with the U.S. government requires it to cooperate with domestic and foreign investigators examining the conduct of its own employees and those of other companies, but experts say it would be rare for actual doctors to be prosecuted in those cases. A company spokesman declined to comment.
Jennifer Fischer, an associate attorney with Arent Fox in Washington, said jurisdictional issues pose a barrier to such cases. The FCPA applies to corruption of government officials, but prosecutors can use it to include doctor-bribery in countries that have government-run healthcare systems.
“The physicians that are receiving the payments or remunerations are usually employed by healthcare facilities in other countries, so they don’t come under U.S. jurisdiction,” Fischer said. “Even assuming the government wanted to go after the physicians— which it’s not clear that they do, considering that they don’t do much in the Anti-Kickback realm—they couldn’t.”
Beyond mere jurisdictional issues, cases against doctors pose tougher challenges and provide smaller rewards than charges against the companies.
Jacqueline Wolff, who co-chairs the corporate investigations and white-collar defense group at Manatt, Phelps & Phillips in New York, said the chances are better of digging up incriminating evidence against a company that might have hundreds of employee e-mail accounts to scour for messages casually discussing kickback arrangements, as compared with a single doctor’s correspondences.
And under the federal Anti-Kickback Statute, a prosecutor must prove a doctor knew he or she had willingly received or solicited payments in exchange for purchasing goods that were later billed to Medicare—a high evidentiary bar to meet without direct evidence such as e-mails.
“You’ll have a doctor who will say, ‘I have been given a consulting agreement because I’m an expert in the field, and I prescribe this drug, and I believe in this drug, and that is the only reason why,’ ” Wolff said. “That makes it a very much more difficult case to bring against a physician.”
Defense attorneys also noted that while government officials might not admit it publicly, prosecutors stand to gain more financially from prosecuting pharmaceutical companies that pay out billions in settlements— the so-called “deep pockets” rationale.
“I don’t think even the government would disagree that while there is fraud and abuse out there to be gone after, it has been a big moneymaker for the government,” said Arent Fox’s Fischer. “There is a lot of money to be made from big corporations. But even if a physician is making really good money, he can only pay so much.”
However, Lewis Morris, the longtime chief counsel for HHS’ inspector general who retired in April, reminded one audience at an American Bar Association physician legal issues conference in Chicago in June 2011 that “it takes two to have a kickback.”
In his remarks, Morris acknowledged that although the office had not been as effective at looking at the physicians who receive kickbacks, it had started requiring companies settling certain schemes to cooperate in future investigations of payment-seeking doctors.
Scott Taebel, a Milwaukee-based Hall Render attorney who focuses on compliance work including Anti-Kickback allegations, said industry lawyers have taken note of the increased willingness to at least gather evidence on individuals’ actions during cases against major corporations.
“It does seem to be more focused on the manufacturer or the hospitals, but the tide may be turning,” he said.
Pfizer paid $60 million this month to settle allegations without admitting wrongdoing that it had maintained a system of allegedly bribing doctors to prescribe its drugs. The company said the government praised its self-reporting of the accusations.
HHS’ inspector general’s office in 2008 included requirements in agreements with large drug companies that all payments to doctors be publicly disclosed.