While the headlines reported colorful allegations of kickbacks to physicians, such as Hawaiian vacations and Madonna tickets, and the stunning magnitude of the largest healthcare fraud settlement and payment by a drug company , the most significant aspect of the $3 Billion settlement by global pharmaceutical giant GlaxoSmithKline LLC (GSK) was the Corporate Integrity Agreement  (CIA), which restructures its sales and promotion practices.  The alleged misconduct involved “off-label” drug promotions (recommendations to use medicines for different conditions and patients than the FDA approved), payment of kickbacks, making false and misleading statements concerning the safety of Avandia, and reporting false “best prices” in order to underpay rebates owed under the Medicaid Drug Rebate Program.

With the theme “patients before profits, science before sales” the government set about to restructure GSK’s marketing practices in significant ways.  In addition to changing its incentive compensation practices, such that executive bonuses are now required to be clawed back for regulatory compliance failures, and field representative compensation must be based on service quality rather than sales volume, the 123-page CIA outlines a major overhaul of GSK’s physician arrangements policies and procedures.

Physicians and hospitals/academic medical centers may obtain remuneration from drug companies under any number of arrangements, including consulting agreements, speaker programs, service on advisory boards, research, publication activities, and grants for medical education activities.  Concern that these payments may undermine medical judgment or scientific independence led Congress to adopt the “Physician Payments Sunshine Act” reporting requirements, which go into effect on  January 1, 2013.  CMS blogged that the final rule will come later this year.  In the meantime, however, the CIA goes far beyond requiring the transparency of monetary payments. It requires that each type of physician relationship involving compensation be conducted in such a manner as to promote compliance with federal standards.

Physicians should see the following changes, among others, in their relationships with GSK and possibly with other companies that read the CIA as “a word to the wise” and adopt similar compliance practices voluntarily:

• Physicians will receive a letter from GSK describing the allegations, the settlement, and requesting that physicians report inappropriate promotion of products or other questionable conduct;
• Any requests by physicians for information on “off-label” uses of drugs will be required to be put in writing, confirming what information was requested, whether or not the request was unsolicited, signed by the medical professional, referred to the Medical Affairs Department, and all such requests for information will be tracked internally at GSK;
• Drug company sales and field reps may be accompanied by monitors who will observe their meetings with health care providers and assess the promotional materials distributed;
• Speakers at programs will be required to have compliance training and written agreements describing the scope of the work, speaker fees to be paid (fair market value with annual caps), compliance obligations. In addition, their programs will be monitored and their fees reported on the GSX website;
• Samples, coupons, and vouchers for drugs will be distributed only to the medical specialty or types of clinical practices for which the drug’s use has been approved;
• Researchers will have written agreements describing the scope of clinical research or other work, fees based on a pre-set rate structure, and compliance obligations;
• Physicians who sit on drug formulary boards or who develop clinical guidelines will be required to disclose their financial relationships with GSK; and
• Sponsorship or funding of grants to healthcare-related organizations in support of educational programs will be limited. The programs must be non-promotional and accurate in nature, and financial relationships with teaching faculty will be disclosed,.

It is important that the health care provider community as well as drug and medical device manufacturers read this CIA in order to have a clear understanding of what the Office of the Inspector General and the FDA expect.  Both business practices and compliance programs may need to be modified or enhanced to address financial incentives related to promotional and scientific activities that could compromise high quality patient care.  Transparency of financial arrangements is useful to raise the question of whether benefits have influenced physician judgment, but this CIA seeks to reform the underlying industry marketing, research, and compensation practices that drive many manufacturers’ arrangements with physicians.