Physician Payment Sunshine Act: Nature’s Unintended Consequences
As drug companies “prepare for new draconian provisions for reporting on financial relationships with academia,” a recent article in Nature Biotechnology investigated whether such efforts to “increase transparency will prove burdensome to researchers and the industry.
The inquiry stems from “the latest fallout from Senator Charles Grassley’s (R-IA) campaign for increased transparency between physician researchers and industry.” This campaign has included numerous letters and investigations involving doctors, organizations and associations, agencies (e.g. NIH), medical journals, and drug and device companies.
While Grassley believes there is a greater need for transparency, “some stakeholders contend that strict disclosure rules add unnecessary and unjust burdens to an already struggling biotech industry—particularly to fledgling companies with few sales.”
Such burdens will force industry to spend money, according to Tom Stossel, director of translational medicine at Brigham and Women’s Hospital, in Boston. As the founder of a small biotech called Critical Biologics, Stossel, who is also a founding member of the Association of Clinical Researchers and Educators (ACRE), noted that these rules come “at a time when the biotechnology industry profitability is low and the investment ecosystem is completely seized up.” As a result, he asked whether disclosure policies are really “what we want to throw money at?”
The clear answer is no because the relationship between industry and academia cannot be jeopardized for various reasons. For example, “research that is undertaken in academia is typically too risky to be carried out in industry. But when researchers hit upon something clinically useful, they need companies to scale up their work, develop products and guide them through the long and expensive regulatory road.” This hand-off is critical for progress and innovation in medicine and science, and it also speeds up the process: “clinical trials are published eight to ten times faster when one of the investigators is affiliated with industry.”
It also allows industry to “gain access to innovative therapies, as well as to patients, a rigorous clinical trial infrastructure and the public relations bonus of being affiliated with distinguished universities and hospitals.” Evidence of the importance of this partnership can be seen in “eighty percent of clinical departments at US medical schools, which receive industry funding of some kind—from research support to faculty lunches—according to a 2007 survey.”
Despite Grassley investigations over the past few years, which have uncovered a few cases where disclosure discrepancies existed, and conflicts were found, these examples are the exception. Clearly, as Mininder Kocher, associate professor of orthopedic surgery at Harvard Medical School in Boston acknowledged, “there probably is only a minority of surgeons who intentionally did not disclose.” Instead, he points to the issue being “that the disclosure requirements are so confusing.”
Kocher himself recognizes that although industry relationships have the potential to be negative, they are “common and necessary” partnerships. Consequently, the important role these relationships provide to patients and physicians must not be hindered by legislation “that impinges on the relationship between industry and academia.”
According to Peter Corr, co-founder of Celtic Therapeutics, a biotech investment company located in the US Virgin Islands, and former head of worldwide R&D at Pfizer, such regulations are problematic because the “profession can police itself.” By taking away this responsibility, Corr asserted that “the government will end up doing things with unintended consequences that would be sad for society as a whole.”
One of those unwanted results is “reporting lumps all of the payments into one, which lacks context, and creates a false impression.” As Christopher Armstrong, investigative counsel to the Senate Committee on Finance pointed out, “a lunch is different from a royalty is different from a research project,” something expressed to him by “talking to hundreds of physicians and industry representatives when drafting the bill.”
Another unintended consequence is that many medical institutions in states such as Minnesota “have banned interactions between their physicians and industry.” As Michael Gonzalez-Campoy, CEO of the Minnesota Center for Obesity, Metabolism and Endocrinology, pointed out, such laws have “made recruiting top talent difficult owing to the hostile environment created by disclosure laws.”
In addition, the new legislation will affect the way drug and device companies do business, since they will now have to “allocate resources to purchase the systems to track these criteria and dedicate personnel to manage the process” of disclosure. As a result, these expenses “will, unfortunately, shift dollars away from ongoing drug development programs,” according to Eliseo Salinas, senior vice president of R&D at Adolor, a biopharmaceutical company in Exton, Pennsylvania, noted.
While some assert that paying for disclosure and transparency is just “part of the cost of doing business,” without any evidence showing any harm caused by such relationships to patients, this kind of spending is nonsensical. Spending money on disclosure is even more problematic because small companies and startups will take a hit because they “will have to have a full-time person who decides whether it’s OK to buy their collaborator lunch.” As Stossel noted, although large companies that have sales can afford it, companies with fewer “sales are going to have a terrible time with it.”
This kind of environment is hurtful to companies like Altair Therapeutics, an eight-person company in San Diego, which “says the regulations are incredibly stringent, particularly for companies that are still in early development phases of their products.” Altair president and CEO Joel Martin, who is collaborating with several Canadian academic medical centers to carry out a phase 2 clinical trial, noted that the disclosure rules could cause “a strong backlash against pharma, which will cause more academics to bow out of industry relationships.” He wants to avoid this kind of outcome because we “don’t want drugs developed in a vacuum.”
Unfortunately, this kind of problem has already happened to Velico Medical, a ten-person company in Beverly, Massachusetts. Velico CEO Doug Clibourn told Nature “that the company tried—and failed—to retain a renowned expert from an elite institution as a device consultant,” but were unsuccessful because of “enormous hoops,” they had to jump through just to comply with his institution’s rules. This was particularly disappointing because the company didn’t even have a product, and was just “trying to figure out one.”
These instances demonstrate that “academia will be losing more and more smart people, because of its growing anti-industry sentiment," according to Antonio Hardan, associate professor of psychiatry at Stanford in Palo Alto, California, who has consulting and research relationships with several pharmaceutical companies. Moreover, as I noted to Nature, “this kind of anti-industry culture that’s being permeated is pretty rapidly moving research and development, and even commercialization, into other regions of the world.”
While some believe that “the less we look like we have something to hide, the better off we are,” these people ignore the fact that disclosure “laws perpetuate the myth among the general public that all doctor-industry relations are bad.” Gonzalez-Campoy, who is also a member of ACRE, further noted that “a lot of harm comes from the implication that doctors are corruptible, that they don’t do what they think or know is best for their patients.”
Accordingly, if these laws and rules remain, there will be a “significant delay” in the implementation of new treatments in the US, and a growing number of drug developers going abroad. In fact, as Brock Reeve, executive director of the Harvard Stem Cell Institute in Cambridge, Massachusetts noted, “industry is particularly valuable in nascent fields that require expertise in several areas of biology, such as stem cells.”
Since industry funding consists of 40-50% of his institute’s budget, he asserted that “these relationships are critical to innovation” because “to do research in a multidisciplinary area like stem cells, no one company, and no one lab, is going to have all the necessary resources.” That is why industry support must remain because without such support, “more people will decide either to go straight into industry or to not do research at all,” leaving patients needlessly waiting for options.
Ultimately, moving the drug industry to other countries must be avoided because the commercial support such companies are providing are critical for research and development. Since federal research budgets have been consistently shrinking, and industry’s product pipeline has been stagnant, it has been “big pharma that has forged a dozen multi-million dollar research collaborations with prominent medical centers,” to help spark innovation in medicine once again. To change this “amazing synergy between the clinical community and companies that are developing new products” now, when it has operated in this universe for decades, is counterproductive.