ScienceDaily recently reported physician and hospital payments from pharmaceutical companies for the District of Columbia in 2011.  The data was reported by researchers at the George Washington University School of Public Health and Health Services (SPHHS), which found that pharmaceutical companies spent nearly $84 million marketing pharmaceuticals in the DC, slightly less than 2010.   

DC publishes their annual reports through a separate webpage hosted through it’s Department of Health, dedicated to Prescription Drug Marketing Costs.  Here’s the 2011 report, which for some reason was not published until early March 2013.

The 2012 report was published in July of last year.  The reports date back to 2007.  In 2010, 132 pharmaceutical
companies reported spending a total of $85.4 million on marketing activities in
the DC,
including $57.6 million on employee and contractor expenses, $21.0 million on gifts
and payments, and $6.8 million on advertising.
Physicians received 76% of the gifts given by pharmaceutical companies, and
these gifts accounted for 39% of the total value of all gifts.

This included an outlay of nearly $19 million (22%) for gifts given to physicians, hospitals and other health care providers.  The gift category is deceiving, however, because it includes “grants, speaker’s fees and food.”   

The reporting of such payments will soon be the national standard once the Physician Payment Sunshine Act goes into effect on August 1, 2013.  In response to this law, physicians are concerned about the impact this transparency will have on their practice and career.  For example, David Caraway, MD, PhD, of St. Mary’s Regional Medical Center in Huntington, W.Va, said that his colleagues will not work with industry or receive payments, even for ones as small as $250 a year.  While that “is not an impactful financial incentive to that physician, … it’s a disincentive for innovation and for collaboration.” 

Speaking to MedPage Today, Caraway cautioned that if the Sunshine Act rules paint physicians with a negative brush, “it will have the effect of killing innovation and research.”  Policymakers and regulators must consider when crafting these plans what objective they are trying to achieve, said Guy Chisolm, PhD, director of the Cleveland Clinic’s Innovation Management and Conflict of Interest Program.  

For instance, how much less biased is a physician who receives $5,000 from a company compared with one who receives $10,000?  “There really aren’t any data to show that bias is less at that level and not the other”” he said.  “Maybe it is, but there are no data there.”  Moreover, there are significant firewalls and physician-industry policies to regulate such relationships and prevent undue influence, conflicts of interest, or bias.  For example, a recent survey of almost 2,000 members of the American Society of Clinical Oncology (ASCO) showed that 93% reported familiarity with the ASCO conflict of interest (COI) policy. 

The annual DC report notes that 12 physicians in the District received gifts (including consulting payments) that totaled more than $100,000 apiece that one year alone.  The report found that a small number of companies — 23 out of 158 — reported marketing expenditures of more than $1 million apiece.  “That is an astonishing amount of money being spent on marketing prescription pharmaceuticals in the District,” said Wood. 

Hospitals, clinics and other organizations received gifts totaling $9.7 million, and individuals received $9.2 million. Some nurses and pharmacists received gifts in 2011 but most of the pharmaceutical company largesse, nearly 82 percent went to doctors. Most gifts to doctors were described by the pharmaceutical companies as speaking fees and were paid in the form of cash or checks, the report said. 

“There is nothing inherently wrong with such gifts,” said Susan F. Wood, PhD, lead researcher and an associate professor of health policy and of environmental and occupational health at SPHHS.  “However, this report draws attention to the amount being spent on marketing pharmaceuticals and raises questions about whether some heavily marketed pharmaceuticals may be prescribed more extensively than is appropriate.” 

The report fulfills the requirement of a 2004 law in the District of Columbia that requires all pharmaceutical companies to file annual reports describing their prescription-pharmaceutical marketing activities in the District.  The AccessRx Act also requires analysis of these reports to determine how pharmaceutical marketing may affect healthcare services in the District. 

In fact, a previous study by Wood and her colleagues showed that pharmaceutical companies making antipsychotic pharmaceuticals gave a disproportionate amount of gifts and payments to District psychiatrists who treat Medicaid patients. Close ties between the pharmaceutical companies and psychiatrists might have led to inappropriate prescribing for Medicaid patients, and particularly for children, according to D.C. Council Member David Catania, who held a hearing on the issue last November.  Other findings of the report include: 

• Out of nearly 3,400 physicians in the District who received at least one food gift, 444 received ten or more meals from pharmaceutical companies during 2011 and 33 physicians got 52 or more of these food gifts.  This finding suggests some physicians are dining with pharmaceutical reps on a weekly basis.
• The top ten professional organizations (representing health professionals in a specific specialty or demographic group) received a total of $3.5 million, with half of those gifts valued at $20,000 or more.
• The top ten Disease-Specific Organizations based in the District received $2.1 million in gifts such as cash or checks from pharmaceutical companies. These organizations often represent and advise patients, and the concern is that large gifts could sway such groups to favor or recommend the company’s products, the report said. 

The report, which was commissioned by the Department of Health (DOH) in the District of Columbia, recognized the implementation of the Sunshine Act, and noted that DC could publicly release the names of all gift recipients sometime after September 2014. 

Other State Transparency Law Updates 

A recent blog post from R-Squared also noted several developments regarding payment transparency laws in several states.  We previously noted changes to the transparency laws in Minnesota and Massachusetts.  In addition to these changes, the post noted that Vermont recently proposed a bill that would narrow the scope of individuals that trigger reporting and leave room for the Attorney General to exclude items of nominal value from reporting and the gift ban.  

Specifically, the bill modifies the definition of “health care professional” to no longer include “an officer, employee, agent, or contractor … who is acting in the course and scope of employment, of an agency, or of a contract related to or supportive of the provision of health care to individuals.”  In addition, the bill modifies definition of “health care provider” to expressly exclude a hospital employee, other than a purchasing agent, without the authority to prescribe or recommend prescribed products. 

Furthermore, the bill expressly carves out as a not-banned gift “items of nominal value” that the Attorney General defines by rule, and “items of nominal value” as defined by the Attorney General are also removed from the disclosure requirements. The effective date if the bill becomes law is July 1, 2013. 

The post also noted that Connecticut, which currently only requires pharmaceutical and medical device manufacturing companies to adopt and implement a compliance code, has now “proposed a disclosure requirement, but it appears the bill only applies to “pharmaceutical manufacturing companies” and “pharmaceutical marketing companies” and not medical device companies.  In addition, there would be a $10 minimum threshold. 

For a comprehensive list of State Actions Relating to Transparency and Disclosure of Health Charges and Provider Payments, the National Conference of State Legislatures has a great webpage with numerous resources.  

Ultimately, “Industry has to be part of the conversation and has to be part of the education process,” said Ryan Hohman, managing director of policy and public affairs at the patient advocacy group Friends of Cancer Research.  “Like it or not, successful innovation requires commercial entities to be involved, and successful education of physicians will require all experts to be educating each other.”