Managing Relationships with Industry

A Physician's Compliance Manual


  • Steven C. Schachter, MD, Harvard Medical School, Boston, MA, USA
  • William Mandell
  • Scott Harshbarger
  • Randall Grometstein

Now more than ever, doctors are being targeted by government prosecutors and whistleblowers challenging the legality of their relationships with drug and device companies. With reputations at stake and the risk of civil and criminal liability, it is incumbent upon doctors to protect themselves. Managing Relationships with Industry: A Physician’s Compliance Manual is an indispensable resource for doctors, professional societies, academic medical centers, community hospitals, and group practices struggling to understand the ever changing law and ethical standards on interactions with pharmaceutical and device companies. It is the first comprehensive summary of the law and ethics on physician relationships with industry written for the physician. Authored by a former state Attorney General, Harvard Medical School Professor, health care lawyer and professor of ethics, Managing Relationships approaches the topic from a balanced and reasoned perspective adding to the on-going national dialogue and debate on the proper limits to medicine’s relationship with industry.
View full description


Physicians in academic and private practice settings dealing with the research and marketing arms of pharmaceutical and device manufacturers.


Book information

  • Published: June 2008
  • ISBN: 978-0-12-373653-6


“A timely balanced and thoughtful book combining important reference material, practical real world issues and broadly informed perspective that allow healthy dialogue among physicians, government, the public and the device and drug industries. An important step toward clearing the air and setting a course for de-risking physician-industry interactions and aligning incentives for improving patient care. Physicians and the public are exposed to polarized, incomplete and biased debates about how physicians and their organizations should manage their relationships with industry. This book gives one the wisdom and confidence to find the best balance between avoidance of conflicts and achieving the highest benefits for patients.” -John A. Parrish, M.D., Executive Director and Founder of CIMIT, the Center for Integration of Medicine and Innovative Technology

“This book is an important contribution to the ongoing discussion inside and outside the medical profession on the legal and ethical boundaries for doctors in their relationships with pharmaceutical and device makers.” -Donald M. Berwick, MD, MPP, President and CEO, Institute for Healthcare Improvement

“In these times, virtually all physicians have interactions with the industry, and this book addresses the relevant issues. Every practicing physician who makes contact with the health care industry will find this volume an invaluable reference – and a wonderful guide to both ethical and legal behavior.” -Roger J. Porter, MD, Former Deputy Director of NINDS(NIH);Co-Author of Biomedical Research Collaboration and Conflict of Interest

“This book provides physicians, lawyers, and the public with an invaluable review of the ethical and legal issues raised by physician-industry relationships, and a practical guide to ethically-sound guidelines and policies” -Lachlan Forrow, MD., Associate Professor of Medicine, Harvard Medical School, President, The Albert Schweitzer Fellowship

“The track record for the relief of human suffering by the pharmaceutical and device industry has been spectacular. For this progress to continue, all parties must work together, conscious of, adhering to, and always answerable to the question of conflict of self-interest. This book details solid legal and ethical guidance, which if followed, will move us in the right direction and create welcomed positive synergy between the pharmaceutical - medical device industry and physicians.” -Leonard Morse, MD, Commissioner of Public Health, City of Worcester, Massachusetts; Professor of Clinical Medicine, Family Medicine and Community Health, University of Massachusetts Medical School; Past Chair of the AMA's Council on Ethical and Judicial Affairs.

Table of Contents




1. Background

The Era of Big Business

Physicians and Industry Sales Representatives

Physicians Involved with Marketing to Other Physicians

Continuing Medical Education

Paying Doctors to Enroll Patients in Clinical Trials

Other Conflicts of Interest

2. Overview of Legal Sources

Anti-Kickback Laws

Safe Harbors

Interplay between Anti-Kickback and Stark Laws

Stark and Physician Self-Referral Laws

Drug and Device Companies Are Generally Not Stark "Entities"

Financial Relationships Under Stark


Indirect Financial Relationships and Exceptions

Direct Financial Relationships

Federal False Claims Act

Whistleblower Qui Tam Actions

Use of The Federal False Claims Act (FCA) to Pursue Alleged Anti-Kickback and Stark Violations

Civil Monetary Penalties

Exclusion From Medicare and Medicaid Programs

State False Claims Acts and Whistleblower Laws

State Laws Regulating Marketing to Physicians

Food and Drug Administration

Off-Label Uses and Marketing

Medicare Part D, Medicaid Drug Coverage and Other Program Changes to Prescription Drugs Coverage

Risks to Physicians

3. Summary of Recent Prosecutions and Investigations

Active Enforcement

The Prosecutable Case

Whistleblower as Private Attorney General

Settlements and Dispositions

Case Examples

Anti-Kickback Cases

off-Label Marketing Cases

Free Sample/"Marketing The Spread" Cases

Food, Drug, and Cosmetic Act False Statements Cases

Group Purchasing Organization Cases

Physician Defendants in Cases Involving Financial Relationships with Industry

4. Applications of Law and Professional and Trade Association Standards to Physician Relationships with Industry

Office of Inspector General Reports

Office of Inspector General Special Fraud Alert

Office of Inspector General Compliance Program Guidance


Medical Practices

Pharmaceutical Manufacturers

Centers for Medicare and Medicaid Services Drug Manual

Corporate Integrity Agreements

Trade Association Codes of Conduct

Phrma Code

Advamed Code

International Federation of Pharmaceutical Manufacturers and Associations Code of Pharmaceutical Marketing Practices

Urac Pharmacy Benefit Management Draft Standards

Medical Association and Society Codes of Conduct

American Medical Association Ethical Opinion 8.061 on Gifts to Physicians from Industry

The American Medical Association Position Versus The No-Gift Movement

Other Societies

Continuing Medical Education

Food and Drug Administration 1

Accreditation Council for Continuing Medical Education

Government Interest

Medical Education and Communication Companies

Clinical Practice Guidelines

Academic Medical Center Conflict-of-Interest Policies

Community Hospitals and Physician-Owned Medical Practices

5. Legal and Ethical Aspects of Specific Physician-Industry Financial Relationships

Gifts, Meals and Visits By Company Sales Representatives

The Law on Gifts to Physicians

Manufacturer’s Support

Applicable State Laws

The Ethics of Gifts to Physicians

Detailing and Training

The Law on Detailing and Training Sessions

The Ethics of Detailing and Training Sessions

Continuing Medical Education

The Law on Continuing Medical Education

The Ethics of Continuing Medical Education

Non-CME Activities/Company Speakers Bureaus

The Law on Speaking for Companies

The Ethics of Non-CME Educational Activities

Consulting and Other Service Arrangements

The Law on Consulting

The Ethics of Consulting


Research Funding

The Law on Research Funding From Industry

The Ethics of Research Funding From Industry

Food and Drug Administration Advisory Committees

National Institutes of Health and Conflicts of Interest

Ama Ethical Standards for Researchers

Publishing Activities

Off-Label Marketing

The Law on off-Label Marketing

The Ethics of off-Label Marketing

Disclosure Considerations

Considerations for Medical Specialty Leaders

Equity Interests in Drug and Device Companies

Committee Memberships

Responding to a Subpoena or Interview Request by a Law Enforcement official


6. Approaching and Adopting Effective Compliance Plans

Current Pressures on the U.S. Healthcare System

Physician Shortages

Healthcare Expenditures

The Pipeline of Medical Innovations: Diminishing Returns

Addressing The Challenges: Key Stakeholders

Public and Media

Physicians and Their Organizations

The Nature and Management of Conflict of Interest

Cognizance and Understanding of The Rules

Considerations for a Compliance Plan

The Absolutist Approach

Any Degree of Industry Engagement

Developing Compliance Plans

Compliance Plan Elements

System-Wide Reforms

Knowledge-Based Care: Academic Detailing and Independent Data Sources

Stricter Conflict-of-Interest Standards for Health System Stewards

Medical School Curriculum on Industry Relationships

Professional Society Leadership

Broader Compliance Training for Physicians on Industry Relationships

Patient Education


Appendix 1 Links to Frequently Cited Documents and Codes of Conduct

Appendix 2 Key to Abbreviations

Appendix 3 Model Service Agreement for Speaking at a Continuing Medical Education Activity

Appendix 4 Model Agreement for Consulting