Saturday, March 31, 2007

Q. The feds are scrutinizing cooperative marketing programs. How should I avoid arrangements they dislike?
A. The OIG views cooperative marketing arrangements with the following characteristics as suspect:
* The manufacturer either provides free advertising or underwrites a portion of advertising expenses for the supplier. For example, the manufacturer might develop and pay for television advertising featuring its products, and include the supplier's name and contact information in the advertisements. The OIG is particularly critical of advertisements that also include a toll-free telephone number that reaches a call center paid for, operated and staffed by the manufacturer. The OIG is concerned that customers calling the telephone number may mistakenly believe that they are speaking to the DME supplier and obtaining objective information about DME.
* The manufacturer selects suppliers to include in its cooperative marketing program based on the demographics of the supplier's market, historic market data and projected market potential.
In the OIG's view, cooperative marketing arrangements could serve as disguised kickbacks (i.e., payments by a manufacturer to a supplier for referrals). The risk that the OIG will view an arrangement as a violation of the statute will be reduced if certain safeguards are in place. For example, instead of the manufacturer providing free advertising for the supplier, they should share equitably in the cost of advertising that promotes both the manufacturer's products and the supplier. If the advertisement displays a toll-free telephone number for a call center, the advertisement should clearly identify the company that answers the call. Call center representatives also should clearly identify the company that they represent.
Phuong Nguyen is a healthcare attorney with Brown & Fortunato in Amarillo, Texas. Reach him at (806) 345-6308 or