What Are Those Consulting Fees and Speakers' Honoraria Really For?

Widely reported in the media were two large settlements reached by Merck & Co and federal prosecutors. As described by AP,

In Philadelphia, prosecutors said Merck agreed to pay $399 million for improper calculation of Medicaid rebates and bribing doctors. In New Orleans, prosecutors said the drugmaker agreed to pay $250 million for its rebate practices. With interest, that totals $671 million.

The settlement is the third largest ever for health care fraud, behind a $900 million case involving hospital operator Tenet Healthcare Corp. and a $730 million case involving hospital chain HCA, according to the group Taxpayers Against Fraud.

Whitehouse Station, N.J.-based Merck said the settlements do not constitute an admission of any liability or wrongdoing.

'What we have here is a disagreement (over) the rules of the Medicaid rebate program,' said Merck spokesman Ronald Rogers. 'These civil settlements were the best and most appropriate way to resolve these lengthy investigations.'

However, the settlement was not just about pricing.

From 1997 to 2001, prosecutors said Merck had about 15 different programs used by its sales representatives to give doctors and other health professionals 'illegal kickbacks,' disguised as fees for training or consultation, to induce them to prescribe Merck drugs.

Another AP report enlarged on this:

Prosecutors ultimately alleged that Merck paid physicians, hospitals and others excess fees to run supposed educational programs, from lunches to speaking engagements to visiting professorships, in hopes they would favor their products.

Clearly, this appears to be another in now a large series of cases in which prominent health care organizations settled charges of unethical, if not illegal behavior. The frequent appearance of such cases contributes to the impression that sleazy and unethical activities are more the rule than exception in health care, and that even the largest and formerly most reputable organizations are willing to go right up the line, and sometimes over it, in pursuit of more sales and more profits.

One feature of this case should be of particular concern to physicians and health care professionals. Drug, device, and biotechnology companies often loftily proclaim that all the money they spend to pay physicians as advisors, consultants, speakers, etc and to support myriad medical educational activities, goes to support of science and education. This case provides more evidence that consulting fees and speakers' honoraria may be meant as inducements to use and help market companies' products. Hence, at best, they are meant to support marketing, and at worst, they approach bribery.

Recall the recent case we discussed of a surgeon who admitted taking kickbacks from medical devices companies labelled as research grants and consulting fees.

Any physician of health care academic who accepts fees from commercial health care companies ought to consider whether the money is really supporting science or education, or is meant to pay for marketing or kickbacks for recommending the companies' products. In most cases, it may be hard to justify that the only purpose of the money is advancing science or education. Do physicians and other health care professionals really want to be regarded as part-time product marketers, or worse? Is the extra money really worth the shadow it throws on one's professionalism?