Stark Law, the AKS, and AMA Ethical Opinions on Drugs and Devices

In last week’s installment, we covered how the troubles of Lance Armstrong relate to the Amgen “fraud-on-the- market” case currently pending before the U. S. Supreme Court. This week, let’s talk about the ethics involved.

The late 1980s marked the beginning of the “Golden Era” of what amounted to a medical technological gold rush. Small biotech companies and university research facilities funded by the National Institute of Health were able to license new drugs to major pharmaceutical companies - and Wall Street went nuts.

Marketing departments unleashed an army of drug reps bent on signing contracts with hospitals, clinics, and individual physicians with promises of free drugs, hidden discounts, and other kickback schemes. The federal response to all of this fraud has been legendary. Today, the major firms have gotten the message. It is much less likely a physician will be presented with a scheme from a major pharmaceutical company which is patently illegal (It’s the smaller operations you must watch out for.)

While federal anti-kickback regulations can be confusing, all you really need to know is contained in AMA Ethics Opinion 8.06. Follow these guidelines, and you should be in compliance with federal law.

Opinion 8.06 - Prescribing and Dispensing Drugs and Devices

(1) Physicians should prescribe drugs, devices, and other treatments based solely upon medical considerations and patient need and reasonable expectations of the effectiveness of the drug, device, or other treatment for the particular patient.

(2) Physicians may not accept any kind of payment or compensation from a drug company or device manufacturer for prescribing its products. Furthermore, physicians should not be influenced in the prescribing of drugs, devices, or appliances by a direct or indirect financial interest in a firm or other supplier, regardless of whether the firm is a manufacturer, distributor, wholesaler, or repackager of the products involved.                                                                  . . .

(3) A third party’s offer to indemnify a physician for lawsuits arising from the physician’s prescription or use of the third party’s drug, device, or other product, introduces inappropriate incentives into medical decision making. Such offers, regardless of their limitations, therefore constitute unacceptable gifts. This does not address contractual assignments of liability between employers or in research arrangements, nor does it address government indemnification plans.

For the most part, as a physician, you can “feel it in your bones” when someone is trying to buy patronage. Some of the schemes, however, contain hidden kickbacks.

Next week, this three-part series will conclude with a discussion of federal regulations derived from fee-splitting ethics opinions, together with a discussion of the types of reported cases involving hidden kickbacks (those which involve “in-kind” as opposed to cash payments.)