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Creating Private-Sector Standards of Conduct

By Richard M. Cooper
May 01, 2003

Whether certain conduct is a crime depends on more than legislatures, judges, and juries. When prosecutors decide whether, whom, and what to charge, the policies underlying their decisions create operative standards of conduct. So, too, do those of agencies administering regulatory programs backed by criminal sanctions. But what about the private sector? Sensible standards of conduct articulated by trade associations can and should play a substantial role in drawing the line between acceptable business practices and bad conduct that can be subject to criminal sanctions.

A good example is the recent development of a Compliance Program Guidance for Pharmaceutical Manufacturers under the Medicare/ Medicaid anti-kickback statute, 42 U.S.C. ' 1320a-7b(b)(1)-(2), by the Office of the Inspector General (OIG) of the Department of Health and Human Services. In general, the anti-kickback statute prohibits the payment of any “remuneration” to a provider of health care to influence the provider's selection of any goods or services to be used in health-care covered by Medicare, Medicaid or another federal health care program. The statute has exceptions, 42 U.S.C. ' 1320a-7b(b)(3); and several safe harbors for specific kinds of arrangements have been created by regulation, 42 C.F.R. ' 1001.952. Nevertheless, there remains a large gray area, which makes it hard to know what is prohibited in many kinds of circumstances.

Interpretive Problems

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