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Wednesday
Jan042017

Compliance Alert: Speaker fees are often toxic

Last month Forest Labs paid $38 million to settle allegations it paid doctors speaker fees for sometimes phony events so they would prescribe its drugs. It was the latest in a string of "speaker fee" cases.

Between 2008 and 2011, the pharma allegedly paid doctors fees that ranged from $500 to $2,500 per event. Some doctors were paid when the speaking events didn't happen or no licensed health professionals attended, the DOJ said.

Forest Labs settled the False Claims Act case without admitting liability.

Here are some other cases with allegations of illegal speaker fees:

In September this year, GSK paid the SEC $20 million to settle China FCPA violations. The SEC said GSK China spent about $17 million on speaker fees in 2012. At least $2 million of that amount was paid to people whose healthcare qualifications couldn't be verified.

Earlier this year, AstraZeneca paid the SEC $5.5 million to resolve FCPA offenses in Russia and China. The China staff paid "speaker fees" to doctors reflected in documentation "containing no meeting date, venue, subject or fees associated with the particular speaker event," the SEC said.

In August last year, medical device maker NuVasive Inc. agreed to pay the United States $13.5 million to resolve allegations that it paid kickbacks to induce doctors to use the company’s spinal fusion system. The alleged illegal payments included promotional speaker fees.

In January 2015, global pharma Daiichi Sankyo Inc. paid the United States and state Medicaid programs $39 million to resolve allegations that it paid kickbacks to doctors so they would prescribe the company's drugs. The DOJ alleged that Daiichi paid doctors kickbacks in the form of speaker fees from 2005 through 2011. Payments went to doctors even when they spoke only to their own staffs at expensive Daiichi-paid dinners, the DOJ alleged.

In 2013, Johnson & Johnson paid $2.2 billion to resolve criminal and civil claims arising from allegations of kickbacks to U.S. doctors and improper marketing claims about three of its prescription drugs. The DOJ alleged that a J&J subsidiary, Janssen Pharmaceuticals, paid speaker fees to doctors to influence them to write prescriptions for Risperdal.

In 2010, Novartis paid $237.5 million to resolve civil allegations over kickbacks paid to doctors to prescribe six of the company's drugs. Novartis allegedly paid doctors "honoraria" of between $1,500 and $2,000 to speak at physician "events" about the benefits of Novartis' drugs. Some doctors earned as much as $150,000 a year in honoraria. In 2007 alone, Novartis paid $9.5 million to doctors through its speakers bureau. Many of the doctors selected as speakers had no publications or teaching positions.

Several speakers, the civil complaint against Novartis alleged, "had difficulty with English. Other speakers were simply very poor communicators." Physician attendance at the "events" was sparse -- often just one or two other doctors. The venues were sometimes tables at restaurants, during the dinner hour, although the DOJ alleged that Novartis never really checked who attended or where the events were held.

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Richard L. Cassin is the publisher and editor of the FCPA Blog.

Reader Comments (2)

Speaker Fees, sending invitations and/or inviting Doctors and medical aid professional for trade and professional symposiums are basic marketing and techniques used by pharmaceutical industries are not uncommon. The trajectory goes back to decades and as old as Himalayas.
Marketing and Sales personnel have been always on the prowl to find and see what their competitors are/ are not doing and offering perks to the medical professional. Speaker fees is only one part of slice of the pizza. During my stint with pharmaceutical industry in third world countries during 80s and 90s, these kinds of fees, indirect bonuses, travel and other emoluments were classified as marketing expenses even though the outcome of these expenses were never quantified. In some cases, competition even went to the length of classifying and disguising these kinds of fees and expenses as Consultants’ fees under the blessings of Top Managements of local subsidiaries in cahoots with Area Vice Presidents of Home/Head offices. The origins of these kinds of items (TOXIC?) lies mainly at C suite.
January 4, 2017 | Unregistered CommenterSubash Murray
This all comes down to integrity at all levels of the company. Any manager that would think this kind of payments okay and a bona fide marketing instrument should be considered a major compliance risk.

Speaker fees are fine if they are a reasonable remuneration for a legitimate speaking arrangement, for someone who adds value to the event. The fees paid in this article have nothing to do with speaking, but are sums paid to either gain an unfair advantage or at least render the recipient unfairly biased towards the products of the company paying.

In my opinion the title of this article gives speaker fees a bad rep, when it should be pointing out that bribes are disguised in many different ways, among which as speaker fees.

No matter what they are called, payments which are not representing a bona fide payment for a bona fide service, whether they are called consultancy fees, speaker fees or travel expenses are all toxic and should be avoided at all costs.
January 5, 2017 | Unregistered CommenterWendy Bouman

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