Seth Whitelaw is President and CEO of Whitelaw Compliance Group, LLC.
On the first of July, the Centers for Medicare and Medicaid Services (CMS) published the second round of Open Payments data, revealing the various transfers of value made from life sciences manufacturers to physicians and teaching hospitals in 2014.
As the initial analyses by Open Payments Analytics, Policy and Medicine, and Modern Healthcare reveal, there appear to be few surprises in the data. For example, more than 75 % of the payments were for less than $100.00, with more than half being for less than $20.00. This is hardly surprising given that meals constitute the majority of the smaller transfers of value, something we knew even before CMS started publishing their data.
We also learned that of the $6.49 billion provided in 2014, the vast majority went to research and royalties. Again, this is hardly surprising, and in some respects heartening to see life sciences companies spending substantial sums to acquire the rights to new technology and do the necessary research to bring that technology to market.
Perhaps what is more important from this second round of disclosures is that it underscores once again the importance of providing the right context for these payments and transfers of value. Within hours of the publication, Modern Healthcare was reporting on “Which companies disclosed the most to Open Payments,” and commenting on the royalties paid by Genentech for some of its key products. While there is nothing amiss in making royalty payments, in fact our patent system encourages such arrangements, there was the subtle insinuation that some how payments royalty by life sciences companies to physicians and teaching hospitals are somehow inherently “bad”.
So what does this mean for life sciences companies and their compliance departments? It means that they need to shift their focus from simply reporting on payments and transfers of value to understanding the nature and context of those payments and transfers. It means developing a truthful, clear and readily understandable explanation around why these payments and transfers occurred, and the benefits to patients and payers that were derived from them. Simply put, it means having a well-thought out plan to achieve that level of understanding; one that can be put into place every time CMS publishes a new set of data.
Given the importance and rising costs of healthcare, it is unlikely that the media is going to tire of this story any time soon. The best any life sciences company can hope for is that their explanation is seen as the better one by the regulators and the public.