PhRMA Code Revised in Response to OIG Special Fraud Alert on Speaker Programs

August 24, 2021By McKenzie E. Cato & Alan M. Kirschenbaum

On August 6, 2021, the Pharmaceutical Research and Manufacturers of America (PhRMA) announced the release of a revised PhRMA Code on Interactions with Health Care Professionals, which takes effect on January 1, 2022.  The PhRMA Code is a voluntary code of conduct focusing on the pharmaceutical industry’s interactions with health care professionals as they relate to the marketing of products.  The PhRMA Code is updated periodically to reflect changes in industry norms or, as is likely the case with the latest revision, in response to political pressure or increased scrutiny from the federal government.

The latest changes to the PhRMA Code are primarily focused on speaker programs, including meals and drinks offered, the venue used, and attendance at such programs.  These revisions appear to be responsive to a November 16, 2020 Special Fraud Alert issued by the Office of Inspector General at the U.S. Department of Health and Human Services (OIG) (see our blog post on this Special Fraud Alert here).

While PhRMA does not reference the OIG Special Fraud Alert in its announcement of the revised code or its summary of revisions to the code, the substantive updates to the code are directly traceable to OIG’s critiques of speaker programs.  OIG provided examples of practices that are common in violative speaker programs that are conducted with the intent to induce health care professionals (HCPs) to prescribe or order products paid for by Federal health care programs:  holding programs at non-conducive venues or events; providing expensive meals; repeat attendance by HCPs at substantially similar trainings; and attendance by the HCP’s friends or families.

PhRMA has updated its guidance regarding speaker programs through the following additions to the Code:

  • The purpose of a speaker program should be to present substantive educational information to address a bona fide educational need, and only those with a bona fide educational need for the information should be invited (i.e., not friends, significant others, or family members of a speaker or invitee). Repeat attendance at a program on the same topic is generally not appropriate, unless there is a bona fide educational need for repeat attendance.
  • The speaker program should occur in a venue that is conducive to the informational communication. If held in a third-party venue, the venue “should not be extravagant or the main attraction of the event” (e.g., the venue should not be a luxury resort, high-end restaurant, or other entertainment, sporting, or recreational venue).  The new Code continues to permit incidental meals that are modest by local standards (still without defining “modest”), but adds a prohibition on providing alcohol.
  • It continues to be appropriate for companies to offer HCP speakers reasonable compensation for their time, travel, lodging, and meal expenses. However, the revised Code clarifies that an HCP should not be selected to serve as a speaker based on past revenue that the speaker has generated or potential future revenue that the speaker could generate by prescribing or ordering a company’s products.

Other, less extensive changes have been made to Code sections on topics other than speaker programs.  The section on informational presentations by company representatives continues to permit modest meals to be provided during such presentations, but a requirement has been added that there must be a reasonable expectation, and reasonable steps taken to confirm, that each attendee has a substantive interaction or discussion with a company representative.  “Grab-and-go” meals and alcohol are not appropriate.

The current Code discourages the use of resort venues for several types of meetings, including consultant meetings, speaker programs, and speaker training meetings.  Wherever a “resort” venue is discouraged in the current Code, the revised Code substitutes “luxury resort.”  In other words, under the revised Code, a resort may be an appropriate venue as long as it is not a “luxury resort.”  This change probably reflects the trend since the Code was last revised for relatively modest hotels to include “resort” in their names.

It is timely to remind our readers that, although the PhRMA Code remains a voluntary industry code, its important function in risk reduction cannot be overstated.  The OIG long ago recommended that drug manufacturers adopt the Code, explaining in the Compliance Program Guidance for Pharmaceutical Manufacturers that, “[a]lthough compliance with the PhRMA Code will not protect a manufacturer as a matter of law under the anti-kickback statute, it will substantially reduce the risk of fraud and abuse and help demonstrate a good faith effort to comply with the applicable federal health care program requirements.”  Moreover, three states — California, Connecticut, and Nevada – have essentially incorporated the Code into state law by requiring pharmaceutical companies to develop and maintain compliance programs that include, or are consistent with, the PhRMA Code.