US Govt. Warns Drug Co.'s Against Cash Incentives 

October 01, 2002 01:41 PM ET

NEW YORK (Reuters Health) - The pharmaceutical industry must not offer cash or other financial incentives to pharmacies, physicians or benefit managers to switch a patient's prescription from one manufacturer's drug to a rival product, the US government warned on Monday. 

Such inducements may be viewed as "kickbacks" prohibited under federal law, according to draft compliance guidelines issued by the Health and Human Services Office of Inspector General (OIG). 

Likewise, drugmakers may not pay pharmacies, pharmacy benefit managers or others to persuade patients or physicians to switch to the company's product, it said. 

Inappropriate drug switching has become a hot button in the industry and is partly the focus of an ongoing government probe into the pharmacy benefit management industry. The inquiry, led by US Attorney Jim Sheehan of Philadelphia, has resulted in several subpoenas for information from pharmacy benefits managers and health plans, according to filings with the US Securities and Exchange Commission. 

The document focuses largely on kickbacks and other illegal inducements provided by manufacturers to drug purchasers; physicians and other professionals who order or prescribe drugs; and sales agents. 

The OIG further recommends that pharmaceutical manufacturers, at a minimum, comply with the voluntary code of ethics set by the Pharmaceutical Research and Manufacturers of America. The PhRMA code bans drug reps from lavishing doctors with free trips, tickets to theater or sporting events and expensive dinners. 

"Arrangements that fail to meet the minimum standards set out in the PhRMA Code are likely to receive increased scrutiny from government authorities," the agency said. 

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