July 28, 2022
Tips for Life Sciences Companies Leveraging Equity Compensation with Physician Advisors
Life sciences companies may want to leverage equity compensation for their physician advisors – but there are complicated healthcare fraud & abuse regulations abound. A recent Fenwick memo lays out several recommendations for life science companies who want to better structure such equity compensation programs, with a short excerpt below:
– Develop and establish, in advance, objective qualifications for physician advisors who may be compensated with equity, avoiding factors that take into consideration the expected volume or value of referrals or business generation (whether currently or in the future) that a specific physician or specialty of a physician can make on behalf of the company.
– Aggregate compensation, including awarded equity, to physician advisors should be at fair market value (FMV) and commercially reasonable for the services to be provided by the physician advisor. The company should develop and maintain reasonable internal documentation to support the FMV of the full arrangement that is refreshed periodically as the advisory arrangement gets renewed.
The memo also recommends that companies develop a healthcare compliance program that encompasses compliance with various laws, including the Federal Anti-Kickback Statute – especially as companies near the coverage & reimbursement stage for their products.
– Emily Sacks-Wilner