While a huge area of focus for pharmacies has been violations in making misbranded and/or adulterated products, most ignore violative marketing arrangements between pharmacies and other healthcare companies/professionals. However, these marketing arrangements can be as problematic as, if not more so than, typical FDA regulatory findings.

Case Presentation:

Pharmacies engaging in marketing relationships with physicians, hospitals or other service providers must be careful not to trip over the expectations of the Anti-Kickback Law, Stark Law and the False Claims Act – amongst other potential laws that may trip pharmacy owners and pharmacists. This is especially true when it relates to Government payers like Medicare, Medicaid, and Tricare . Unaware pharmacists may often clamor to engage with a physician and have to compete with drug representatives from pharmaceutical companies for his or her attention. Pharmacists may hence decide that to make the referral arrangement interesting enough for the physician, it is important to incentivize the relationship with the physician. Such incentives may include deals like: “If you refer fourteen patients to my pharmacy, we will give you a 20% rebate on the value of the prescriptions you referred.”

The Anti-Kickback Law generally prohibits an individual or entity from knowingly and willfully offering or paying, or from soliciting or receiving, remuneration in order to induce the referral or the arranging for the referral of business reimbursed by federal health care programs. A relationship supported by a rebate on the prescriptions referred would generally be deemed to “induce the referral.” Violations of the Anti-Kickback Law are automatically violative of the False Claims Act and have been the basis of civil and criminal penalties.

Management and Outcome:

Marketing relationships between pharmacies and other healthcare providers must be vetted to ensure that they don’t violate laws. If the law has been violated, appropriate corrective measures must be taken immediately. It is important that companies that have violated the law consider self-reporting since the fines, penalties and potential damage can be ameliorated. If you believe you have engaged in an inappropriate marketing relationship, reach out to the Kulkarni Law Firm now.