Federal government issues warning to drug manufacturers

WASHINGTON — Techniques being used by pharmaceutical companies to market their products may violate federal abuse and fraud laws, the U.S. government warned earlier this week. The official warning follows the government’s recent release of compliance guidelines.

According to an article in The New York Times, the guidelines state that manufacturers must not offer financial incentives to doctors, hospitals, insurers or pharmacists to encourage or reward the prescribing of drugs that can be reimbursed under Medicaid and Medicare. Federal law currently prohibits payments intended to generate business under Medicaid and Medicare, the paper reported.

According to Janet Rehnquist, inspector general of the Department of Health and Human Services, Medicaid and Medicare spend about $30 billion a year on prescription medications. That figure is expected to rise dramatically if the current administration agrees on a plan to provide comprehensive outpatient drug benefits to older Americans.

In brief, the guidelines state that when a pharmaceutical company “provides anything of value” to a physician who “might prescribe the manufacturer’s product,” the drug company should examine whether it is providing a tangible benefit to the physician with the intent to induce or reward referrals.

Further, drug companies risk prosecution if they encourage the use of their products by making payments to health plans or to companies such as pharmacy benefit managers – the agencies that control the formularies for insurance companies.

Ms. Rehnquist told The New York Times that both the drug manufacturer and the benefit manager can protect themselves from prosecution by disclosing their financial arrangements to the people who pay for the drugs.

She also said research and education grants must be divorced from marketing, or that may be construed as a violation of the law.

The guide states that if a pharmaceutical manufacturer has any influence over the content of a professional education program or choice of speakers “there is a risk that the program may be used for inappropriate marketing purposes.”

To view the formal guidance, click here.