It starts with a knock on the front door, usually of a lower-level employee, usually around supper time. The visitor, an agent from the Office of Inspector General or the Federal Bureau of Investigation, is investigating alleged corporate misdeeds, maybe expensive gifts given to doctors at meetings or inordinately high speaker or consultant fees. The next thing you know, the company is subpoenaed and must turn over literally millions of pages of records — including documents related to meetings — to the courts.

That's exactly the kind of scenario that attorneys Michael Manthei and Christopher Myers, partners at international law firm Holland+Knight, help their clients avoid. They assist companies in developing strategies for compliance with the numerous rules governing the pharmaceutical industry, including federal antikickback statutes, and laws relating to false claims and healthcare fraud. In an August 2 webinar, sponsored by StarCite, a supplier of Web-based corporate meeting management solutions, Manthei and Myers outlined the role meeting professionals can play in compliance, and explained the guidelines about entertainment, meals, and gifts at company-sponsored events.

Catch $22

The pharmaceutical industry has been under the regulators' glare for years, but in the last year or so, the spotlight has intensified. “There's been a paradigm shift,” said Manthei, who is based in H+K's Boston office. Now, federal regulators are looking at secondary markets and smaller pharmaceutical companies, not just “Big Pharma.” Also, individual states are getting into the act. Currently, nine states require manufacturers to report marketing expenditures related to healthcare professionals and 27 more states are considering similar legislation.

“There is a perception at the Congressional level and at the state levels that there is a lot of abuse going on,” said Myers, who works out of the firm's McLean, Va., office.

Perhaps the most significant change is that even small gifts and relatively inexpensive meals may be considered a corrupting influence, explained Myers. In fact, in recent subpoenas, the government has asked for documentation not just for high-end gifts, but for any gifts, meals, or expenditures over $22, despite the fact that the Pharmaceutical Research and Manufacturers Code on Interactions with Healthcare Professionals says gifts can cost up to $100. Gifts — including any payment or other item of value given to a person or entity (including tickets, vouchers, cash, etc.) that can influence prescribing/product selection — have touched off the most recent round of investigations.

Golf and Gifts

Myers and Manthei reiterated what many meeting professionals have heard for the past few years — entertainment, socializing, and gifts must be subordinate to the purpose of the event. For example, it's OK to schedule a round of golf during the course of a three-day educational meeting, but scheduling three rounds of golf in three days could raise a red flag. You can give attendees branded, promotional tote bags containing meeting materials, as well as gifts of minimal value that are either practice-related or deemed to be for the benefit of the patient. Raffles are prohibited, unless the items meet the above criteria. “If you can't give it away directly, you should not be able to give it away indirectly through a raffle,” said Manthei. Raffling off gifts like iPods, laptops, and trips is no longer acceptable.

It's permissible to cover reasonable out-of-pocket travel and lodging expenses for speakers or consultants, but it's not OK to pay expenses, entertainment, or registration fees for spouses, friends, family, or guests. Planners should make it clear on the invitations, as diplomatically as possible, that spouses are not invited to the event, said Myers.

Speaker fees or honoraria should be fair market value, a term that is a bit amorphous, admitted Manthei. “It's the price a buyer and seller would agree to in an arm's length transaction,” he said. In other words, the fee should be the going rate. A world-renowned expert can be paid more than a first-time speaker, but the rate should be in line with what other experts earn. But “token” consultants — those who do little or no work for the company but are, perhaps, being rewarded because they are high-prescribers — are a definite no-no, said Myers. Regulators are watching out for these type of “sham” agreements, he added.

Finally, the venue must be appropriate for education, which generally means a facility with adequate meeting space. “Meetings” that take place on the golf course, in the stadium skybox, or at a Bruce Springsteen concert are out of the question, quipped Manthei.

Paper Chase

If a company is accused of wrongdoing, the results can be disastrous — even if the company turns up clean.

As we said earlier, the investigation begins with interviews of lower-level employees — who may not have done anything wrong, but who may be caught off guard and don't know their rights. Employees do not have to talk to investigators about an alleged offense, the attorneys said.

Next, the government typically issues a subpoena for documents from a multiyear period — five to seven years is not uncommon. Subpoenas request an enormous amount of information, some of it related to meetings, including expense reports detailing all payments, gifts, entertainment, and travel expenses involving healthcare professionals. That means not only receipts and hard copy records, but e-mails, blogs, wikis, and other forms of electronic data. “Imagine the difficulty of pulling that together,” said Manthei.

The attorneys gave a real-life example of a company that spent $7 million per year during a four-year period, employing 60 to 80 attorneys working full-time, and restoring more than 10 terabytes of electronic data. “If you can quickly produce documents, it shows you have nothing to hide and that you have all your ducks in a row,” said Manthei. “That really turns down the heat tremendously.”

The key to producing documents in a timely manner is to have a compliance program, one that includes a document-retention policy. Companies should track and document all events-related spending, train employees and vendors on compliance, and enforce the rules. The attorneys say that companies should keep a centralized record of the “who, what, when, and cost” for each event and track money spent on each attendee at each event. Records should be kept on all meetings for six to seven years, added Myers. This will allow companies to present data to investigators quickly, which is key. It also helps organizations catch problems internally — before they become big ones. And don't even think about running to the shredder: Once an investigation is under way and a subpoena is served, the destruction of documents can be a criminal offense.

Companies also need to require their vendors to comply with the program, because investigators may also ask for any pertinent documents from third-party suppliers that were involved in the planning of events. Companies may indeed be responsible for any wrongdoing by a hired vendor.

The cost of compliance is miniscule compared to the costs of being investigated, said Myers. “A good compliance program is your best weapon to avoid criminal or civil fraud,” he said. But it can't be a “paper program,” he continued — one that is stuck on a shelf and ignored. “The company has to live it.” If the intent to follow the rules is demonstrated, concludes Manthei, “the penalties will be minimized.”

CME: No Strings Attached

As many CME professionals and pharmaceutical meeting planners are well aware, the rules governing grants for continuing medical education are quite different from guidelines about company-sponsored events. The CME grant must be for a bona fide educational or scientific conference and the funds must be provided to the conference sponsor, said Michael Manthei and Christopher Myers, partners at international law firm Holland+Knight, during a webinar about compliance held on August 2.

The grantor cannot have any influence over speaker selection, program content, attendee invitations, or in any way influence how the money is spent. Money can be directed to a meetingwide event, such as a cocktail party, but the event must be open to all attendees. However, industry is not permitted to pay for attendees' transportation or lodging. Also, grants should flow through an in-house grant-review committee at the pharmaceutical company and should not be authorized by sales and marketing departments. “The government is very interested in who authorized the spend,” said Myers. “If it's sales and marketing, they are suspect.”