WASHINGTON — The government warned pharmaceutical companies on Monday that they must not offer any financial incentives to doctors, pharmacists or other health care professionals to prescribe or recommend particular drugs, or for switching patients from one medicine to another.
The warnings came as the government informed the industry that many practices commonly used in the marketing and sale of prescription drugs could run afoul of federal fraud and abuse laws.
Specifically, the government said that drug makers could not offer incentive payments or other “tangible benefits” to encourage or reward the prescribing or purchasing of particular drugs by doctors, health plans or companies that manage drug benefits for employers and insurers.
Aggressive marketing is the norm in the pharmaceutical industry. For years, drug makers have treated doctors to free Broadway plays, weekend trips, expensive meals and other lavish perks. Many companies have rewarded middlemen, known as pharmacy benefit managers, for putting their products on lists of recommended drugs, known as formularies. Some companies have also rewarded doctors and drugstores for switching patients from one medication to another.
Similarly, doctors in a position to influence the prescribing of drugs for large numbers of patients have been retained as advisers and consultants to drug manufacturers.
The government said it was concerned about such arrangements because they could improperly drive up costs for Medicare and Medicaid, the federal health programs for 75 million people who are elderly, disabled or poor. The federal government spends $400 billion a year on the two programs combined, and the cost is expected to double in 10 years.
The new standards, the first of their kind, were issued by Janet Rehnquist, inspector general of the Department of Health and Human Services, as guidance to the pharmaceutical industry. While the standards do not have the force of law, drug makers that flout them are more likely to be investigated and prosecuted for violations of federal fraud and kickback statutes.
“In today’s environment of increased scrutiny of corporate conduct and increasingly large expenditures for prescription drugs,” Rehnquist said, “it is imperative for pharmaceutical manufacturers to establish and maintain effective compliance programs.”
The public will have 60 days to comment on the standards. The government may revise them in the light of those comments.
Rehnquist said that every drug company should appoint a compliance officer, establish a hotline to receive complaints of fraud and abuse and consider paying
rewards to employees who report misconduct.
Under the new standards, companies are responsible not only for their own employees, but also for sales agents and contractors who “engage in improper marketing and promotional activities” on their behalf.
U.S. tells drug makers not to use incentives
Daily Emerald
September 30, 2002
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