UNIVERSITY OF FLORIDA
COLLEGE OF MEDICINE






Interim Vice President for Health Affairs
PO Box 100014
Office of the Dean, College of Medicine
Gainesville, FL  32610-0014
Phone (352) 392-2761
Fax (352) 392-9395

July 6, 1999

MEMORANDUM
 
 
TO:  All Faculty Members
FROM: 
Kenneth I. Berns, M.D., Ph.D.
Interim Vice President for Health Affairs
Dean, College of Medicine

SUBJECT:
 Fraud and Abuse Considerations in Financial Arrangements with Pharmaceutical Manufacturers

    Studies funded by pharmaceutical manufacturers (including "patient registry programs") may be entered into by the University of Florida, College of Medicine.  Because faculty members individually may be asked to do studies by pharmaceutical manufacturers, it is important that they understand that the current regulatory and legal environment regarding these types of financial arrangements is very complex.  Of course, such studies may be entered into only by the College of Medicine and not by individual faculty members.

    There are a number of federal and state laws that regulate financial arrangements related to health care services or between health care related organizations.1   These laws govern both the conduct of the College of Medicine and the conduct of the individual faculty members.  While a physician might not intentionally enter into a prohibited financial arrangement, participation by the College of Medicine or its faculty in certain types of financial arrangements may permit the government to find practices that could result in significant liability to the College of Medicine and/or to the physician who entered into the financial arrangement.

    The College of Medicine is committed to ensuring that its financial arrangements comply with all federal and state laws, regulations, guidelines and policies.  This memorandum is intended to answer several commonly-asked questions that frequently confront College of Medicine faculty members regarding certain types of financial arrangements with pharmaceutical manufacturers.  Please note: many sponsor requests are considered human research that must be submitted to the IRB for approval.  For more information, contact the appropriate IRB office, the College of Medicine Office of Research Affairs  or visit the IRB web site at www.ortge.ufl.edu/irb.
_______________________
1    Federal and state anti-kickback statutes make it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any renumeration to induce referrals of items or services reimburseable by Federal or state health care programs.  Where renumeration is paid purposefully to induce referrals of items or services paid for by Federal or state health care programs, these anti-kickback statutes are violated.  By their terms, these statutes ascribe liability to parties on both sides of an impermissable "kickback" transaction.  For purposes of these anti-kickback statutes, "renumeration" includes the transfer of any of value, in cash or in-kind, directly or indirectly, covertly or overtly.
 
 

FREQUENTLY ASKED QUESTIONS REGARDING FINANCIAL
ARRANGEMENTS WITH PHARMACEUTICAL MANUFACTURERS

Q1:    What Are Some Examples Of Acceptable Financial Arrangements?

Clinical Trial Data Collection

A pharmaceutical manufacturer is conducting an investigator-initiated trial of alternative therapeutic regimens or needs assistance in obtaining patient data in a Phase I or Phase II clinical trial.  The manufacturer pays appropriately negotiated amounts for the College of Medicine’s conduct of, or participation in, the study under a contract with the University.

This type of arrangement would not violate fraud and abuse laws because the remuneration paid to the University is at fair market value and part of a legitimate research project.

Retrospective Data Collection

A pharmaceutical manufacturer is seeking specific data on a particular condition and how patients have responded to various treatment modalities and combinations, including treatment from that manufacturer’s drug(s). The manufacturer pays the University for its participation in the project, including the faculty member's compiling and/or analyzing  of the retrospective data.  The manufacturer pays appropriate negotiated amounts for the College of Medicine’s participation in the study under a contract with the University.

This type of arrangement would not violate fraud and abuse laws because the payment is not intended to influence prescribing or referral activity.  Factors in this arrangement that demonstrate a lack of wrongful intent include: (1) the payment to the University is at a fair market price; (2) the manufacturer is seeking retrospective data on drugs that already have been prescribed and does not reward current prescription activity; and (3) the faculty member is not required to prescribe the manufacturer's drug(s) in order for the University to receive the remuneration.

Q2: What are Examples Of Potentially Questionable Financial Arrangements?
Patient Data Collection for FDA Approved Drug

A pharmaceutical manufacturer is recruiting physicians to obtain data on a particular FDA approved drug that it manufactures. The company offers to pay the College of Medicine for its faculty member’s efforts to enroll patients in a study.  As part of the study, the patient will be prescribed the manufacturer’s approved drug and the faculty member will compile certain data and information as requested by the manufacturer.  The manufacturer may also offer additional or increased remuneration to the College of Medicine based on the length of time that a patient remains enrolled in the study.  In addition, the patient or the patient’s insurance company is billed for the cost of the drug.

Government regulators have taken the position that this type of arrangement violates fraud and abuse laws.  In the past few years, the Office of Inspector General has prosecuted physicians and pharmaceutical manufacturers based on the claim that arrangements such as this violate specific anti-kickback provisions.  Government regulators view the manufacturer’s payments as an improper inducement to the College of Medicine to prescribe the manufacturer’s drug.

Receiving Funds Contingent Upon Resource Utilization or Product Selection

Situation #1
A pharmaceutical manufacturer with a longstanding relationship with the College of Medicine approaches a faculty member indicating that the manufacturer’s continuing support for research (or other similar funding for events that are consistent with the College of Medicine’s academic mission) would be reduced if utilization of the manufacturer’s product were to decline due to the loss of formulary status or other decreased utilization.

Government regulators may view the manufacturer’s ongoing payments as an improper inducement to the College of Medicine faculty to prescribe the manufacturer’s drug because the manufacturer has stated (or inferred) that financial support for the College of Medicine’s academic mission may be at risk if utilization is reduced.

Situation #2
A College of Medicine faculty member requests that Shands add a medication to its formulary.  Further, the faculty member asks Shands to consider the financial contributions made to the College of Medicine by the drug’s manufacturer when Shands performs the financial analysis of the total cost of the drug therapy.  In addition, other faculty request that Shands retain the availability and utilization of competing product(s) due to financial support provided to the College of Medicine by the competing manufacturer(s).

Drug charges to the Medicare program are based on the unit cost of the drug, less any rebates, free goods, or discounts received by the purchaser of the drug (in this case, the hospital.)  All of these price reductions are included in Shands’ cost report and effectively reduce drug charges to Medicare.  However, the funds contributed to research and academic mission support are not included in Shands’ cost report as a reduction against the cost of drugs for purposes of Medicare reimbursement.  Therefore, Shands’ compliance with the wishes of the faculty member could be seen as an inappropriate inducement to utilize a drug reimbursed by the Medicare program.  Linking a drug or service to research funding, donations or other forms of academic support can be viewed as an impermissible “kick-back” if the value of the research funding or other financial support is not passed back to the Medicare program in the form of a cost reduction on Shands’ Medicare cost report.

Q3: Am I at Personal Risk?
Anti-kickback statutes impose liability on all participants of an impermissible "kickback" transaction.  If an improper payment is made as a result of a faculty member’s actions, even if the faculty member did not receive a direct benefit or payment, the faculty member could individually be liable.  Violations of Federal and state anti-kickback statutes can be felonies punishable by fines, imprisonment or both. Conviction may also lead to the faculty members automatic exclusion from Federal and state health care programs, including Medicare and Medicaid.
Q4: What Should I Do Now?
Each faculty member should review and scrutinize all of the financial arrangements with pharmaceutical manufacturers in which they participate in order to detect potential health regulatory fraud and abuse problems.  Attached to this memorandum are some suggested guidelines to follow when screening existing financial relationships or potential future financial relationships with pharmaceutical manufacturers.  The goal of these guidelines is to ensure that all financial arrangements with pharmaceutical manufacturers are structured to fully comply with relevant federal and state laws and are in the best interests of both the College of Medicine and faculty members.

These guidelines apply to all current and future financial relationships and are intended to educate faculty to recognize financial relationships that are prohibited and financial arrangements for which faculty members should seek additional guidance before proceeding.  To help the College of Medicine assess its current position, all faculty must complete the attached acknowledgement form indicating that he/she had read, understood and shall comply with the standards set forth in these guidelines.

 Q5: Who Should I Contact if I Have a Question or Problem?
If you have any questions or would like additional information about this issue once you have reviewed this memorandum and the attached guidelines, please contact the College of Medicine Office of Research Affairs at 352-392-5398.

In addition, you may contact the Office of General Counsel at 352-392-3705 if you have questions relating to similar types of financial arrangements that may involve the provision of  other items or services (e.g., durable medical equipment, home health services) or other types of health care-related organizations.

Anyone wishing to remain anonymous may report their concerns to the confidential Values Line Hotline at 800-329-3569.


 

Return to Compliance main page        College of Medicine home page

Webmaster <ahagan@dean.med.ufl.edu>College of Medicine, Office of Compliance 
This page created August 30th, 1999.  Please read our disclaimer and permitted use statement.