Drug and medical-device makers paid $6.49 billion to U.S. doctors and teaching hospitals during 2014, according to the federal government’s first full-year accounting of the breadth of industry financial ties with medical providers.
The tally comprises company payments to more than 600,000 doctors and 1,100 hospitals for services such as consulting, research and promotional speeches about drugs, as well as the value of free meals provided to doctors by sales reps pitching products.
The figures come from a new federal-government transparency initiative. The 2010 Affordable Care Act included a provision dubbed the Sunshine Act, which requires manufacturers of drugs and medical devices to disclose most payments they make to physicians and teaching hospitals each year. The Centers for Medicare and Medicaid Services, or CMS, has compiled the records into an online, searchable database known as Open Payments.
The push for greater transparency was driven by concerns that doctors’ prescribing decisions are tainted by the money and gifts they receive each year from companies. Supporters expect the transparency initiative to provide useful information to patients about the relationships their doctors have with industry and to curb the influence of payments on medical care.
Companies say the payments are necessary to conduct research, to gather expert advice from practicing doctors, and to educate doctors about the appropriate use of drugs and devices. The American Medical Association said Tuesday that it opposes inappropriate, unethical interactions between doctors and industry, but that there are relationships that can help improve patient care and educate doctors.
About half of 2014’s total payments, or $3.23 billion, were categorized as research-related activities, and roughly 81% of those payments were in the form of cash or cash equivalents, according to the data. Many of the top research payments—as broken down by drug—were related to drugs that have been on the market for several years.
Companies spent $803.49 million in royalty or licensing payments and $369.44 million in consulting fees. Payments for food, beverages, travel and lodging amounted to $403.64 million, the vast majority of it in in-kind payments. Details of some payments for miscellaneous “entertainment” included a $65 massage at an airport, Alcatraz tickets and a $2,000 payment for a training seminar in the Cayman Islands.
Roche Holding AG’s Genentech unit was among the companies with the highest payout totals to doctors and hospitals, at $373.4 million for 2014, according to the CMS database.
A large portion of that—more than $250 million—went to City of Hope medical center in Duarte, Calif., as royalties on sales of several products including the blockbuster cancer treatments Herceptin and Avastin. Genentech had licensed patents from the center in the 1980s.
A Genentech spokeswoman said the company’s collaboration with the medical community is important to delivering new medicines.
Among other big drug makers, Pfizer Inc. paid a total of $287.4 million to doctors and teaching hospitals, and GlaxoSmithKline PLC paid $213.1 million, according to the CMS database.
Pfizer said more than three-quarters of its payments were for research activities, compensating doctors and institutions for their help running clinical trials.
GlaxoSmithKline said that it practices “appropriate engagement with health-care professionals” and that it expects overall payments to decline partly because it will stop paying outside doctors to give speeches about the company’s medicines by 2016.
Last September, CMS released the first batch of data, which covered payments for the final five months of 2013, or about $3.4 billion. But that set of data was riddled with errors, and recipient information was omitted for a big portion of the records because of data problems.
The batch of data released Tuesday included an updated presentation of the 2013 data, as well as the initial release of full-year 2014 payments. CMS said it was able to confirm that 98.8% of all records submitted for 2013 and 2014 had accurate identifying information about the recipient.
Doctors have expressed concern about having their names attached to money paid by industry. Some have scaled back their interactions with industry because they know it will be reported publicly.
Some companies have reduced spending on items such as speaking fees and meals in recent years. Some said they cut back because they have reduced the size of their sales forces.
The CMS Open Payments website gave doctors an opportunity to preview the payment data reported in their names before it went public, as well as to dispute information they believed was inaccurate. Only a portion did so. CMS said doctors and teaching hospitals reviewed about 30% of the total value of the data before it went public.
In its statement Tuesday, the AMA said “the vast majority of the data released today has not been independently validated by physicians, which makes it less usable for the patients it’s intended to benefit.” The group said the CMS process for allowing doctors to preview the data is cumbersome, limiting their participation.
About Open Payments Data:
Sometimes, doctors and hospitals have financial relationships with health care manufacturing companies. Open Payments is the federally run transparency program that collects information about these financial relationships and makes it available to you. These relationships can involve money for research activities, gifts, speaking fees, meals, or travel. One of the ways we provide this data to the public is through this search tool, which allows you to search for a doctor, teaching hospital, or company that has made payments. Exploring this information, and discussing the results you find with your healthcare provider, can help you make more informed healthcare decisions.
The Affordable Care Act requires CMS to collect information from applicable manufacturers and group purchasing organizations (GPOs) in order to report information about their financial relationships with physicians and hospitals. Open Payments is the federally run program that collects the information about these financial relationships and makes it available to you. View the summary data dashboard for an overview of the published data.
What is a conflict of interest? What is nature of payment? Learn about Open Payments and what it may mean for physicians, industry, and you.
Program Participants: Access the System Learn More About System Registration Requirements Physician Registration Information Industry Registration Information Hotel Workers Want to End Pharma Support of Continuing Medical EdIn an unusual development, a union that represents hotel workers has started a campaign to end pharmaceutical industry funding of continuing medical education, which are programs that doctors are often required to attend to maintain their licenses.The effort follows ongoing concerns that drug and device makers may use CME CME +1.59% sponsorships to influence programs by arranging for speakers to discuss or emphasize their medicines. Worries that industry may hold sway over medical practice and research led the federal government last year to launch the Open Payments database so payments to physicians can be tracked.
However, Unite Here, which represents more than 270,000 hospitality workers, among others, believes industry funding should be eliminated altogether and has begun an online campaign to encourage the Accreditation Council for Continuing Medical Education, which regulates CME activities, to clamp down. The union says it believes industry influence contributes to higher drug costs for its members.
What’s unusual, though, is that many CME programs are held at hotels, which means the campaign to eliminate industry funding could translate into fewer events that help pay for union jobs. For this reason, one CME expert wrote on his blog that the campaign is a “fascinating new chapter in the battle over industry funding” of CME activities.
“You have to respect an organization willing to bite the hand that feeds them. Hotel workers are, after all, an integral part of the grand machinery transporting industry marketing messages into the hearts and minds of doctors,” writes Daniel Carlat, an associate clinical professor of psychiatry at Tufts School of Medicine and who also runs a company that publishes CME newsletters for mental health practitioners.
In an email, Carlat adds the union is “an unusually credible source. They have no vested interest in limiting industry funding of CME other than the desire to decrease their health care costs. You can’t attack them as being academics or ‘pharmascolds’ trying to get publicity on the issue to further their careers or to gain fame. These are simply workers who observe first-hand how companies spend money to influence doctors, and they are tired of paying the price in terms of increased health care costs.”
For its part, the ACCME says that just 11% of CME events receive industry funding, which is “tightly controlled” by its rules. The organization adds there “is no evidence that commercial support creates commercial bias in accredited CME, results in inappropriate prescribing or leads to increased healthcare costs. In fact, accredited CME supports public health initiatives to improve quality and safety.”
Carlat, however, says studies have shown CME courses were correlated with increased prescribing of a drug marketed by a CME sponsor. He also notes another study that compared courses sponsored by just one company with courses funded by multiple companies, and found the range of topics was narrower in courses supported by that one company and were generally related to its recently approved products.
Overall, industry funding of CME is declining, but remains substantial. Last year, drug and device makers paid $675 million for CME, or 26% of total revenue reported by CME providers, including private education firms, medical schools, hospitals and government agencies, according to the ACCME. In 2011, industry paid $762 million, or 32% of total revenue booked by CME providers.
Big Pharma’s Money Ties To Doctors Revealed
It’s the largest attempt yet to reveal the financial ties between medical providers and the health care firms peddling their wares, and includes compensation that those companies give to doctors and hospitals in things like speaking and consulting fees, travel to industry conferences, and free meals.
For now, the database only includes a few months’ worth of payments, and has other shortcomings that won’t allow patients to fully vet their doctors and hospitals.
“This is an opportunity for the public to learn about the relationships among health care providers, and pharmaceutical and device companies,” Marilyn Tavenner, administrator of the Centers for Medicare and Medicaid Services, said in a press release.
This first release of payments information reveals drug and device makers made 4.4 million payments to 546,000 doctors and more than 1,300 teaching hospitals from August through December of last year. In total, the payments were worth about $3.5 billion.
The Centers for Medicare and Medicaid Services will add more numbers in the coming weeks, according to a press release. The first full-year accounting of payments won’t come out until June. Drug and device companies are required to disclose this information under Obamacare.
The idea for Open Payments originated as the so-called Physician Payment Sunshine Act, the brainchild of lawmakers led by Sen. Chuck Grassley (R-Iowa) and then-Sen. Herb Kohl (D-Wis.) in 2007. Eventually, patients will have a clearer understanding of where their doctors’ and hospitals’ financial interests may lie.
In addition to promoting transparency in general, making these payments public also may serve to reduce potential conflicts of interest by making health care providers think twice before accepting money from those companies.
But the first set of numbers in this huge new database only includes payments from a five-month period, which limits patients’ and researchers’ ability to track how closely tied one doctor or teaching hospital may be to the drug and device industries.
What’s more, flaws in the data, which forced President Barack Obama’s administration to delay the publication of these numbers, persist. As a result, there are payments not included in the database, and other information is listed without the names of the providers.
In short: You can search for your doctor or local teaching hospital, but the information you find might be incomplete, or even inaccurate.