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Whoever knowingly and willfully offers or pays any remuneration...to any person to induce such person to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made...under a Federal health-care program shall be guilty of a felony.
Admittedly, this statute is quite a lot to digest at one time. Therefore, each part of the law will be separated and examined. After interpreting the act's phrases, we will provide some practical meaning to the law.
The phrase knowingly and willfully is a very important part of the act because it focuses on the individual's mens rea, or criminal intent. The government bears the heavy burden of proving the defendant's mens rea. This standard applies to both parties involved in a prohibited transaction, placing each at an equal risk. In defining knowingly and willfully, courts have applied the "should know" standard. Briefly, such a standard may be breached by reckless disregard for the consequences of one's actions as well as negligence in the preparing and submitting of claims, or in supervising the preparing and submitting of claims. This means a pharmacist must have known he/she was performing the fraudulent act or was instructing another to do the same. With respect to negligently submitting a claim, the courts look at what a similar person of reasonable prudence and intelligence would ascertain. As a result, the statute serves to protect the pharmacist who makes a legitimate mistake in submitting a claim.
Remuneration simply means payment or compensation. The federal anti-kickback law refers to offering or paying something of value with the intention of causing the recipient to make referrals over his/her reason or judgment due to the remuneration. What do referrals have to do with pharmacy? Well, they have the potential to come into play every day. One such example would be payments from the manufacturer to pharmacists for providing patients with instructions on the use of the manufacturer's drug. This would likely be seen as unlawful because patient counseling is a duty pharmacists already are obligated legally and ethically to provide.
An example identified by the Office of Inspector General (OIG) involved drug company A offering a cash award or "switch fee" to pharmacies each time a drug prescription was changed from drug company B's product to drug company A's product. Here, the pharmacies were induced to help persuade physicians, who were unaware of the pharmacies' financial interest, to change prescriptions. The OIG's example is different from the situation in which a pharmacist is required to switch a patient's prescribed medication to a formulary drug in order to be covered by the patient's insurance company. In the formulary illustration, the pharmacist is receiving a nominal dispensing fee plus a market value less than or equal to fair market value for services rendered. For example, a pharmacist receiving the average wholesale price (AWP) minus 10% plus a $2.50 dispensing fee for a prescription does not fit the definition of remuneration.
Two recent cases involving drug manufacturers further illustrate violations of the anti-kickback law with respect to remuneration. They also show how states are becoming more active in enforcing these regulations.
In both cases, Upjohn and Miles Laboratories instituted "cognitive services programs" under which they offered to compensate pharmacists for educating patients who switched to the new drugs covered under the program. The state attorneys general alleged these payments were made without the patients' knowledge, therefore depriving them of their rights under state unfair trade and consumer protection laws. Miles paid $605,000, in addition to paying $200,000 to the Massachusetts Medicaid Fraud Unit, while Upjohn paid $675,000.
There are, however, exceptions to liability under the federal Anti-kickback Statute. Otherwise known as safe harbors, these business relationships prevent the participants from being subject to criminal or civil prosecution. Though a description of all these exemptions is beyond the scope of this article, two safe harbors will be mentioned. The first one, relating to discounts, excludes from the definition of remuneration "a discount or other reduction in price obtained by a provider of services or other entity ... if the reduction in price is properly disclosed and properly reflected in the costs claimed or charges made by the provider or entity."
The key message here is that the pharmacist should properly disclose the discounts given. As seen earlier in the Miles and Upjohn cases, failure to disclose the remuneration resulted in violations of the act by both manufacturers. A second safe harbor relates to "personal service agreements" such as consulting arrangements. While possibly not as relevant to pharmacy practice as the first safe harbor, this second example illustrates an important point. Any pharmacist receiving payment for providing this type of service must make sure the arrangement is made pursuant to a written agreement that specifically details the services to be provided while not exceeding the fair market value of the services provided. Failure to take these steps will cause the agreement to lose its safe-harbor status and will result in a violation of the statute. Application principles for the federal anti-kickback law are presented in Fig. 1.
• Adherence to the APhA code of ethics presents a less appealing target for enforcement of the act.
• Choose incentives that benefit patient care when pursuing economic value.