Pharmaceutical companies must go through doctors to sell their products. They typically send medical representatives to doctors to get them to prescribe their drugs. However, doctors meet representatives from several companies. Accordingly, cases of pharmaceutical companies offering incentives to doctors to beat this competition are not uncommon.
Many studies have shown physicians who receive payments from pharmaceutical companies are highly likely to prescribe their drugs. A study in 2016 revealed that the makers of Linzess, a drug that treats irritable bowel syndrome with constipation, paid about $29 million to doctors, and this resulted in 45% more prescriptions of the drug.
Research shows an increased prescribing of medicines from paying companies. In 2018 alone, the amount paid to physicians by pharmaceutical companies was $2.18 billion.
So, is doing this legal?
Kickbacks can be unlawful
A pharmaceutical company making personal financial payments to physicians (cash, vacation, expensive meals and so on) to prescribe their drug can be unlawful. A doctor should assess a drug before prescribing it. But kickbacks can make a physician prescribe medication as a sense of mutual obligation or reciprocity; kickbacks can affect a physician’s clinical decision-making.
Payments can be allowed in certain circumstances
A pharmaceutical company can offer a physician payment in certain situations without resulting in legal trouble. For example, many pharmaceutical companies pay doctors to speak at their events. The companies usually provide doctors with industry information on their products and allow them to assess the products. In turn, a doctor can provide adequate information at the events.
However, the exchange should be transparent. The physician should report the fee to the Centers for Medicare & Medicaid Services (CMS). Therefore, if speaker fees are not reported, they can be considered an unlawful kickback.
Payments between pharmaceutical companies and doctors can be complicated. If you are accused of unlawful kickbacks, get legal guidance to protect your career.