Physician Payment Sunshine in Western Australia — Tracking Physician Payments to the End of the World

Pharmaceutical purchases in Western Australia must meet the procurement policies set out by the State Supply Commission (SSC). They must achieve value for money, provide open and effective competition for suppliers, and ensure probity and accountability, including good management of conflicts of interest. 

For those geographically challanged, Western Australia is perhaps the most remote region on earth and includes the cites of Perth (1.55 million),  Mandurah (78,612), Bunbury (32,499), Geraldton (31,553), Kalgoorlie (28,242), Albany (25,196), Broome (14,436), and Port Hedland (14,000).  To get a flavor for Western Australia, I recomend the movie Gallipoli, Mel Gibson’s first movie.

Pharmaceutical companies commonly offer to cover travel and other costs of public hospital staff to attend conferences and seminars relating to their products and research.  Both public hospital staff and ultimately their patients benefit from this knowledge transfer. However, in allowing staff to accept sponsored travel from private companies, the Department of Health must carefully manage any perceive

A recent report from the Auditor General found that “public health officials have failed to report all but a small fraction of gifts and travel sponsorships from pharmaceutical companies since July 2010.”  The report is “evidence the Department of Health is still poorly managing potential conflicts of interest.”

What is interesting about this report is that it shows the difficulty of accurately tracking payments from industry to health officials.  As we wait for the final regulations to be issued for the Physician Payment Sunshine Act, this example gives a glimpse at the problems and concerns health care providers and teaching hospitals may face.  If some countries are insufficiently tracking payments, how will this measure nationwide, particularly when the Sunshine regulations contain a significant number of technical requirements?

Report

A “significant majority’ of the unreported gifts were flights, accommodation and registration fees for clinical staff to attend conferences – including trips worth up to $16,000 each.  Auditor-General Colin Murphy also found public health officials had purchased pharmaceuticals without appropriate delegated authority, the required number of quotes had not been obtained and products had been bought from unapproved suppliers.

“The weak controls over pharmaceutical purchasing mean that we cannot give assurance that purchases always represent value for money, are transparent and accountable and demonstrate open and effective competition,” Murphy said.  “While we did not find any evidence of inappropriate influence, we did find weaknesses in Health’s management of free travel and gifts, especially the recognition and management of potential conflicts of interest.”  It should be noted that the report found no evidence of inappropriate influence. 

The audit was based on information provided by 27 pharmaceutical companies and the Auditor-General did not follow up to confirm the gifts were received by staff from six audited hospital.  However, Murphy said the significant mismatch between what pharmaceutical companies and health staff reported suggested a conflict of interest issue remained.

“If gifts and benefits are provided and they’re not declared and conflicts are not well managed then there is a potential for a perceived or actual conflict of interest in the procurement process,” Mr Murphy said.  He was concerned the lack of transparency could lead to allegations that patients were not prescribed the most appropriate drug.

The report also found that WA Health, which spends $250 million per year on prescription drugs, was not effectively managing all risks associated with access and use of addictive and abuse-prone pharmaceuticals.  While the number of drugs that disappeared was relatively small – 0.04 per cent – controls needed to be strengthened and investigations were not transparent, making it difficult to give assurance that the cause of losses was identified.

The six public hospitals audited did not have appropriate processes for controlling the receipt of pharmaceutical deliveries or clear guidelines on how to measure and account for liquid pharmaceuticals.  There also was little control over the destruction and disposal of drugs, as well as storage and access.

Hospitals did not have reliable information to identify and manage conflict of interest risks arising from gifts and benefits provided by pharmaceutical companies to hospital employees. In December 2011 the Department of Health implemented a revised policy that clarifies and emphasizes staff obligations for reporting acceptance of gifts. The Department is still to finalize its revised policy on acceptance of travel sponsorships. These sponsorships represent the bulk of the benefits received. 

Two hospitals did not have a formal, documented process to review and approve their officers’ choice of pharmaceuticals. No hospital ensured that potential conflicts of interest were identified each time a new pharmaceutical product is selected or recommended for approval.

Murphy said during visits to hospitals he found an unlocked drug storage cupboard, irregular stocktakes of drugs and keys given to staff members with no sign-out process. “We did, however, find that the administration of drugs to patients was well controlled,” he said.

The audit followed concerns raised last year about conflicts of interest in WA Health, with staff being bribed by pharmaceutical companies. “There is no doubt Health has made some progress in addressing issues with the purchasing and management of pharmaceuticals, however this audit highlights that more needs to be done,” Murphy said.

WA Health director general Kim Snowball said the “necessary action” would be taken against clinical staff who were found to have not declared gifts.  He acknowledged control of how pharmaceuticals were purchased and managed remained weak, however, he said it was important to note that the Auditor General found no evidence of a conflict of interest.

Snowball said significant improvements had been made since the department’s new gift policy was introduced in December, in response to an earlier audit that revealed the issue.  WA Health also was introducing new controls for staff who undertook sponsored travel.  “I have met with the Auditor General and have immediately written to clinical staff who were alleged to have not declared gifts that they had received prior to the implementation of the new gift policy,” Snowball said.

“Where it is proven that policy has not been complied with, necessary action will be taken.”  Additional processes were being implemented to ensure secure management of hospital pharmaceutical reporting and investigation of pharmaceutical losses.  “WA Health accepts the findings of the [Auditor General] and will act on any recommendations that we have not already addressed to further improve our procedures and purchasing policies.”

Recommendations 

The report recommends WA Health to ensure relevant stakeholders, such as hospital pharmacies, policy owners, system administrators and contract managers, work together to review and improve policies, procedures, contract management, system controls and staff training to ensure government purchasing standards are met for pharmaceutical procurements.  The report further recommends WA Health should improve its management of conflict of interest risks by: 

• ensuring it has a robust system to enable accurate reporting on the nature and extent of gifts and benefits received by its officers. This includes effective implementation of their new gifts policy and introduction of the revised travel policy
• implementing independent review of pharmaceutical selection that identifies potential conflicts of interest
• embedding conflict of interest declarations into all key decision-making processes that impact pharmaceutical purchasing. 

WA health should Address control weaknesses in hospitals’ management of pharmaceuticals by: 

• improving controls when hospitals take initial receipt of pharmaceuticals associated with addiction and abuse, and ensure these processes are included in its revised compliance monitoring program
• revising its compliance monitoring activities for patient care areas to ensure there is a coordinated strategy that is comprehensive and avoids unnecessary duplication
• clearly instructing hospitals on how to measure liquid pharmaceuticals, and decide how to assess liquid pharmaceutical losses
• formally assessing the costs and benefits of different technology options, such as security card locks, automated dispensing machines and CCTV, to control and record access to pharmaceuticals.

WA Health should improve its reporting of investigations and follow up of pharmaceutical losses by: 

• clearly documenting how it determines the cause of pharmaceutical losses
• giving more consideration to trends in relation to the individuals who have access to pharmaceuticals when losses occur
• adhering to its new reporting protocol with the WA Police to ensure every pharmaceutical discrepancy is reported
• implementing its recently revised policy regarding reporting and investigation of pharmaceutical discrepancies. 

Given that there was “no evidence of inappropriate influence”, perhaps money in the healthcare system would be better spent on improving patient care vs. running down who got paid what for travel.  But then again, those who are seeking total transparency are not that transparent themselves.