On Friday, August 6, 2021, Pharmaceutical Research and Manufacturers of America (PhRMA), the preeminent trade association representing pharmaceutical companies, announced revisions to its Code on Interactions with Health Care Professionals (PhRMA Code) that will become effective January 1, 2022. The PhRMA Code is a voluntary code for pharmaceutical companies, but its standards are considered to be best practices and are commonly adhered to by pharmaceutical and medical device companies. Moreover, some states (e.g. California, Massachusetts, Nevada, and the District of Columbia) require pharmaceutical companies to adopt a code consistent with the PhRMA Code.

The changes to the PhRMA Code are undoubtedly in response to the November 16, 2020 Special Fraud Alert from the Department of Health and Human Services’ Office of the Inspector General (OIG), on “fraud and abuse risks associated with… speaker programs.” (For additional information on the OIG’s Special Fraud Alert, please see our November 25, 2020 blog post.) Speaker programs are a common practice in the industry and generally entail pharmaceutical and medical device companies retaining health care professionals (HCPs) to speak or present on the companies' drugs or devices to educate their peers.

The OIG’s Special Fraud Alert warned that speaker programs may violate the federal Anti-Kickback Statute if they are designed “to induce HCPs to prescribe or order (or recommend)…the companies’ products.” The Special Fraud Alert discussed the “educational value of such programs,” and argued that many occur “under circumstances that are not conducive to learning.”

In its announcement, PhRMA highlights the importance of these speaker programs and provides that “company-sponsored speaker programs provide important substantive educational information about the benefits, risks and appropriate uses of company medicines and related disease states.” The PhRMA Code, however, emphasizes that speaker programs must exclusively serve “bona fide educational needs among attendees.” Specifically, the PhRMA Code includes the following updates:

• Attendance: The PhRMA Code deems repeat attendance by a HCP at a speaker program “on the same or substantially the same topic where a meal is provided” as “generally not appropriate.” Likewise, attendance at a program after serving as a speaker for one “on the same or substantially the same topic” is “not appropriate.” The PhRMA Code reiterates that “attendance by friends, significant others, family members and other guests of a speaker or invited attendee is not appropriate.” Exceptions to these exclusions only apply if a bona fide educational need can be established on the part of the party in question.

• Commensurate Meals: Though the PhRMA Code does not expressly disapprove of meals provided as an “incidental business courtesy,” it stresses that any meals must be “modest as judged by local standards, as well as subordinate in focus to the educational presentation.”

• Alcohol: The PhRMA Code precludes pharmaceutical and medical device companies from paying for or providing alcohol during speaker programs.

• Hosting Venues: The PhRMA Code requires the selection of modest venues for hosting, ruling out “extravagant” third-party venues such as “luxury resorts, high-end restaurants, and entertainment, sporting, or other recreational venues or events.”

• Speaker Selection: Pursuant to the aim of speaker programs, the PhRMA Code emphasizes that “speaking arrangements are neither inducements nor rewards for prescribing a particular medicine or course of treatment,” and similarly that pharmaceutical and medical device companies should not select speakers “based on past revenue that the speaker has generated or potential future revenue that the speaker could generate.” Instead, pharmaceutical and medical device companies should evaluate potential speakers’ expertise, credentials, communication skills, and other relevant criteria.

Given that the government has long vigorously pursued enforcement actions against pharmaceutical and medical device companies for alleged kickbacks paid to physicians in the form of meals and entertainment, often in conjunction with speaker programs and research events, pharmaceutical and medical device companies should consider whether their policies and processes need revision to reflect the changes to the PhRMA Code.

Co-authored by Joe Ort.