Drug and Device Companies Pay Doctors $2.6 Billion in Non-Research Payments for 2015

CMS last week released the third year of Open Payments Data pursuant to the Sunshine Act. Drug and device companies paid out $2.6 billion to physicians and teaching hospitals in 2015 for general payments (not related to medical research). For comparison, general (non-research) payments in 2014 was $2.56 billion. In total in 2015, between general payments, medical research and ownership/investment interests, drug and device makers reported $7.52 billion under the Sunshine Act.

The data appears to reflect increasing industry concern about the conflict of interest involved in payments to doctors by manufacturers. There were big year-over-year declines in the amount of money reported for payments provided as entertainment, gifts and honoraria. The amount of money paid out as charitable contributions on behalf of physicians had the largest percentage increase – it more than doubled.

The concern comes from, among other things, recent studies that question the amount of money that it takes to influence physician prescriptions. A study published online in 2016 by JAMA Internal Medicine earlier this year suggested that even a single free meal can boost the likelihood a doctor writes prescriptions for a certain drug. The study analyzed U.S. government data on Medicare Part D prescriptions as well as Sunshine Act data on payments by pharmaceutical companies to doctors.

Studies like this one raise the question of whether the payments are illegal kickbacks in violation of the Anti-Kickback Statute (AKS). When pharma companies cross the line and start paying physicians for prescriptions, they are in violation of the AKS as well as the False Claims Act, which provides for treble damages to the U.S. Government for the payment of money due to false claims or false/fraudulent statements.

There have been efforts to cut back these conflicts of interest.

In 2002, the Pharmaceutical Research and Manufacturers of America (PhRMA) took action based on information that large payments to doctors could influence prescribing. It adopted a voluntary Code on interactions with healthcare professionals to limit the interference with the independence of a doctor’s prescribing practices.

In 2010, Congress adopted the Physician Payments Sunshine Act as part of the Affordable Care Act in order to provide increased transparency to consumers concerning payments made to physicians or teaching hospitals. The first set of data released by CMS concerned payments in 2013.

The U.S. government has also pursued several False Claims Act lawsuits for drug companies that have crossed the line through their payments (honoraria, food, travel and gifts) to doctors for speaker programs and other services.

It will be interesting to see whether these numbers see decreases in the next few years as a result of the recent studies noting the impact on prescribing habits as well as the government’s enforcement actions. The amount of money reported due to payments for food and beverages as well as travel and lodging saw slight increases in 2015. Still, it may be several years until these changes are fully processed through the system.

Although there have been significant efforts to cleanup improper payments to physicians over the past decade, one dangerous alternative drug companies could be driven to is Direct to Consumer (DTC) Advertising.

The U.S. is one of two countries in the world (the other is New Zealand) that allows DTC advertising of prescription drugs. At the end of 2015, the American Medical Association called for a ban on drug ads to consumers.

The impact of consumer advertising is still up for debate but there are concerns that the ads drive demand for expensive treatments despite less costly alternatives. A poll conducted in 2015 by the Kaiser Family Foundation found that 28% of respondents talked to a doctor after a prescription drug advertisement. Given their effectiveness in spurring conversations between patients and physicians, the unanswered question is whether those conversations lead to improved outcomes or bad drug treatment choices.

The pharmaceutical industry has been putting increasing amounts of money into this area, so it seems to be working for them. Drug companies spent $5.4 billion on advertising last year, with $3.7 billion going towards television ads to consumers. Both total spending and tv ad spending jumped over 2014 (19 and 31 percent respectively).

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