Compliance: What You Need to Know : Plastic and Reconstructive Surgery

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What You Need to Know

Evans, Gregory R. D. M.D.; Haeck, Phil M.D.; Roth, Malcolm M.D.; McGuire, Michael M.D.; Glasberg, Scott M.D.; Wells, James M.D.; Costelloe, Michael J.D.; Stokes, Michael M.A.; Wargo, Carol M.A.

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Plastic and Reconstructive Surgery 128(5):p 1143-1148, November 2011. | DOI: 10.1097/PRS.0b013e31822b62fc
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Dr. X presents the use of a new product that is off label at an American Society of Plastic Surgeons (ASPS)-sponsored meeting for CME credit. He has performed over 200 of these procedures without any complications and believes in the use of the product for off-label use. Two weeks later, Dr. X, who is a consultant for the product's parent company, presents at a company-sponsored non-CME event. During his presentation, the use of the off-label product is presented and Dr. X talks about the outcome of his 200 patients. The next day, federal authorities begin investigating Dr. X for the promotion of a product for off-label use at this non-CME event. Fiction? On the contrary, the rules of compliance have changed and without much flexibility. Despite our personal opinions, both companies and physicians have to be aware of the rules of the road governing compliance regulations. We are mandated to follow these new regulations and attempt to interpret where things are gray.111

In December of this past year, approximately 45 surgeon leaders from several organizations within plastic surgery, along with corporate compliance officers and others, attended the ASPS Compliance Summit held in Rosemont, Illinois. Discussions focused on the current and future regulatory environment surrounding industry interactions with physicians. The purposes of this article are to focus on the major topics of discussion and to provide all of our members with some overview and direction during this time of new regulations and oversight. The article, however, is not meant to be an extensive scientific review of the current topic.

So where did it all begin? Under pressure, the Pharmaceutical Research and Manufacturers Association published rules in 2002 prohibiting drug representatives from giving doctors lavish trips and tickets to entertainment events. Meals and speaking fees were not banned. In 2007, Senator Charles E. Grassley (R-Iowa) and Senator Herb Kohl (D-Wis.) introduced a bill requiring large pharmaceutical companies and medical device manufacturers to disclose the value of dinners and of speaker and consultation fees they provide to doctors. The bill finally was adopted this year as part of the health care overhaul.1,9 This eventually led to antikickback legislation that was to be enforced by the Office of the Inspector General. Over the past several years, this has led to large fines on device and pharmaceutical manufacturers who have been interpreted as playing “outside the rules and regulations.”1 No longer will promotional efforts by pharmaceutical and medical device manufacturers, including gifts, dinners, and entertainment, be allowed. This is a billion dollar business, but if we do not change how we interact with companies, physicians and the companies may be liable for fines and perhaps even jail time. Thus, it is vital for all of us to understand the governing rules to avoid potential violations, but at the same time to continue to work closely with industry for the betterment of patient care.

The pharmaceutical and medical device industries can expect increased scrutiny of, and actions against, company officers and other individuals, according to a senior official from the Department of Health and Human Services Office of the Inspector General.8 Although industry has heard this message before, there are new “teeth” to the Office of the Inspector General's approach this time, especially including the following: (1) board of directors, officers, and senior manager certification requirements in a number of recent corporate integrity agreements, which, borrowing from Sarbanes-Oxley, will put corporate leaders on the hook for their companies' compliance actions; (2) a number of criminal actions against individuals deemed by the government responsible not only for orchestrating but also for failing to scrutinize and abate compliance problems; and (3) close scrutinization of transfers of assets or operations from the entity that faces exclusion and refusing to be a party to what the Office of the Inspector General views as “sham” transactions.8 However, industry is not solely liable. We as physicians are responsible for our interactions as well.

If you are contacted by an agency for a violation, call your lawyer immediately and do not speak to any agent until your lawyer is present. The False Claims Act was originally designed to detect fraud in contracts when selling supplies to the Army, but that statute has now been completely reapplied in multiple contexts and is one of the most significant in the drug and device world. Someone can blow the whistle on a drug or device company and as a result receive up to one-third of the amount of any government settlement.


Practitioners involved in university practices are familiar with compliance rules that govern interactions with industry. Each university has established guidelines for industrial relationships, most of which take a very conservative and safe approach. As an example, Harvard Medical School will prohibit its 11,000 faculty from giving promotional talks for drug and medical device makers and accepting personal gifts, travel, or meals under a new policy intended partly to guard against companies' use of Harvard's prestige to market their products.10 The conflict-of-interest rules also place stricter limits on the income faculty can earn from companies for consulting, joining boards, and other work; require public reporting of payments of at least $5000 on a medical school Web site; and promise more robust internal reporting and monitoring of these relationships.10 For the University of California, there is established uniform guidance and access to ensure that educational and technical support is available but also to ensure that appropriate behavior and compliance with regulatory rules are enforced. A vendor or company representative can be present within the operating room, provided they go through the appropriate registration and documentation. Vendors are provided access to the hospital cafeteria but cannot conduct any business there. Physicians are required to disclose financial interest in products used within the University system, and physicians are restricted from being involved in the purchasing or selling of these products. The University also limits consultation fees and the ability to accept gifts and support. For example, companies can no longer provide food for grand rounds or support the clinic or residents with products or gifts. Educational grants or exhibits fees are allowed, but no direct contributions or support for faculty dinners, visiting professors, and others are allowed.

Federal antikickback statutes date back to the 1800s and prohibit offering something of value in exchange for product use (industry) and receiving something of value in exchange for product use (physician) as a means of reducing fraud and eliminating improper influence over medical decisions. Gifts are not allowed, which essentially includes expensive meals in addition to meals and entertainment for spouses, children, office staff, or anyone not directly involved in medical or purchasing decisions of the practice. Company-branded logo gifts, such as pens, sticky notes, mugs, clocks, and so on, are not allowed. Gift baskets, wine, flowers, and golf outings or other forms of recreation are forbidden. What is allowed are reasonably priced meals to discuss new products with physicians and travel, lodging, and hospitality related to legitimate educational venues for training. However, are private practitioners responsible for following these rules? The short answer is absolutely. Many plastic surgeons in private practice may be unaware of industry compliance laws. Many of the industry sales representatives are inconsistent in their adherence to their company's compliance rules and have even resisted the notion of corporate compliance. One issue related to this is that single-source vendors have made competition fierce, prompting some representatives to bend the rules to their advantage. “You see a difference in the industry representatives and their attitudes when they enter UCLA versus a private hospital,” says Michael McGuire, former president of the ASPS.

I don't think it's a lack of appreciation on the part of the private practitioners or if it's just a lack of general awareness. Those in academic medical centers are being educated on this more frequently. They are aware of what's going on in the environment and the real risks that exist for them individually.

—Ryan Brown, J.D., Allergan Medical


The confusion about gifts and entertainment pales in comparison regarding questions around speaking, training, and consulting relationships. These may not be as tangible, but they are things of value being exchanged, and the penalties for off-label promotion are severe. This represents a great opportunity for ASPS to add value and provide a service for its membership because they have skin in this game—if they take money or become agents of the manufacturer and go beyond the label, it's the exact same issue as if the sales rep does it.

—Seth Rodner, J.D., Medicis legal counsel

The “One Touch Rule” is an enforcement philosophy within the U.S. Food and Drug Administration that states that if a manufacturer “touches” an interaction in any way, shape, or form, the agency views that interaction as the manufacturer's activity, even if it is being executed through a physician. This includes payment of money and facilitating benefits such as media interviews. Physicians may prescribe for off-label use, but as discussed before, a physician who is a paid speaker for a company may not discuss off-label use during media interviews, training sessions, or non-CME events. A physician who is not a paid speaker of the company may discuss off-label use but not if the company facilitates in any way this discussion (e.g., press office, publisher).

The law and the scope of enforcement are going far beyond situations where money changes hands. FDA officials have been in public forums, actually propagating an even broader view, which is that even if you're not taking money in connection with this particular speech, and even if the manufacturer wasn't involved in setting up the speech without money changing hands, there's some school of thought that they still may look to sweep in the physician as an agent under this creative theory that there are all sorts of other connections between the physician and the manufacturer that may have nothing to do with this particular speech—that the person happens to be an investigator or happens to be a consultant separately. And in the aggregate, does that create a sufficient nexus to view them as an agent for all purposes?

—Seth Rodner, J.D., Medicis legal counsel

The international landscape is not much better. U.S. companies cannot convene a group of U.S. physicians outside the country to promote off-label use of products, even if the off-label use is allowed in that foreign country. U.S. companies and physicians have to abide by U.S. law regardless of their location. For multinational companies, U.S. rules and regulations heavily influence how companies think and behave. The Foreign Practices Act allows the U.S. government to pursue U.S. companies for violating the laws of a foreign country even if the foreign country does not choose to enforce it. Therefore, if it is a violation to give something of value to health care providers in France, and a U.S. company has an employee who does that, the Department of Justice can still prosecute the case. Gary Messplay, J.D., Hunton & Williams' Food and Drug Practice co-chair, states:

There is a significant amount of enforcement effort being focused on doctors right now. There have been a number of enforcement actions on the premise of doctors receiving kickbacks and doctors promoting products off-label. And so the government clearly sees this as a way to affect the behavior that is going on. They are not simply going to go after the companies. They are not just going after the big check, the multi-billion dollar settlements. They are going after individuals, individuals in companies, and individual health care providers. It is an alarming trend, but it is not going away.

It is permissible to discuss off-label use in continuing medical education, but the content of the course must be free of manufacturer influence. The facilitator of the education must be independently picked along with the faculty, agenda, and so on. Corporate funding for such courses must be granted in a lump sum. Simply calling an educational offering CME does not allow off-label discussions, even among peers.

Complicating matters, when a company is considering whether or not to provide a grant for a CME meeting, they may see the name of their consultant and a member of their speaker's bureau on the agenda. The topic of the presentation is in the agenda, so they know potentially that he's going to be speaking off-label. Does that determine the size of the grant? Do they increase their grant from $20,000 to $50,000 based on that knowledge? The company hasn't selected the speaker and it hasn't influenced the topic, but it essentially knows what the doctor is going to be speaking about. That's the reason that OIG believes companies should no longer determine independently their educational grants for CME, but rather put all their money into one great, big pool and allow an independent foundation or organization to divvy out money to all the CME meetings in the country for all specialty societies.

—Jackie Huber, Biomet Corporation Vice President and Chief U.S. Compliance Officer

Promotional speakers are required by many companies to be trained in compliance and what they may or may not say when speaking as an agent of the company. One-to-one discussions based on your clinical experience that are designed to inform colleagues of your experience are presumably allowable. Ultimately, the decision falls to the physician's interpretation of the rules.

In those colleague-to-colleague interactions, the shades of gray, light and dark, are based on the nature of your relationship in the industry. If you are only a member of a speaker's bureau, I think that gray lightens. If you are an investigator, it gets darker. If you receive royalties on sales, it gets much darker. The devil is in the details, and you need to be very cognizant of the touches you have with industry and the nature of your relationship.

—Jackie Huber, Biomet Corporation Vice President and Chief U.S. Compliance Officer

Consulting relationships have to be made on fair-market values. Companies can pay physicians as consultants for legitimate, valuable business information, not as a runaround to promote a product to a physician. Companies may not pay a physician to listen to their sales pitch. Consulting fees must be a reasonable hourly rate to facilitate the exchange of information. This varies from company to company, many of which have a template and formula to determine reasonable fees and expenses. Before you become a consultant, there are several questions that you should ask.

  1. How many consultants are being used for the panel?
  2. Does the number make sense for what the manufacturer is attempting to accomplish?
  3. What qualifications and experience is the manufacturer seeking in the consultant?
  4. Do you fit those qualifications and levels of expertise, or were you selected simply because you are one of the manufacturer's top customers?
  5. Finally, are you truly being expected to provide a service to the manufacturer?

When you attend a meeting, ask yourself who is doing the bulk of the work? Are the company representatives up there presenting or are you actually speaking as an active participant at that meeting? If you're not, then the red flags should be going up in your head. If you're not participating, why are you being paid for your time?

—Jackie Huber, Biomet Corporation Vice President and Chief U.S. Compliance Officer


What are the dos and don'ts for requesting grants from industry?

  1. Do go through proper channels. Funding requests must go through proper channels as set forth by the manufacturer's compliance office (i.e., do not solicit a sales rep or company official with whom you have a personal relationship)—or it will be denied.
  2. Do not say the research will result in increased use of the company's product.
  3. Do be specific in your request; include a detailed budget, data analysis plan, and justification for the number of patients.
  4. Do include curricula vitae of everyone who will be involved in the study (and make sure everyone is qualified to participate in it).
  5. Do demonstrate in your request that you understand U.S. Food and Drug Administration rules and that you will be responsible (not the company) for any institutional/regulatory requirements for the institutional review board approvals.
  6. Do not include in your request that you look forward to working with the manufacturer on developing a protocol. Companies cannot be involved in investigator research.

If this is investigator research, it's investigator research. And if a company starts tinkering around with protocols and inclusion criteria and end points, then all of a sudden, it's their study. They do not want it to be their study. They want it to be your study. All they want to do is give you the money.

—Gary Messplay, J.D., Hunton & Williams' Food and Drug Practice co-chair

Susan Clarke, Mentor Worldwide Director of Healthcare Compliance, states:

Companies will not provide unrestricted grants because they do not want the money used for anything outside of the primary stated purpose of the grant. In providing grants, they want a protocol that will allow them to evaluate whether the study has merit or will add value.

According to the Advanced Medical Technology Association, guidelines research must have scientific merit with well-defined objectives and milestones. Funding has to be unrelated to product purchases and the grant cannot be awarded for product purchases in the past or used as inducements. National and regional organizations must follow the same guidelines, including submitting proposals through proper channels as determined by the manufacturer when requesting funding for educational or other programs. Studies must demonstrate a scientific basis for meetings and avoid too much recreational activity compared with educational activity.

The agenda for the three-day meeting shouldn't be 50 percent golf, and it shouldn't have a lot of spa amenities in it. When industry sees that, we cringe. It can really undermine your request—industry gets very nervous when they see budgets that include some very extravagant things.

—Susan Clarke, Mentor Worldwide Director of Healthcare Compliance

A company can direct funds to a charity but cannot cover expenses to produce a charitable event for another group. A company can advertise but cannot pay for a member's attendance at the event. Manufacturers may contact the Plastic Surgery Foundation to help facilitate a study. Regional societies are less aware of compliance rules and rarely have a mechanism in place to request funding in the proper way and through the proper channels.


The Federal Sunshine Act provides that drugs, device, biological, and medical employment contractors report transfers of values made to physicians or a teaching hospital. Transfer of value in bills above a $10 value has to be reported whether it is in cash, textbooks, meals, or other forms. All of this will be implemented by March of 2013. All of these payments will be reported online.1 Additional regulations will be issued by October of 2011 to clarify the definition of the scope of these laws and how they relate to state laws. All practicing physicians will be subject to this reporting. A 45-day period will be allowed for companies along with the physician to review the information to correct errors before they are made public. In the past 3 years, 19 states have considered various types of “sunshine” legislation and more will likely follow. In a report published by the conservative-leaning Manhattan Institute, New York University law professor Richard Epstein said conflict-of-interest rules have too many restrictions that prevent informed and knowledgeable people from sitting on medical school faculty and panels that rule on drug licensing.7,11 He believes that although conflict of interests are a necessary part of doing business in an interconnected world, these conflicts can be managed through a judicious combination of disclosure and oversight.7,11 Federal law will supersede, but this is an ever-changing environment. Corporate payments to societies may be included in the sunshine regulations. Senator Grassley, who championed the Sunshine Act, sent letters to multiple medical societies, including the ASPS, in late 2009 requesting information on their relationships with industry. What makes this even more difficult for the ASPS is that the Society has a wide mix of corporate sponsors, some of which are not from either the pharmacologic or medical device realms.1


So how can our Society function in this environment? We must develop compliance codes for the Society and develop compliance codes for our members. These certainly do not have to be as extensive as university guidelines but do have to have some basic principles. We must align the Society codes with the Advanced Medical Technology Association and the Pharmaceutical Research and Manufacturers Association. Public disclosure of ASPS leadership relationships with industry will likely become an imperative, as will required disclosures for ASPS faculty speakers and abstract presenters. Speakers should make a conflict-of-interest disclosure, including the companies he or she works with, and ask the audience to inform the speaker if they feel there is any commercial bias in the presentation.6

Organizations like ASPS need to have their own code of conduct that aligns with antikickback statute, at a minimum, but also with industry codes, because there is a disconnect between the expectations of associations and the obligations of pharmaceutical/medical device companies. Elements of the code should include a mission statement demonstrating objectivity on medical issues and that the focus of the organization is public health. There should be an absolute ban on receiving items of value from industry (gifts, trips, lavish meals, entertainment, and recreation). For ASPS to have a code that specifically prohibits, for example, receiving anything of value from health care industry, it will help bring synergy to the PhRMA Code, which prohibits that. If the medical associations and societies will adopt codes that align with what the industry standards are, I think we'll make a lot of progress.

—Gary Messplay, J.D., Hunton & Williams' Food and Drug Practice co-chair

Norman Kahn, M.D., Council of Medical Specialty Societies Executive Vice President, states:

Everything that we do as a society needs to be free of company influence, and transparency as part of our social contract is a key ingredient of this—including disclosure of corporate support. We are not the police. We are not the circuit board for the specialty society. But, and this the key, in a social contract based on professionalism, a profession gets to regulate itself as long as it does so. And if we fail as a professional society to voluntarily regulate ourselves, the next Physician Payment Sunshine Act will not be disclosure only; it will be like Massachusetts.


Industry compliance is an increasingly important issue as manufacturers, individual physicians, and medical societies are under greater regulatory, legislative, and public scrutiny for their interactions and the potential for business to influence medical judgment. Organizations and individuals who violate compliance-related federal laws (antikickback statutes, off-label promotion ban) are subject to significant penalties. Although most acknowledge the reasoning behind a need for industry/physician compliance, few understand how far the rules reach—or the serious consequences for violations. Although plastic surgeons practicing in academic medical centers are largely aware of the compliance issue because of rigid institutional enforcement, it is presumed that for most private practitioners, the issue is not at the forefront of their daily lives. Education will be key to informing membership, but previous voluntary attempts to educate physicians on compliance have been a challenge. The compliance officers who attended the summit highly recommended that the ASPS creates its own compliance code that aligns with Pharmaceutical Research and Manufacturers Association and Advanced Medical Technology Association industry codes—and begins educating members. The summit meeting was largely viewed, however, as an important and forward-thinking step in bringing ASPS leadership up to speed on the issue.


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©2011American Society of Plastic Surgeons