OIG pharma guidance targets pricing, kickbacks

The draft guidance for pharmaceutical companies released Oct. 1 held few surprises. Kathleen McDermott, a partner with Blank Rome in Philadelphia, says her only real objection is the guidance’s title, which she says may mislead health care providers into thinking it applies only to pharmaceutical companies.

"The health care community should not be misled that this is just about manufacturers and sales reps," says the former federal prosecutor from Maryland. "Many of the issues highlighted in the guidance apply across the board to physicians, hospitals, and other health care providers and their arrangements and relationships with pharmaceutical manufacturers."

"The discussion on kickbacks and drug samples applies to many aspects of the health care industry," she adds. McDermott says that is where the rubber is going to hit the road for hospitals because of their formularies, and for physicians because of their prescribing practices. "I think it is a particularly good discussion on those issues," she says. "I think it is a welcome discussion."

Health and Human Services (HHS) Inspector General Janet Rehnquist says the sheer size of the pharmaceutical industry makes it a high-profile target. "The real money is in the pharmaceutical industry," Rehnquist said when she released the guidance at the joint American Health Lawyers Association/Health Care Compliance Association conference in Washington, DC, on Oct. 1. "Obviously, the need for compliance measures, oversight, and enforcement is paramount."

While Medicare pays for only a limited number of drugs, about $700 million in Medicare spending in 1992 leaped to $5 billion in 2000. "That number is staggering considering that Medicare only covers a handful of drugs," says Rehnquist.