In the BU Law School Health Care Fraud and Abuse seminar, the topic this week is the anti-bribery law known as the Anti-Kickback Act, a criminal statute. The law prohibits the solicitation, receipt, or offering of “any remuneration,” direct or indirect, in cash or in kind between a vendor of drugs or devices and a provider (doctor or hospital) if such remuneration is tied in some way to referrals of business. It is a sweeping statute, designed to stop economic influences from driving physicians’ medical decisions.
There are all sorts of cases that have arisen under this law, from brazen cash-under-the-table bags of cash to much more subtle forms of “inducement.” Regulated industries have adopted voluntary codes of conduct on this topic, and virtually every pharmaceutical company compliance plan addresses this issue in some form or another. But still companies keep getting in trouble.
Part of the reason is that very few companies have adopted any alternative to the traditional eat-what-you-kill model of compensating their sales representatives. Generous bonus structures usually allow sales reps to greatly increase their compensation if they tear the cover off the ball in selling the product. Reps who hit high numbers that are out of line with their peers are often held up as heroes rather than being subjected to scrutiny about how they achieved such anomalous results. Reps who don’t push the envelope are often treated as laggards or simply let go.
One thing should be clear, though. It is not the sales reps who drive the numbers game; they are simply the troops following the orders. Sales targets are put in place by management, who often has investor and Wall Street expectations in mind. So there is an inherent tension between profit maximization and compliance with the law. Companies that have gotten in trouble with the AKA have failed to manage that tension.
For class this week, the students were given the following assignment to consider: “Assume that there are two similar products on the market, bioequivalent and the same in every way that matters (safety, efficacy, price, ease of administration). They are made by two competing companies who care very much about market share and are willing to be very aggressive in making sure that the other company doesn’t increase its market share to their detriment. The question arises: how can we get more doctors to write our drug rather than the competitor’s? In light of the AKA, what can you do to get their attention and potentially influence their prescription writing practices, without running afoul of the AKA?
Major advertising expenditures, both in television, trade journals, magazines and social media.
Attractive branding and naming of the product.
Making targeted charitable donations to earn goodwill in the community of patients and providers.
Hiring (or continuing to hire) very good looking, outgoing, friendly sales reps. (This suggestion was partly in jest, but only partly!)
Offering free screenings to patients.
Offering direct-to-consumer coupons to prospective patients.
Determining whether any beneficial arrangements can be made with third parties, such as pharmacies, group purchasing associations, wholesalers, and pharmacy benefit managers.
Welcome to the world of trying to make a profit while staying out of serious trouble. It’s tricky out there!