The two business drivers of CROs are (1) pharmaceutical companies that want studies, and (2) referring physicians. Though CROs will enter into advertising programs designed to educate and attract study participants (often paid for by Pharma), CROs are often frustrated in generating community physician referrals. One of the main obstacles is the federal Anti Kickback Statute (AKS), which forbids payment of any kind in exchange for patient referrals. CROs will be glad to know, however, that one of the AKS regulatory exceptions (Safe Harbors) in particular, the “Personal Services Exception” does allow CROs to enter into compensation arrangements with referring physicians. Though the purpose cannot be to induce patient referrals, if the Safe Harbor is complied with, the CRO can have a compensation arrangement with a physician who refers.
The Safe Harbor essentially requires the following:
- That the arrangement be for necessary services (not some cloaked way to pay for patient referrals);
- The doctor’s duties have to be in writing;
- There has to be a written agreement between the parties;
- The agreement must have a 12 month term (though it could be terminated within that period of time);
- Compensation must be set in advance, be consistent with fair market value and not vary based on the value or volume of business between the CRO and the referring doctor.