New OIG Advisory Opinion Impacts Funding of Continuing Education Programs by Pharmaceutical and Medical Device Companies

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OIG Advisory Opinion 22-14 (June 29, 2022) could have significant implications for how life science companies (manufacturers of pharmaceuticals, medical devices and diagnostic tests) contribute to continuing education (“THIS”) programs for health care providers (“Health professionals”). Specifically, in AO 22-14, the Office of the Inspector General for the U.S. Department of Health and Human Services (“BIG”) rejects a plaintiff’s proposal to allow pharmaceutical and medical device industry sponsorship of a CE program for healthcare professionals, noting that it could generate prohibited compensation under the federal anti-bribery law.

Background

The Applicant in Advisory Opinion 22-14 is an ophthalmology practice (“Applicant”). Local optometrists from outside the practice routinely refer patients to the applicant for surgical procedures, after which the applicant and the local optometrist co-manage the patient’s care.

The applicant wishes to create two continuing education programs for optometrists – a one-day and an evening educational program taught by experienced faculty (either applicants’ practitioners or external faculty) on new technologies and pharmacological practice in the treatment of ophthalmic patients. CE programs would provide several hours of continuing education credit for optometrists, and the applicant designed the program to meet state requirements for continuing education credits for optometrists to maintain licensure. The program is open to all local optometrists and is not dependent on whether the optometrist has previously referred patients or plans to refer patients to the applicant.

Proposals

The applicant offers four proposals on how to organize and pay for the CE program:

  • Proposal A – Participating optometrists pay an enrollment fee that covers the estimated fair market value of all program costs and expenses. If the income from the registration fees does not cover the expenses of the program, the applicant will cover them. If revenues exceed expenses, the applicant will donate the excess to charity. The applicant has designed the program costs and fees so that any overruns or shortfalls will not be material.

  • Proposal B – Optometrist participants do not pay any registration fees to attend; instead, the applicant covers all program costs.

  • Proposal C – Optometrist participants do not pay any registration fees to attend; instead, the applicant covers all program costs. The applicant is also seeking industry sponsorship funding in the form of grants from pharmaceutical and medical device manufacturers.

  • Proposal D – Participating optometrists pay a registration fee; The applicant is also seeking industry sponsorship funding in the form of grants from pharmaceutical and medical device manufacturers.

Analysis

The OIG recognizes that CE programs are a “pillar” and valuable tools for “updating [HCPs’] technical knowledge and skills and to learn about new or changed diagnostic and treatment options. The OIG also recognizes that obtaining a state license often requires the completion of continuing education hours during the year. But, despite the educational nature of CE’s programs, they may also “constitute a means of compensating referral sources in violation of federal anti-bribery law.”

The OIG notes that each proposal involves compensation that engages federal anti-bribery law (42 USC § 1320a-7b). The applicant offers something of value (continuing education programs and related credits) to local optometrists who are able to refer patients. The applicant also offers compensation to the professors in the form of honoraria. Additionally, the OIG also notes that Proposals C and D also include compensation for the applicant, external faculty members, and participants from pharmaceutical and medical device companies in the form of industry sponsorships.

To analyze each arrangement, the OIG begins by turning to its November 2020 Special Fraud Alert on Speakers’ Programs, noting that while these programs have an “overall difference in scope” from current proposals, the OIG is reviewing the “suspicious features” it identifies in the November 2020 Special Fraud Alert as instructive. Namely, the OIG considers whether:

  • A company sponsors a speaker program with little or no background information

  • Alcohol is available or a meal of greater than modest value is provided to participants

  • The program takes place in a place that is not conducive to the exchange of educational information

  • The selection of speakers or HCP attendees is based on past or expected income that such individuals have or will generate by prescribing or ordering the Company’s products; and

  • A company pays HCP speakers more than fair market value for speaker service or pays compensation that takes into account the volume or value of past business generated or potential future business generated by HCPs.

Overall, the OIG concludes that the CE program would not be considered “suspicious” under any of these criteria. The OIG draws attention to the educational content of the applicant’s program; expert teachers; modest meals and non-alcoholic refreshments; a suitable location such as an office or conference space; no recreational content; participation is open to all local optometrists and not based on past or anticipated referral models; external professors would be selected on the basis of their expertise and not references; and professors would receive fees commensurate with the fair market value of their services.

Next, the OIG reviews each compensation stream as part of the proposals. In a decision that could significantly impact the life sciences industry and how it sponsors continuing education programs, the OIG concludes that only proposal A—in which local optometrists pay their own way and the applicant does not not seek industry sponsorship – would pass rally under anti-bribery law.

According to proposals B and C, no registration fees would be charged and the continuing education program would be free and entirely financed by the applicant (proposal B) or by the industry (proposal C). The OIG concludes:

  • Proposition B: With respect to applicant funding of enrollment fees, there is an increased risk that such compensation will incentivize participants and faculty to refer patients, including federal health care program recipients, to applicant and results in inappropriate referral of patients.

  • Proposition C: With respect to sponsorship of pharmaceutical and medical device companies, there is an increased risk that such compensation will induce the claimant, faculty, and participants to prescribe or order a sponsoring company’s products, including including those payable by federal health care programs, which could result in the conduct of patients or increased costs for federal health care programs.

OIG analysis under Proposition D, however, may have the most significant impact on life sciences companies.

The OIG clarifies that it does not address programs in which a pharmaceutical or medical device company funds an educational grant in support of an independent third-party entity’s CE program. These types of programs, implemented by “arm’s-length entities that are not directly involved in the delivery of patient care (eg, a professional organization),” are routinely subsidized by industry. Rather, the OIG is for programs where a medical practice and “direct referral source for medical device and pharmaceutical company sponsorship” is the CE program organizer. The OIG explains that the industry sponsors under Proposal D pay the costs that the applicant would otherwise have incurred. Additionally, if sponsorships exceed CE program expenses, the applicant’s ability to use those excess funds also constitutes compensation.

The OIG notes a concern that a pharmaceutical or medical device manufacturer rewards prescribing or ordering physicians by requiring a continuing education program organizer to select and compensate these physicians to be continuing education teachers or selecting only top-level physicians as participants in industry-sponsored continuing education programs. .

Therefore, the OIG declines to conclude that there is a low risk of fraud and abuse.

Conclusion

Although the OIG’s advisory opinion can only be invoked by the requester, the agency’s findings regarding the pharmaceutical and medical device industry’s sponsorship of a continuing education program organized and implemented by a health care provider or organization are informative and highlight the increased risk in this area. . Life science companies should proceed with caution, particularly if funding any type of continuing education program organized and implemented by a healthcare provider (for example, funding for grand tours or funding for programs continuing education courses organized by large integrated delivery networks or health systems). (Conversely, medical practices, health systems, IDNs, and other large providers that implement continuing education programs should also pay attention to OIG findings regarding the level and scope of sponsorship and funding for the pharmaceutical and medical device industry.)

It’s unclear if we’ll see an application in the continuing education space; however, life science companies and providers should consider taking steps to review their internal policies and processes for funding and organizing educational programs and adopt appropriate controls to minimize risks in this space.

Originally published by the Washington Legal Foundation’s Legal Pulse blog

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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