Physician Payments Sunshine: 2012 DC Transparency Report, State Transparency Law Updates

Researchers at the George Washington University School of Public Health and Health Services (SPHHS) found that pharmaceutical companies spent $97.5 million marketing pharmaceuticals in Washington, DC in 2012, slightly more than the 2011 figure. DC’s “AccessRX Act of 2004” requires all pharmaceutical companies to file annual reports describing their prescription-pharmaceutical marketing activities in the District. The Act also requires analysis of these reports to determine how pharmaceutical marketing may affect healthcare services in the District. We wrote about the 2011 “impact” analysis that focused on antipsychotics in the elderly.

The 2012 report notes that 147 pharmaceutical manufacturers reported payments totaling $97.5 million for advertising, gift, and aggregate expenditures in the District. Company reports of total marketing expenditures ranged from $200 to $6.7 million (not including seven companies that reported no expenses).

While the 2012 payments represent a slight uptick in pharmaceutical marketing expenses, the past five years definitely trend downward:

 

DC marketing expenditures were highest in 2007, declined in all categories from 2008 through 2010, and stayed essentially flat in 2011. Between 2011 and 2012, total reported expenditures rose, “driven mainly by a 61.7% increase in Gift Expenses,” the report states.

Gift Expenses

“Gift Expenses” included $30.5 million (31.3%) for gifts given to physicians, hospitals, and other health care providers. However, the gift category is deceiving because it includes grants, speaker fees, product samples, food, and books. Food accounts for 71.8% of all gifts but only 6.4% of the total dollar amount given by pharmaceuticals.

The amount of company resources necessary to capture this small percentage of spend is astounding.

Monetary gifts, in the forms of cash or checks, grant, and donations, represented more than three fourths (78.8%) of total gift value, although they accounted for only 14.7% of the number of gifts. The report noted: “Marketing was reported as the primary purpose of gifts almost half (45.9%) of the time, and accounted for 21.8% of the gift value ($6.7 million). Education was identified as the purpose of 20.1% of the gifts, and accounted for 29.9% of gift value, or $9.1 million.” 

Hospitals, professional organizations, and other  non-individual recipients received $19.6 million in gifts, almost twice as much as the $10.8 million given to individual recipients. With regard to individual physician gifts, the report found that there were 15 physicians who each received cash or check gifts totaling more than $100,000 from pharmaceutical companies. Together, these 15 physicians received gifts that totaled $2.5 million, or 34.2% of all monetary gifts given to physicians.

“More than 3,200 physicians received at least one food gift,” the report states. Of these, “472 received 10 or more meals from pharmaceutical companies during 2012.” This means that around 2,800 physicians—the vast majority—received less than 10 meals in 2012. The report found that “twenty physicians received 52 or more food gifts, averaging at least one free meal per week from a pharmaceutical company,” and noted that “food gifts are generally accompanied by a visit from a pharmaceutical sales representative, so these physicians are likely having frequent interactions with detailers who are promoting specific drugs.”

In terms of other “gifts,” physicians received a total of $6.0 million in the form of speaking fees or “related gifts.” Fifteen physicians received speaking payments totaling more than $100,000 apiece; together, their speaking gifts added up to $2.3 million. We can speculate that perhaps these were the same 15 physicians from above.

The report included some interesting information, including a breakdown of the recipients of gifts for pharmaceutical companies:

Advertising Expenses

Pharmaceutical companies reported total District advertising expenses of $5.4 million in 2012. Companies that reported advertising expenses had totals ranging from $39 to $1.9 million. The median value for advertising expenses greater than zero was $9,342. For the 66 companies that did report advertising expenses, half spent less than $10,000, while three spent over $500,000 each. The majority of the remaining companies fell within the $1,000- $10,000 range of total advertising expenses.

This chart illustrates that perhaps “advertising expenses” are not quite as clear a category as one would hope for:

Aggregate Expenses

Pharmaceutical companies reported total Aggregate Expenses – expenditures for employees and contractors engaged in District marketing activities – of $61.5 million in 2012. Aggregate Expenses account for nearly two-thirds (63.1%) of total marketing expenses in 2012. Aggregate Expenses totals ranged from $457 to $6.0 million, and their median value was $123,857 (excluding companies with no expenditures).

Like advertising expenses, there is very little specific information in this reporting section.

Comparison with Vermont

The report stated that for several years the authors compared DC expenditures to Vermont’s, which had a similar disclosure law. However, “[a]mendments to Vermont’s law affected marketing expenditures and made its reports less comparable to the District’s, but offer a demonstration of how a gift ban can affect pharmaceutical marketing trends.”

In 2009, Vermont amended its law on pharmaceutical marketing to prohibit gifts (including food) from manufacturers to healthcare providers and to require reporting, including clinical‐trial and research expenditures. Companies may only pay honoraria and expenses to healthcare professionals for speaking when the recipient is “a health care professional who serves on the faculty at a bona fide significant educational, medical, scientific, or policy‐making seminar,” the healthcare professional determines the content of the presentation, and a contract specifies deliverables restricted to medical issues, not marketing activities. The 2009 law requires companies to report on the quantity (not value) of samples of prescription drugs they distribute, and a 2011 amendment requires reporting of samples of over‐the‐counter drugs.

Vermont expenditures:

• Total expenditures, including those for biologics and devices: $7.6 million
• Total pharmaceutical expenditures: $5.4 million
• Pharmaceutical expenditures, excluding clinical trials and research: $1.2 million

The DC report notes: “Comparing these numbers to totals from the past two years reveals a surprising pattern: Vermont pharmaceutical marketing expenditures (excluding clinical trials and research) dropped by 29% from 2009 to 2010, as the gift ban was implemented; rose 62% from 2010 to 2011, and then dropped by 60% from 2011 to 2012.”

The report posits to Vermont may also have reduced gift spending in 2012 in response to enforcement activities, which we covered a few months ago. During 2012, the Attorney General conducted dozens of investigations into potential violations of both the gift ban and the disclosure law.

In comparing the two jurisdictions, the report states: “Because the District does not require reporting of clinical-trial expenses or expenditures by biologics and device manufacturers, the Vermont expenditure total for pharmaceutical expenditures excluding clinical trials ($1.2 million) is the most relevant for comparison purposes to the $97.5 million of expenditures in the District of Columbia.”

Clearly, the pharmaceutical spend in DC dwarfs the Vermont expenditures. The report suggests that Vermont laws and enforcement have decreased their expenditures by 30% in 2010 or 60% in 2012. The reality is, pharmaceutical companies spend 8000% more in DC than in Vermont.

Physician Payments Sunshine Act

Under the Access Rx Act, the SPHHS report does not disclose names of specific companies or gift recipients, but reports on aggregate expenditures. Under the Physician Payments Sunshine Act, come March 31, 2014, pharmaceutical companies must file their first reports with the Department of Health and Human Services. The reports will list the physician names and more specific descriptions of gifts and research funds.

In its recommendations section, the report states that they want to “[u]se the opportunity created by the Affordable Care Act to strengthen the District of Columbia’s reporting requirements.” They recommend DC take the following steps:

• Make all reports submitted pursuant to the AccessRx Act publicly available.
• Require more detailed reporting of aggregate costs.
• Require unique recipient identifiers
• Require “product marketed” information for gift expenses.
• Notify for whom large gifts amounts are reported.

We will see how DC and other states react once Sunshine data goes public.