In the alert, OIG sets forth examples of allegations relating to speaker programs that have arisen in civil and criminal cases that the federal government has pursued against both individual healthcare providers and companies under the Federal Anti-Kickback Statute (AKS) and False Claims Act (FCA). The alert cites instances in which companies were alleged to have “rewarded [high-prescribing healthcare providers, or HCPs] with lucrative speaker deals” or to have “conditioned speaker remuneration on sales targets.”3 OIG also cited events held at “entertainment venues” or “high-end restaurants where expensive meals and alcohol were served.”4 Further, the alert identifies characteristics that, separately or in the aggregate, “potentially indicate a speaker program arrangement that could violate the anti-kickback statute,”5 including circumstances where “alcohol is available or a meal exceeding modest value is provided”; the location of a program is “not conducive to the exchange of educational information,” such as “restaurants” or “sports venues”; “the company sponsors a large number of programs on the same or substantially the same topic or product” where “no new medical or scientific information” has arisen; and “HCPs attend programs on the same or substantially the same topics more than once.”6
The factors identified by OIG are familiar, but the alert goes farther than and contradicts prior statements in suggesting speaker programs by their very nature are ill-advised, present serious fraud risks, and should be abandoned. According to the alert, “[c]ompanies should assess the need for in-person programs given the risks associated with offering or paying related remuneration and consider alternative less-risky means for conveying information to HCPs.”7
Regulated companies have sponsored speaker programs for many years. Such programs, properly executed, are legal under both the AKS and the Federal Food, Drug, and Cosmetic Act. In the past, speaker programs have been the subject of scrutiny under the AKS on the ground that the payments to speakers and meals or other value to attendees qualify as remuneration that may be intended to induce or reward referrals. In this most recent alert, OIG goes farther, expressing skepticism about “the educational value of such programs,”8 suggesting that “one purpose” of the programs is to induce prescriptions of the manufacturer’s products, and encouraging industry to find other ways to communicate medical or scientific information.
The alert is also explicitly premised on the idea that speaker programs can negatively affect patient care. HCPs who receive remuneration to speak at or attend such events “may skew their clinical decision making in favor of their own and the company’s financial interests, rather than the patient’s best interests,”9 according to OIG.
The OIG Special Fraud Alert raises important questions under two provisions of the U.S. Constitution. In particular, in burdening manufacturer speech provided through speaker programs that they sponsor, the alert appears to conflict with the Free Speech Clause of the First Amendment. The alert also appears to conflict with the Due Process Clause of the Fifth Amendment because it does not give adequate notice with respect to the circumstances in which speaker programs will be regarded as prohibited by the AKS.
First, OIG’s position, if considered in a First Amendment litigation context, would require heightened judicial scrutiny because it “imposes a speaker- and content-based burden on protected expression.”10 The alert “disfavors specific speakers, namely pharmaceutical [and medical device] manufacturers,”11 by assuming that programs sponsored by manufacturers are “inherent[ly] fraud[ulent]”12 and lacking in “educational value.”13 Indeed, in the alert, OIG openly favors other types of speakers, stating that HCPs should instead obtain their information from sources such as “third-party educational conferences, medical journals, and more.”14 From the constitutional standpoint, this rationale is provocative, because it burdens a “narrow class of disfavored speakers”15 based on the motivation for the speech. Nor does the alert wrestle with the fact that properly executed speaker programs disseminate scientifically supported, truthful, nonmisleading information to HCPs about drugs and medical devices. As the Supreme Court has acknowledged, accurate “speech in aid of pharmaceutical marketing ... is a form of expression protected by the Free Speech Clause of the First Amendment.”16
Further, the alert also reaches beyond commercial speech, covering both speaker programs that disseminate only nonpromotional information and programs that solely pertain to a “disease state.”17 Nonpromotional information about drugs and medical devices is, at minimum, subject to an FDA policy expressly recognizing a manufacturer’s entitlement to engage in “scientific exchange.”18 Speaker programs that are focused on disease states or otherwise do not promote any particular drug or device are not subject to regulation by FDA, and government efforts to limit those types of programs are subject to demanding judicial scrutiny under the First Amendment.19
Second, the alert raises serious Due Process concerns because it fails to provide clarity to companies regarding the types of speaker programs that could potentially subject them to AKS liability. OIG identifies a list of suspect “characteristics” but is careful to note its list is for “illustrative” purposes and is “not exhaustive.”20 Nor is “the presence or absence of any one of the factors ... determinative of whether a particular arrangement would be suspect under the anti-kickback statute.”21
Fundamental notions of due process require that companies be on notice of the type of conduct that will subject them to criminal or civil penalties.22 There is no question that a company faces severe penalties if found to have violated the AKS. Criminal conviction “lead[s] to mandatory exclusion from Federal health care programs, including Medicare and Medicaid.”23 Short of criminal conviction, “OIG may also initiate administrative proceedings to exclude persons from the Federal health care programs and impose civil money penalties.”24 As one court recently noted, “where a conviction can result in exclusion from healthcare programs, likely a death knell for any company, it is ... important for the regulatory and law enforcement regime to clearly spell out what is and is not prohibited conduct.”25
Notice is particularly important where First Amendment freedoms are involved because clarity “is necessary to ensure that ambiguity does not chill protected speech.”26 Due to the vagueness of OIG’s “illustrative” list, companies may be reluctant to host speaker programs at all lest OIG infer illicit motives warranting AKS enforcement.
The OIG alert itself lacks legal effect but is nonetheless significant in its impact on regulated entities. It signals a heightened focus on firms using speaker programs for potential scrutiny under federal statutes and expands the degree of risk associated with such programs. Consequently, manufacturers may be less inclined to allocate resources for the support of such programs. The alert implies that information that could be provided by speaker programs would be accessible via alternative channels — an assumption that is subject to question. Accordingly, a firm that has been targeted for enforcement is entitled to raise First and Fifth Amendment objections and defenses to any government effort to burden accurate scientific or commercial speech provided through speaker programs.
A vehicle for a direct, proactive challenge raising the constitutional issues presented by the OIG alert arises out of recent HHS actions intended to improve the use of guidance documents. The department published good guidance practice regulations as part of its regulatory reform initiative on December 7, 2020.27 Prerule guidance is invalid under those regulations unless republished on an official online guidance portal.28 The OIG alert has been posted to the HHS guidance portal and therefore remains in effect.29 A challenge to the alert could be advanced through the new petition process established under the regulations.30 The preamble accompanying the regulations provides that petition responses are final agency action subject to judicial review.31 In principle, therefore, an aggrieved party could request that OIG revise or withdraw the alert on constitutional or other grounds, and that party could cite any denial of such a petition in asserting its entitlement to litigate the First and Fifth Amendment issues presented by the alert.
Drug and medical device companies have the most accurate and up-to-date information regarding their products and therefore are best positioned to facilitate the sharing of that information with HCPs.32 As the Supreme Court has recognized, “in the fields of medicine and public health, where information can save lives,” the free flow of information is critical to doctors and patients alike.33 Whereas OIG claims the alert is “not intended to discourage meaningful HCP training and education,”34 it seems highly likely to have that effect, thus chilling constitutionally protected speech. Because the alert is written in terms of a list of factors that OIG regards as potentially problematic, without offering more definitive methods of distinguishing permitted from permissible programs, OIG’s statement also raises questions of consistency with the Due Process Clause of the Fifth Amendment.
1 Dep’t of Health & Human Servs. Office of Inspector Gen., Special Fraud Alert: Speaker Programs at 1 (Nov. 16, 2020), https://oig.hhs.gov/fraud/docs/alertsandbulletins/2020/SpecialFraudAlertSpeakerPrograms.pdf.
2 Special Fraud Alert at 2–3.
3 Id. at 1–2.
4 Id. at 2.
5 Id. at 5.
6 Id. at 5–6.
7 Special Fraud Alert at 7.
8 Id. at 3.
9 Id. at 4.
10 Sorrell v. IMS Health Inc., 564 U.S. 552, 570–71 (2011).
11 Id. at 564.
12 Special Fraud Alert at 2.
13 Id. at 3.
14 Id. at 4.
15 Sorrell, 564 U.S. at 573; see Nat’l Inst. of Family & Life Advocates v. Becerra, 138 S. Ct. 2361, 2375–76 (2018) (speech restrictions in the healthcare context will often fail to survive even intermediate scrutiny when they limit private parties’ speech in favor of speech preferred by the government).
16 Sorrell, 564 U.S. at 557; United States v. Caronia, 703 F.3d 149, 167 (2d Cir. 2012) (holding that truthful and nonmisleading pharmaceutical promotional claims are protected by the First Amendment).
17 Special Fraud Alert at 3.
18 21 C.F.R. § 312.7(a).
19 See Caronia, 703 F.3d at 163 (noting that “regulation of commercial speech — expression solely related to the economic interests of the speaker and its audience — [is] subject to intermediate scrutiny”).
20 Special Fraud Alert at 5.
22 F.C.C. v. Fox Television Stations, Inc., 567 U.S. 239, 253 (2012) (“A fundamental principle in our legal system is that laws which regulate persons or entities must give fair notice of conduct that is forbidden or required”).
23 Special Fraud Alert at 3.
25 United States v. Facteau, No. 15-CR-10076-ADB, 2020 WL 5517573, at *1 (D. Mass. Sept. 14, 2020).
26 Fox Television Stations, 567 U.S. at 254; see also NAACP v. Button, 371 U.S. 415, 432–33 (1963) (noting that “standards of permissible statutory vagueness are strict in the area of free expression. ... Because First Amendment freedoms need breathing space to survive, government may regulate in the area only with narrow specificity”).
27 85 Fed. Reg. 78770.
28 Id. at 78786 (45 C.F.R. § 1.4(a)(2)).
29 The alert is available at https://www.hhs.gov/guidance/document/special-fraud-alert-speaker-programs.
30 85 Fed. Reg. at 78786-87 (45 C.F.R. § 1.5).
31 Id. at 78782-83 (“Under the proposed rule, HHS's response to any such petition would be considered final agency action reviewable in court, because it would mark the consummation of HHS's decision-making process and legal consequences flow from the response to the petition.” (citing Appalachian Power Co. v. E.P.A., 208 F.3d 1015, 1022 (D.C. Cir. 2000)).
32 Caronia, 703 F.3d at 167 (“it only furthers the public interest to ensure that decisions about the use of prescription drugs ... are intelligent and well-informed”).
33 Sorrell, 564 U.S. at 566.
34 Id. at 6.
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