Competent authorities

Federal Laws & Implementing Regulations, & Government-Issued Guidance

Various federal laws and implementing regulations may be implicated in connection with providing anything of value to healthcare professionals ("HCPs"), under laws designed to prevent fraud, waste, and abuse ("FW&A") in government healthcare programs. Enforcement action and settlement history provide insight on the federal government’s perspective on these matters.  The federal government also issues guidance that may provide insight on the way it views transfers of value to HCPs.  Examples:

Federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)):

Prohibits providing remuneration in any form with the intent to induce or reward for, the prescribing, or arranging for or recommending the prescribing, of a product or service that is reimbursed by a federal healthcare program.  Does not establish specific appropriate amounts to be spent on HCPs related to accommodations, travel, or meals.

Physician Payment Sunshine Act (42 U.S.C. § 1320a-7h) and Implementing Regulations (42 C.F.R. Part 403, Subpart I):

Requires applicable manufacturers to track and to submit information regarding payments made to certain US HCPs.  Does not establish appropriate amounts to be spent on HCPs related to accommodations, travel, or meals; rather, addresses tracking and transparency obligations.  Individual payments of de minimis value (adjusted annually; currently $11.04) are exempt from the reporting requirement, although tracking is required because reporting is triggered if the aggregate payments to a particular HCP exceed a certain amount (adjusted annually; currently $110.40).

Federal (Government-Issued) Guidance:

US federal agencies issue guidance (e.g., OIG guidance including the HHS-OIG Compliance Program Guidance for Pharmaceutical Manufacturers (the "HHS-OIG Guidance", available here), Advisory Opinions, Special Fraud Alerts, etc.) to the life sciences and healthcare industries on various activities that may include guidance and interpretation relative to items of value provided to HCPs.  

State Laws & Implementing Regulations

FW&A Laws Including Any Payor Statutes:

Nearly all states have adopted FW&A laws that are generally analogous to the federal laws, but which in some cases apply more broadly than the federal laws (e.g., regardless of payor).

Marketing and Gift Laws: 

State marketing and gift laws should be considered. The exact applicability and scope will vary, and the landscape is subject to change, but a number of states have established compliance program requirements and/or impose restrictions on (and/or requirements related to) items or transfers of value being offered to HCPs in a particular state. Examples of jurisdictions with laws of this type:

• California[1]
• Connecticut[2]
• District of Columbia[3]
• Maine[4]
• Massachusetts[5]
• Minnesota[6]
• New Jersey[7]
• Vermont[8] 

Other Points to Consider (Not Addressed in this Survey): In some cases even cities (for example, the City of Chicago) may issue requirements governing marketing to HCPs;[9] and there may be other state laws applicable more broadly to gifts or other items of value (including hospitality) to state employees, with whom the life sciences industry may interact (for example, Louisiana). Further, healthcare professionals are governed by state professional licensure and related ethical requirements, the specifics of which may vary from state-to-state, and in addition the American Medical Association ("AMA") Code of Medical Ethics provides guidance regarding industry-provided gifts and subsidies for physicians. Further, healthcare institutions may have their own internal policies that prohibit or limit the receipt of hospitality. 

Footnotes

[1] Cal. Health & Safety Code § 119402.
[2] Conn. Gen. Stat. § 21a-70e.
[3] D.C. Code § 48-833.01.
[4] Me. Rev. Stat. tit. 32 § 13759; 02-392 C.M.R. ch. 12, § 7.
[5] Mass. Gen. Laws ch. 16 § 111N.
[6] Minn. Stat. § 151.461.
[7] N.J. Admin. Code § 13:45J.
[8] Vt. Stat. tit. 18 § 4631a.
[9] Chicago Municipal Code § 4-6-310(h)(1).

PhRMA Code on Interactions with Healthcare Professionals (last revised September 2019)

AdvaMed Code of Ethics (effective January 1, 2020)

As explained, because a number of the standards cross-reference and incorporate others by reference, it is prudent to consider the landscape as a whole when approaching the US market. 

General Principle in the US: US government- and industry-issued guidance generally distinguish between two categories:

• The potential for an industry role relative to travel and hospitality expenses (payment for, or reimbursement for, such expenses) in connection with company-sponsored events, meetings, or HCP services. This may include some meetings with educational or scientific content, but the content is controlled by the company. This category may also include travel and hospitality associated with HCPs engaged to provide services for the company (e.g., consultants or clinical investigators).  This category is the focus of the US responses for this survey.
• The potential for industry financial support in connection with independent continuing medical education ("CME") or similar third-party conferences or events where the company does not control or influence content. This category is further explained in Online Conferences. Under industry codes, any financial support should be provided to conference organizers, and the conference organizers in turn should apply appropriate standards to its use.

Federal Law & Implementing Regulations, & Government-Issued Guidance: The laws and regulations do not specifically enumerate or define "appropriate" versus "inappropriate" venues, but enforcement action and settlement history show that selection is likely to impact the government’s perception of potential intent to induce or reward. In addition, the HHS-OIG Guidance states generally, with respect to entertainment, recreation, travel, meals, gifts, gratuities, and other business courtesies that the AKS should be considered and that "compliance with the PhRMA Code with respect to these arrangements should substantially reduce a manufacturer's risk." 68 Fed. Reg. 23,721, 23,738 (May 5, 2003). Other guidance may discuss the appropriateness or inappropriateness of venues for certain HCP interactions (e.g., OIG Special Fraud Alert on Speaker Programs provides that speaker programs held at venues that are not conducive to the exchange of educational information, such as golf courses, wineries, and sports stadiums, would be suspect). 

State Laws & Implementing Regulations:  Several state laws reflect an expectation of reasonable and appropriate event locations (for example, New Jersey in reference to venues and circumstances conducive to bona fide services; other states through incorporation of the PhRMA and/or AdvaMed Codes). 

Industry Codes of Conduct: The PhRMA Code and AdvaMed Code address restrictions regarding event venues.  For example, the PhRMA Code states that for consulting arrangements with HCPs the venue and circumstance of meetings with consultants must be conducive to the primary focus of the meeting, and resorts are specifically not appropriate venues.  The AdvaMed Code states that companies should not select a setting because of its entertainment or recreational facilities (e.g., resorts in geographic locations renowned primarily as seasonal vacation destinations).

Federal Law & Implementing Regulations, & Government-Issued Guidance: The laws and regulations do not specifically enumerate or define "appropriate" versus "inappropriate" venues, but enforcement action and settlement history show that selection is likely to impact the government’s perception of potential intent to induce or reward. In addition, the HHS-OIG Guidance states generally, with respect to entertainment, recreation, travel, meals, gifts, gratuities, and other business courtesies that the AKS should be considered and that "compliance with the PhRMA Code with respect to these arrangements should substantially reduce a manufacturer's risk." 68 Fed. Reg. 23,721, 23,738 (May 5, 2003). See below. Other guidance may discuss appropriateness or inappropriateness of venues for certain HCP interactions (e.g., OIG Special Fraud Alert on Speaker Programs provides that speaker programs held at venues that are not conducive to the exchange of educational information, such as golf courses, wineries, and sports stadiums, would be suspect). 

State Laws & Implementing Regulations:  Several state laws reflect an expectation of reasonable and appropriate event locations (for example, New Jersey in reference to venues and circumstances conducive to bona fide services; other states through incorporation of the PhRMA and/or AdvaMed Codes). 

Industry Codes of Conduct: The PhRMA Code and AdvaMed Code address restrictions regarding event venues. For example, the PhRMA Code states that for consulting arrangements with HCPs the venue and circumstance of meetings with consultants must be conducive to the primary focus of the meeting, and resorts are specifically not appropriate venues. The AdvaMed Code states that companies should not select a setting because of its entertainment or recreational facilities (e.g., resorts in geographic locations renowned primarily as seasonal vacation destinations).

Federal Law & Implementing Regulations, & Government-Issued Guidance: The laws and regulations do not specifically enumerate or define "appropriate" versus "inappropriate" accommodations, but enforcement action and settlement history show that selection is likely to impact the government's perception of potential intent to induce or reward. In addition, the HHS-OIG Guidance states generally, with respect to entertainment, recreation, travel, meals, gifts, gratuities, and other business courtesies that the AKS should be considered and that "compliance with the PhRMA Code with respect to these arrangements should substantially reduce a manufacturer’s risk." 68 Fed. Reg. 23,721, 23,738 (May 5, 2003). See below. 

State Laws & Implementing Regulations:  Some state laws incorporate adherence to the PhRMA Code and/or AdvaMed Code as part of their requirements (see below).  Some states, like New Jersey, prohibit the payment or subsidy of lodging costs for non-faculty prescribers attending an educational or promotional event. 

Industry Codes of Conduct: Industry Codes provide guidance on accommodations in certain circumstances. For example, the PhRMA Code provides that compensation for HCP lodgings for consultant arrangements and speaker programs should be reasonable and based on fair market value. The AdvaMed Code states that accommodations for HCPs to attend Company-conducted programs or meetings must be modest and reasonable under the circumstances and encourages companies to establish controls on the appropriate level of lodging accommodations.

Federal Law & Implementing Regulations, & Government-Issued Guidance: The laws and regulations do not specifically enumerate or define "appropriate" versus "inappropriate" air travel, but enforcement action and settlement history show that selection is likely to impact the government’s perception of potential intent to induce or reward. In addition, the HHS-OIG Guidance specifically notes that companies providing benefits, including travel, in association with information or marketing presentations could potentially implicate the AKS. The HHS-OIG Guidance states generally, with respect to entertainment, recreation, travel, meals, gifts, gratuities, and other business courtesies that the AKS should be considered and that "compliance with the PhRMA Code with respect to these arrangements should substantially reduce a manufacturer’s risk." 68 Fed. Reg. 23,721, 23,738 (May 5, 2003). See below. 

State Laws & Implementing Regulations: A number of states with laws of this type incorporate an expectation that travel expenses must be "reasonable" to be covered. 

Industry Codes of Conduct: The PhRMA Code indicates that, even in circumstances in which covering travel expenses is otherwise considered appropriate under the guidance, reimbursement should be limited to "reasonable" travel expenses. The AdvaMed Code also provides that travel costs for HCPs, where permitted, must be "modest and reasonable under the circumstances."

Federal Law & Implementing Regulations, & Government-Issued Guidance: The laws and regulations do not specifically enumerate or define "appropriate" versus "inappropriate" train transportation, but enforcement action and settlement history show that selection is likely to impact the government’s perception of potential intent to induce or reward. In addition, the HHS-OIG Guidance specifically notes that companies providing benefits, including travel, in association with information or marketing presentations could potentially implicate the AKS. The HHS-OIG Guidance states generally, with respect to entertainment, recreation, travel, meals, gifts, gratuities, and other business courtesies that the AKS should be considered and that “compliance with the PhRMA Code with respect to these arrangements should substantially reduce a manufacturer’s risk.”  68 Fed. Reg. 23,721, 23,738 (May 5, 2003).  See below. 

State Laws & Implementing Regulations: A number of states with laws of this type incorporate an expectation that travel expenses must be "reasonable" to be covered. 

Industry Codes of Conduct: The PhRMA Code indicates that, even in circumstances in which covering travel expenses is otherwise considered appropriate under the guidance, reimbursement should be limited to "reasonable" travel expenses.  The AdvaMed Code also provides that travel costs for HCPs, where permitted, must be "modest and reasonable under the circumstances."

Federal Law & Implementing Regulations, & Government-Issued Guidance: The laws and regulations do not specifically enumerate or define "appropriate" versus "inappropriate" travel considerations, but enforcement action and settlement history show that selection is likely to impact the government’s perception of potential intent to induce or reward. In addition, the HHS-OIG Guidance specifically notes that companies providing benefits, including travel, in association with information or marketing presentations could potentially implicate the AKS. The HHS-OIG Guidance states generally, with respect to entertainment, recreation, travel, meals, gifts, gratuities, and other business courtesies that the AKS should be considered and that "compliance with the PhRMA Code with respect to these arrangements should substantially reduce a manufacturer's risk." 68 Fed. Reg. 23,721, 23,738 (May 5, 2003). See below. 

State Laws & Implementing Regulations: Some states detail restrictions on payments for travel for non-faculty HCPs.  For example, New Jersey prohibits any payment or direct subsidy to a non-faculty prescriber for the costs of travel associated with attending any education event or promotional activity. 

Industry Codes of Conduct: The PhRMA Code indicates that, even in circumstances in which covering travel expenses is otherwise considered appropriate under the guidance, reimbursement should be limited to "reasonable" travel expenses.  The AdvaMed Code also provides that travel costs for HCPs, where permitted, must be "modest and reasonable under the circumstances."

Federal Law & Implementing Regulations, & Government-Issued Guidance: The laws and regulations do not specifically enumerate or define "appropriate" versus "inappropriate" standards regarding the provision of meals, but the situation in which they are offered is likely to impact the government’s perception of potential intent to induce or reward. In addition, the HHS-OIG Guidance specifically notes that companies providing benefits, including meals, in association with information or marketing presentations could potentially implicate the AKS.  The HHS-OIG Guidance states generally, with respect to entertainment, recreation, travel, meals, gifts, gratuities, and other business courtesies that the AKS should be considered and that “compliance with the PhRMA Code with respect to these arrangements should substantially reduce a manufacturer’s risk.”  68 Fed. Reg. 23,721, 23,738 (May 5, 2003). See below. HHS-OIG generally expects meals and refreshments to be reasonable and modest. Enforcement actions have cited kickbacks in the form of expensive dinners and excessive alcohol. 

State Laws & Implementing Regulations: States have varying approaches to meal limitations. For example, Vermont prohibits the provision of meals or other food items to Vermont HCPs or non-prescribing staff, unless the meals are fair market compensation for HCP services or refreshments at a convention booth.  Other states, like Massachusetts, limit the provision of modest meals for HCPs to in-office educational presentations and out-of-office speaker programs and conventions. 

Industry Codes of Conduct: The PhRMA Code permits modest, occasional meals if they are offered in the appropriate circumstances and venue. PhRMA’s Statement on Application of PhRMA Code Section 2 During Emergency Periods addresses the provision of meals in conjunction with virtual presentations to HCPs during the COVID-19 pandemic. Meals may only be provided if there is a reasonable expectation that the HCP will remain present throughout the event, and meals should continue to be limited to in-office or in-hospital settings. The AdvaMed Code provides that meals may only be provided to HCPs who attend and have a bona fide purpose for attending the meeting (e.g., no meals for entire office staff or guests).  Both the PhRMA Code and AdvaMed Code specifically warn against “dine & dash” programs offering meals without a company representative being present at the meeting.

Federal Law & Implementing Regulations, & Government-Issued Guidance: The laws and regulations do not specifically enumerate or define a maximum dollar value for meals, but the value is likely to impact the government’s perception of potential intent to induce or reward. In addition, the HHS-OIG Guidance specifically notes that companies providing benefits, including meals, in association with information or marketing presentations could potentially implicate the AKS.  The HHS-OIG Guidance states generally, with respect to entertainment, recreation, travel, meals, gifts, gratuities, and other business courtesies that the AKS should be considered and that "compliance with the PhRMA Code with respect to these arrangements should substantially reduce a manufacturer’s risk."  68 Fed. Reg. 23,721, 23,738 (May 5, 2003).  See below. HHS-OIG generally expects meals and refreshments to be reasonable and modest. Enforcement actions have cited kickbacks in the form of expensive dinners and excessive alcohol.  Federal guidance may also discuss limitations on meals for certain HCP interactions (e.g., OIG Special Fraud Alert on Speaker Programs notes a recent settlement involving instances where the average per attendee cost for food and alcohol at a speaker program exceeded $500).  

State Laws & Implementing Regulations: Some states incorporate concepts such as “modest” meals, with consideration of local standards, and gift caps which may come into play for meals depending on the circumstances.  For example, Minnesota sets an annual $50 cap, and Maine allows "modest" meals and refreshments of minimal value in certain circumstances and defines "modest" as the cost similar to that which an HCP would pay when dining at his/her own expense as judged by local standards where the event is held. Other states more generally incorporate PhRMA Code and/or AdvaMed Code standards by reference.

Industry Codes of Conduct: The PhRMA Code indicates that, in circumstances in which providing meals is otherwise appropriate under the Code, they should be modest as judged by local standards.  The AdvaMed Code also provides that permissible meals provided to HCPs must be modest and "provided in a manner conducive to the presentation of scientific, educational, or business information."

Federal Law & Implementing Regulations, & Government-Issued Guidance: The laws and regulations do not specifically enumerate or define "appropriate" versus "inappropriate" venues for meals, but the selection is likely to impact the government’s perception of potential intent to induce or reward.  In addition, the HHS-OIG Guidance specifically notes that companies providing benefits, including meals, in association with information or marketing presentations could potentially implicate the AKS.  The HHS-OIG Guidance states generally, with respect to entertainment, recreation, travel, meals, gifts, gratuities, and other business courtesies that the AKS should be considered and that "compliance with the PhRMA Code with respect to these arrangements should substantially reduce a manufacturer’s risk." 68 Fed. Reg. 23,721, 23,738 (May 5, 2003).  See below.  HHS-OIG generally expects meals and refreshments to be reasonable and modest. Enforcement actions have cited kickbacks in the form of expensive dinners and excessive alcohol. In addition to guidance more generally on appropriate venue and modest meals, advises against high-end restaurants. For example, OIG Special Fraud Alert on Speaker Programs said that suspect venues include high-end restaurants. 

State Laws & Implementing Regulations: In addition to guidance more generally on appropriate venue and modest meals, some states specifically include language mirroring the PhRMA Code in requiring that meals provided to health care providers generally must be provided in the provider's office or hospital setting. Some states more generally incorporate PhRMA Code and/or AdvaMed Code standards by reference. 

Industry Codes of Conduct: In addition to guidance more generally on appropriate venue and modest meals, the PhRMA Code states that sales representatives may provide meals in the HCP office or hospital only when provided in connection with an accompanying informational presentation and prohibits out-of-office meals by sales representatives or their immediate managers (except in connection with a speaker program). The AdvaMed Code provides that appropriate settings may include the HCP’s place of business "or an off-site space that is conducive to the discussion, such as a restaurant."

Federal Law & Implementing Regulations, & Government-Issued Guidance: The laws and regulations do not specifically address this topic but given the HHS-OIG Guidance’s cross reference to the PhRMA Code, the PhRMA Code’s view should be considered (i.e., inappropriate to cover expenses for non-participating spouses or guests). 

State Laws & Implementing Regulations: Some state law restricting payments and gifts to HCPs also specifically mention family members. For example, New Jersey’s prohibitions on gifts and payments to prescribers also apply to the prescriber’s immediate family, and Massachusetts prohibits meals provided to HCP spouses or other guests. Some states more generally incorporate PhRMA Code and/or AdvaMed Code standards by reference. 

Industry Codes of Conduct: The PhRMA Code states it is not appropriate for companies to pay for travel and lodging for non-faculty HCPs (e.g., it would not be appropriate to pay for the cost of an HCP’s spouse). The AdvaMed Code also states that companies may not pay for or otherwise subsidize travel or lodging for spouses or guests of HCPs.

General Principle in the US: US government- and industry-issued guidance generally distinguish between two categories:

1. The potential for an industry role relative to travel and hospitality expenses (payment for, or reimbursement for, such expenses) in connection with company-sponsored events, meetings, or HCP services.  This may include some meetings with educational or scientific content, but the content is controlled by the company.  This category may also include travel and hospitality associated with HCP’s engaged to provide services for the company (e.g., consultants or clinical investigators).  This category is the focus of the US responses provided above for this survey.  Relative to this category and with consideration of online formats, note:
   • Federal Guidance: In general, in light of significant restrictions on travel due to the COVID-19 pandemic, industry-sponsored or funded travel and hospitality is likely to be subject to a higher degree of scrutiny under the relevant standards (e.g., bona fide need, reasonableness). In one specific example, under the OIG Special Fraud Alert on Speaker Programs, industry can anticipate a higher degree of scrutiny of the justification for in-person events when it is possible to provide information virtually.
   • State Laws and Implementing Regulations: Some states specifically address the provision of honoraria for company-sponsored events.  For example, Maine limits the aggregate value of all cash and gifts received by an HCP for a particular speaking engagement to an annual limit of $500 in retail value. 
   • Industry Codes of Conduct: The PhRMA Code already addressed an expectation that if meals are provided there must be a reasonable expectation that the HCP will remain present throughout the event. Supplementing this, PhRMA’s Statement on Application of PhRMA Code Section 2 During Emergency Periods addresses the provision of meals in conjunction with virtual information presentations to HCPs during the COVID-19 pandemic. PhRMA states that meals should only be provided if there is a reasonable expectation that the HCP will remain present (e.g., virtually “present” over video or audio conferencing) throughout the event, and any meals offered in connection with informational presentation made by field sales representatives or their immediate managers should continue to be limited to in-office or in-hospital settings. 
2. The potential for industry financial support in connection with independent continuing medical education ("CME") or similar third-party conferences or events where the company does not control or influence content. (Note: If a company has engaged an HCP to present on behalf of the company at an event, this should be treated as a consulting arrangement, subject to considerations under category (1) above.)
   • The PhRMA Code states: "Since the giving of any subsidy directly to a health care professional by a company may be viewed as an inappropriate cash gift," any financial support should be given to the CME provider or conference’s sponsor, which, in turn, can use the money to reduce the overall  registration fee for all attendees.
   • The AdvaMed Code states that companies cannot provide direct contributions to individual HCPs or pay directly for individual HCPs registration fees. Educational grants provided by companies directly to third party program organizers can be used by these organizers to allow HCPs-in-training (for example, medical and nursing students, residents, etc.) to attend the program, provided that the Company does not select or control the selection of the specific HCPs-in-training who will benefit.
   • Some states (e.g., Massachusetts) specifically prohibit the reimbursement of costs for health care providers to participate in any CME event or third-party scientific or educational conferences, while others incorporate PhRMA Code and/or AdvaMed Code standards by reference.
   • The Accreditation Council for Continuing Medical Education ("ACCME") Standards for Continuing Medical Education sets forth standards regarding industry support of CME.  For example, the ACCME states that industry grants may not be used for travel, lodging, honoraria, or personal expenses for non-teacher or non-author participants of a CME activity.  The CME provider may use commercial support to pay for travel, lodging, honoraria, or personal expenses for bona fide employees and volunteers of the provider, joint providers or educational partners.
   • Given that in the US, industry should not generally be providing funds or reimbursement directly to HCPs in connection with attendance at, or travel to and from, independent third-party events, this topic is not further covered in the US survey responses. 

Refer to the General Principle in the US describing the distinction between company-sponsored and independent third-party events.

With respect to company-sponsored events, PhRMA's Statement on Application of PhRMA Code Section 2 During Emergency Periods addresses the provision of meals in conjunction with virtual presentations to HCPs during the COVID-19 pandemic.  Meals may only be provided if there is a reasonable expectation that the HCP will remain present throughout the event, and meals should continue to be limited to in-office or in-hospital settings.