Physician-industry collaboration can produce important medical advances. If your contribution is your time and effort or your ability to generate useful ideas and the payment you receive is fair market value compensation for your services without regard to referrals, then, depending on the circumstances, you may legitimately serve as a bona fide consultant.
However, some pharmaceutical and device companies have used "sham" consulting agreements and other arrangements to buy physician loyalty to their products or testing. Such arrangements are viewed as "illegal" when they induce physicians to prescribe or use products on the basis of that loyalty to the company or to get more money from the company, rather than because of the work performed for the consulting or rather than because it is the best treatment for the patient.
As a practicing physician or health care provider, you may have opportunities to work as a consultant. researcher or promotional speaker for the drug or device industry. For every financial relationship offered to you, evaluate the link between the services you can provide and the compensation you will receive. Test the propriety of any proposed relationship by asking yourself the following questions:
1/ Does the company really need my particular expertise or input?
2/ Does the amount of money the company is offering seem fair, appropriate, and commercially reasonable for what it is asking me to do?
3/ Am I actually doing research or consulting work that is of value? Is the company telling me that one of my assistants can do all the work and it's a great way to give me a "revenue stream" or other such promises?
4/ Is it possible the company is paying me for my loyalty so that I will prescribe its drugs or use its devices?
5/ What would happen if you do not prescribe the drugs, use the devices or do not order the tests at issue?
If your contribution is your ability to prescribe a drug or use a medical device or refer your patients for particular services or supplies, the proposed consulting arrangement likely is one you should have reviewed by a respected health care law lawyer and not rely on the company's lawyers. If in doubt, avoid as it could violate fraud and abuse laws.
For example, if a drug company offers to pay you and a hundred other “thought leaders” to attend a conference in the Bahamas without requiring preparatory work on your part or information about your expertise in the field (other than the fact that you are a licensed physician), you should be suspicious that the company is attempting to influence you to prescribe its drug. If you're offered payment for "research" by just tracking information for ordering genetic testing, think about whether there is true research going on and find out what the company is charging for the testing.
The government is getting much more aggressive on pursuing claims that these are disguised "kickbacks." If it sounds too good to be true, it probably is so be careful out there.