Scientific Deception

Regulators are increasingly becoming concerned about pharmaceutical companies that offer financial and other incentives to physician-researchers, reasoning that the incentives may affect the physicians' judgment when they make treatment decisions for beneficiaries of health care programs. They think that this can result in increased costs being passed on to the federal government. In the worst-case scenario, such incentives could cause medically unnecessary items and services to be provided, and patients to be harmed.

Because the health care industry is so highly regulated, many health care transactions may draw government scrutiny. Clinical research is not immune from such scrutiny, particularly with the ever-increasing amounts of money, both public and private, being funneled into these activities. The main federal laws addressing financial arrangements between physicians and potential referral sources are the Ethics in Patient Referrals Act, more commonly called the Stark Law (42 U.S.C. ' 1395nn), the Medicare and Medicaid Antikickback Statute (42 U.S.C. ' 1320a-7b) and the False Claims Act (the civil False Claims Act is codified at 31 U.S.C. ' 3729, while the criminal False Claims Act is codified at 18 U.S. C. ' 387). The first two of these laws require physicians who enter into financial arrangements with potential referral sources for which claims for items or services may be presented to federal health benefit programs to try to structure their affairs to fall within one of the narrow statutory or regulatory exceptions or safe harbors the False Claims Act provisions essentially require persons who cause claims to be submitted to the federal government for reimbursement to do so in an honest manner.

Federal Oversight of Fraud and Abuse Laws Affecting Clinical Researchers

The FDA is a major player. Basically, the agency monitors the testing of new drugs in humans, determines if new drugs can be marketed, and then tracks any adverse reports about approved drugs after marketing begins in order to ensure that the drugs are safe, effective and properly labeled.

The testing of drugs used by humans involves three to four “phases.” Far fewer drugs make it through the last stage of the new drug-approval process than are introduced for study.

A common publicly held misconception is that the FDA's scientists actually test drugs to determine their safety and efficacy; rather, the agency oversees the development of drug protocols and reviews the data submitted by the new drug or new device proponents.

In the area of clinical research, the FDA has promulgated regulations that delineate the respective responsibilities of the clinical investigators, new drug or device sponsors and investigational review boards (IRBs). Clinical drug trials are scientific experiments conducted by clinical investigators. Increasingly, because of shrinking revenue streams, many clinical investigators are physician-researchers who have entered into agreements with sponsors (ordinarily, drug manufacturers or research institutions that have developed the drugs). Among other requirements, physicians who administer investigational drugs must abide by various conditions regarding the conduct of the study as outlined by FDA regulations and sign an FDA form certifying that they have received approval from an IRB before they begin the study.

OIG's Responsibilities

The Office of the Inspector General (OIG) has oversight responsibility for the Medicare Trust Fund. Its agents enforce the federal criminal and civil Anti-Kickback Statute, codified at 42 U.S.C. ' 1320a-7b, which prohibits the knowing and willful solicitation or receipt of any remuneration, direct or indirect, in exchange for referring patients to a person for the furnishing of items or services for which payment may be made by Medicare or Medicaid. A line of cases interpreting this statute holds that if just one purpose underlying the payment of remuneration is to induce referrals of items or services paid for federal or state health care programs, then the statute is violated. While there are about two dozen safe harbors to this statute, failing to meet a safe harbor does not mean that the statue has automatically been violated, since it requires proof of an impermissible intent.

As followers of the industry are well aware, federal authorities already have prosecuted industry players under the Anti-Kickback statute for grant-giving practices. Various manufacturers have also been subjected to prosecution under state analogs of the antikickback statute. The most pertinent FDA regulations with which clinical researchers must be familiar involved informed consent requirements (see article by Maureen Milford, infra), the sponsor and monitor requirements, the requirements for financial disclosure by clinical investigators, the requirements for review and approval, and the requirements pertaining to investigational new drugs.

In addition, the OIG enforces the federal civil monetary penalty provisions, and the mandatory and permissive exclusion from participation in Medicare and state health care program provisions. The OIG has long been concerned about pharmaceutical firms engaging in que4stional drug promotion practices.

Conclusion

Because the number of privately sponsored new drug and new device clinical investigations has eclipsed the number of governmental-sponsored studies, suppliers, research institutions and clinical investigators must become aware of the various dangers posed under the fraud and abuse laws in addition to their various duties under the regulatory framework for clinical research). To protect against regulatory action, affected parties need to become familiar with the nuances of these laws and the regulatory focus of the agencies that oversee such laws, and the proactive measures to protect themselves from any regulatory scrutiny before it develops.

At a minimum, all parties involved in clinical research should adequately document all disbursements of grant funds to: 1) reflect the purposes for which the funds are provided; 2) demonstrate that the payments are set in a manner that fairly approximates fair market value for the services provided; 3) memorialize that any disbursements of grant funds are not tied to the referral of any Medicare of Medicaid business; and 4) carefully document all the extra time and costs that are incurred in conducting the clinical investigation.

Regulators are increasingly becoming concerned about pharmaceutical companies that offer financial and other incentives to physician-researchers, reasoning that the incentives may affect the physicians' judgment when they make treatment decisions for beneficiaries of health care programs. They think that this can result in increased costs being passed on to the federal government. In the worst-case scenario, such incentives could cause medically unnecessary items and services to be provided, and patients to be harmed.

Because the health care industry is so highly regulated, many health care transactions may draw government scrutiny. Clinical research is not immune from such scrutiny, particularly with the ever-increasing amounts of money, both public and private, being funneled into these activities. The main federal laws addressing financial arrangements between physicians and potential referral sources are the Ethics in Patient Referrals Act, more commonly called the Stark Law (42 U.S.C. ' 1395nn), the Medicare and Medicaid Antikickback Statute (42 U.S.C. ' 1320a-7b) and the False Claims Act (the civil False Claims Act is codified at 31 U.S.C. ' 3729, while the criminal False Claims Act is codified at 18 U.S. C. ' 387). The first two of these laws require physicians who enter into financial arrangements with potential referral sources for which claims for items or services may be presented to federal health benefit programs to try to structure their affairs to fall within one of the narrow statutory or regulatory exceptions or safe harbors the False Claims Act provisions essentially require persons who cause claims to be submitted to the federal government for reimbursement to do so in an honest manner.

Federal Oversight of Fraud and Abuse Laws Affecting Clinical Researchers

The FDA is a major player. Basically, the agency monitors the testing of new drugs in humans, determines if new drugs can be marketed, and then tracks any adverse reports about approved drugs after marketing begins in order to ensure that the drugs are safe, effective and properly labeled.

The testing of drugs used by humans involves three to four “phases.” Far fewer drugs make it through the last stage of the new drug-approval process than are introduced for study.

A common publicly held misconception is that the FDA's scientists actually test drugs to determine their safety and efficacy; rather, the agency oversees the development of drug protocols and reviews the data submitted by the new drug or new device proponents.

In the area of clinical research, the FDA has promulgated regulations that delineate the respective responsibilities of the clinical investigators, new drug or device sponsors and investigational review boards (IRBs). Clinical drug trials are scientific experiments conducted by clinical investigators. Increasingly, because of shrinking revenue streams, many clinical investigators are physician-researchers who have entered into agreements with sponsors (ordinarily, drug manufacturers or research institutions that have developed the drugs). Among other requirements, physicians who administer investigational drugs must abide by various conditions regarding the conduct of the study as outlined by FDA regulations and sign an FDA form certifying that they have received approval from an IRB before they begin the study.

OIG's Responsibilities

The Office of the Inspector General (OIG) has oversight responsibility for the Medicare Trust Fund. Its agents enforce the federal criminal and civil Anti-Kickback Statute, codified at 42 U.S.C. ' 1320a-7b, which prohibits the knowing and willful solicitation or receipt of any remuneration, direct or indirect, in exchange for referring patients to a person for the furnishing of items or services for which payment may be made by Medicare or Medicaid. A line of cases interpreting this statute holds that if just one purpose underlying the payment of remuneration is to induce referrals of items or services paid for federal or state health care programs, then the statute is violated. While there are about two dozen safe harbors to this statute, failing to meet a safe harbor does not mean that the statue has automatically been violated, since it requires proof of an impermissible intent.

As followers of the industry are well aware, federal authorities already have prosecuted industry players under the Anti-Kickback statute for grant-giving practices. Various manufacturers have also been subjected to prosecution under state analogs of the antikickback statute. The most pertinent FDA regulations with which clinical researchers must be familiar involved informed consent requirements (see article by Maureen Milford, infra), the sponsor and monitor requirements, the requirements for financial disclosure by clinical investigators, the requirements for review and approval, and the requirements pertaining to investigational new drugs.

In addition, the OIG enforces the federal civil monetary penalty provisions, and the mandatory and permissive exclusion from participation in Medicare and state health care program provisions. The OIG has long been concerned about pharmaceutical firms engaging in que4stional drug promotion practices.

Conclusion

Because the number of privately sponsored new drug and new device clinical investigations has eclipsed the number of governmental-sponsored studies, suppliers, research institutions and clinical investigators must become aware of the various dangers posed under the fraud and abuse laws in addition to their various duties under the regulatory framework for clinical research). To protect against regulatory action, affected parties need to become familiar with the nuances of these laws and the regulatory focus of the agencies that oversee such laws, and the proactive measures to protect themselves from any regulatory scrutiny before it develops.

At a minimum, all parties involved in clinical research should adequately document all disbursements of grant funds to: 1) reflect the purposes for which the funds are provided; 2) demonstrate that the payments are set in a manner that fairly approximates fair market value for the services provided; 3) memorialize that any disbursements of grant funds are not tied to the referral of any Medicare of Medicaid business; and 4) carefully document all the extra time and costs that are incurred in conducting the clinical investigation.