Compliance Issues with Overcoming “Friction” in the Sale of Expensive Pharmaceutical Products

By Gregg Shapiro

The pharmaceutical distribution and reimbursement system in the United States has many inherent “friction points” that discourage unnecessary use of expensive pharmaceutical products. Because having a robust compliance program makes good business sense,[1] compliance professionals in the pharmaceutical industry should understand the dynamics of these friction points and be aware of the compliance issues that can arise at each of them. In order to sell a pharmaceutical product, its manufacturer not only must convince physicians to prescribe the product—the friction point that has generated perhaps the most frequent enforcement activity involving pharmaceutical sales practices over the past two decades—but also may have to convince patients to purchase the drug, pharmacy and therapeutics committees to put the drug on formulary, nursing home pharmacies and electronic health record software vendors to recommend the drug, and insurers, both public and private, to pay for the drug. The pressure to overcome these challenges can be immense, and pharmaceutical executives and sales and marketing professionals may seek to smooth over these friction points through unlawful kickback schemes and false representations. This article discusses some of the potential compliance issues that may occur at each of these points in the pharmaceutical distribution and reimbursement system.

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