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Disclosure of Industry Payments to Physicians

Specifications of the Physician Payments Sunshine Act (S. 2029).*

Annual electronic reporting, beginning March 31, 2011, by drug, device, and medical-supply companies of payments or other transfers of value to any physician or medical practice. Physician ownership or investment interests in manufacturers, group purchasing organizations, or distributors also reported.

 

The term "physician" includes doctors of medicine and osteopathy, dentists, podiatrists, optometrists, and chiropractors.

 

Disclosure of name of recipient, city and state, value, and date of payment or other transfer of value and the form (e.g., cash, stock, or stock option) and reason (such as consulting fee, education, research, royalty or license, honorarium, gift, entertainment, food, travel, or charitable contribution).

 

Public availability no later than September 30, 2011, and on June 30 of each subsequent year, of information for the previous calendar year on a searchable, "clear and understandable" government Web site. Background information and overall context can be provided. Appeal and correction process established.

 

Reporting required if aggregate amount paid or transferred exceeds $500 in a calendar year. Exclusions include anything below $25 in value, product samples intended for patients, certain educational materials and direct training, and items used for providing charity care.

 

State reporting requirements preempted. Delayed reporting of payments made pursuant to product-development agreements or clinical investigations for 2 years or until approval of a product by the Food and Drug Administration, whichever is first.

 

Penalties of $1,000 to $5,000 for each failure to report, with an annual cap of $50,000, and $5,000 to $50,000 for every instance of knowledge of failure to report, with an annual cap of $250,000.

 

Payments to physicians who are full-time employees of manufacturers excluded.

 

*Information is from the Senate Finance Committee as of July 2008. A bill similar to the Senate bill has been introduced in the House (H.R. 5605).

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Most physicians in the United States have financial relationships with industry, ranging from the acceptance of meals to the receipt of large sums of money for consulting, speaking, or conducting research.^1,2 Within the next several years, the manufacturers of drugs, medical devices, and medical supplies that are paid for by Medicare, Medicaid, or the State Children's Health Insurance Program may be required to report publicly many of these gifts and payments; the information would be made available in a "clear and understandable" format on a searchable government Web site. Public reporting would be mandated by the Physician Payments Sunshine Act sponsored by Senators Charles Grassley (R-IA), the ranking member of the Committee on Finance, and Herb Kohl (D-WI), chair of the Special Committee on Aging, which is pending in Congress (see Specifications of the Physician Payments Sunshine Act). Sunshine laws are so called because they "let the sun shine in," revealing otherwise private information.

Physician–industry relationships have always been a mixed blessing. Although for-profit companies' primary responsibility is to their shareholders, and physicians' primary responsibility is to their patients, doctors can collaborate with industry to improve patient care. Industry can provide researchers with funds that might not otherwise be available, particularly for drug and device development and pivotal clinical trials. These relationships, however, can influence prescribing behavior and the use of medical devices and supplies, increase the cost of care, create a mind-set of entitlement among doctors, and undermine the independence and integrity of the profession.

New revelations about these relationships are not uncommon. In June 2008, for example, Grassley criticized three prominent psychiatrists at Harvard University and Massachusetts General Hospital for failing to report to their institutions a considerable amount of their income from consulting fees — which apparently totaled at least $1 million apiece between 2000 and 2007. Grassley expressed concern about possible violations of federal and university conflict-of-interest rules by physicians conducting research while receiving more than the allowable amount of money from the company whose product was being studied.³ The institutions, the National Institutes of Health (NIH), and the Senate Finance Committee are all investigating the matter.

Currently, as is the case with educational programs and journal articles, disclosures of payments typically reveal the payer of the funds but not the amount paid. Most commonly, physicians' relationships with industry consist of receiving food in the workplace, receiving drug samples, or being reimbursed for costs associated with professional meetings or continuing medical education (CME) programs.¹ Larger payments are made to researchers, speakers, and consultants and for licenses and patent-related royalties. An analysis of publicly disclosed payments of $100 or more over a 2-year period in Vermont and a 3-year period in Minnesota — two states that have enacted disclosure laws — found that the median payments were $177 and $1,000, respectively.⁴ In fiscal year 2007 in Vermont, psychiatrists were the largest beneficiaries among the top 100 recipients. When it comes to gifts, both the American Medical Association (AMA) and the Pharmaceutical Research and Manufacturers of America (PhRMA), the pharmaceutical trade association, consider it permissible to give doctors textbooks and other items that are primarily of benefit to patients (such as an anatomical model for use in an examination room) and are not of substantial value (defined as $100 or less). A large number of payments, particularly for food, are for more than $100.⁴

Congressional support for a national reporting system reflects exasperation with health care costs and, as Grassley puts it, the "hodge-podge" of state systems and voluntary systems at medical schools and teaching hospitals that rely on doctors to tell the truth about their income from industry. According to Grassley, "The stakes are high for both public safety and the public purse. Making information about financial relationships open to scrutiny is the right thing to do." Some companies, such as Eli Lilly and Pfizer, have released some payment information or are planning to do so, but the specifics vary widely among manufacturers. The five largest manufacturers of prosthetic hip and knee joints disclose physician payments on their Web sites, in compliance with a settlement agreement reached in September 2007 with the Department of Justice about alleged kickbacks paid to orthopedic surgeons for implanting their devices. An analysis of the statements by the Philadelphia Inquirer found that 51 doctors received more than $1 million each in 2007 alone. However, the disclosures are difficult, if not impossible, to understand, because they do not state the reasons the physicians received the money.

The Physician Payments Sunshine Act applies to industry payments to a physician or medical practice or to persons or entities that accept money on their behalf. It otherwise does not cover payments to professional societies, medical schools, hospitals, or intermediaries, such as charitable foundations, that fund research or education, or to medical education and communication companies that provide CME programs or prepare advertising and marketing campaigns. Nor does it apply to businesses outside the drug, medical-device, or medical-supply industries that may fund biomedical research or retain physicians as consultants — such as food and nutrition companies, online health data companies, or tobacco companies.

Moreover, the act has been scaled back since its introduction in September 2007, prompting criticism that industry has received too many concessions — but also resulting in notable endorsements. Supporters now include the Association of American Medical Colleges (AAMC), the AMA, and many other medical organizations, as well as PhRMA, the Advanced Medical Technology Association (a trade association of the medical-device industry and related companies), and individual drug and device companies. Unlike the original bill, the revised legislation would preempt state reporting requirements and delay reporting for some payments. It would raise the threshold for disclosure from $25 for a payment or gift to a total payment or other "transfer of value" per company of $500 in a calendar year. Thus, many payments and gifts, including some gifts not in compliance with AMA and PhRMA guidelines, would not be reported. Penalties for failures to report payments have been reduced.

Massachusetts is considering banning gifts to physicians from drug and device manufacturers and requiring public reporting of other payments. The state senate approved the provision, but the state house of representatives did not. Although the revised federal legislation is not as strict, it is still in many respects more comprehensive than the reporting laws that have been enacted in the District of Columbia, Maine, and West Virginia, in addition to Minnesota and Vermont. These laws apply only to the pharmaceutical industry, and only in Minnesota are disclosures explicitly required to be public records. The Vermont law has a broad exemption for payments that are designated "trade secrets." Reporting criteria are not standardized, and the data may be difficult to obtain and of poor quality⁴; West Virginia has no penalties for lack of reporting.