Health Firms Paid $6.49 Billion to Doctors, Hospitals in 2014

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Drug and medical-device makers paid $6.49 billion to U.S. doctors and teaching hospitals during 2014, according to the federal government’s first full-year accounting of the breadth of industry financial ties with medical providers.

The tally comprises company payments to more than 600,000 doctors and 1,100 hospitals for services such as consulting, research and promotional speeches about drugs, as well as the value of free meals provided to doctors by sales reps pitching products.

The figures come from a new federal-government transparency initiative. The 2010 Affordable Care Act included a provision dubbed the Sunshine Act, which requires manufacturers of drugs and medical devices to disclose most payments they make to physicians and teaching hospitals each year. The Centers for Medicare and Medicaid Services, or CMS, has compiled the records into an online, searchable database known as Open Payments.

The push for greater transparency was driven by concerns that doctors’ prescribing decisions are tainted by the money and gifts they receive each year from companies. Supporters expect the transparency initiative to provide useful information to patients about the relationships their doctors have with industry and to curb the influence of payments on medical care.

Companies say the payments are necessary to conduct research, to gather expert advice from practicing doctors, and to educate doctors about the appropriate use of drugs and devices. The American Medical Association said Tuesday that it opposes inappropriate, unethical interactions between doctors and industry, but that there are relationships that can help improve patient care and educate doctors.

About half of 2014’s total payments, or $3.23 billion, were categorized as research-related activities, and roughly 81% of those payments were in the form of cash or cash equivalents, according to the data. Many of the top research payments—as broken down by drug—were related to drugs that have been on the market for several years.

Companies spent $803.49 million in royalty or licensing payments and $369.44 million in consulting fees. Payments for food, beverages, travel and lodging amounted to $403.64 million, the vast majority of it in in-kind payments. Details of some payments for miscellaneous “entertainment” included a $65 massage at an airport, Alcatraz tickets and a $2,000 payment for a training seminar in the Cayman Islands.

Roche Holding AG’s Genentech unit was among the companies with the highest payout totals to doctors and hospitals, at $373.4 million for 2014, according to the CMS database.

A large portion of that—more than $250 million—went to City of Hope medical center in Duarte, Calif., as royalties on sales of several products including the blockbuster cancer treatments Herceptin and Avastin. Genentech had licensed patents from the center in the 1980s.

A Genentech spokeswoman said the company’s collaboration with the medical community is important to delivering new medicines.

Among other big drug makers, Pfizer Inc. paid a total of $287.4 million to doctors and teaching hospitals, and GlaxoSmithKline PLC paid $213.1 million, according to the CMS database.

Pfizer said more than three-quarters of its payments were for research activities, compensating doctors and institutions for their help running clinical trials.

GlaxoSmithKline said that it practices “appropriate engagement with health-care professionals” and that it expects overall payments to decline partly because it will stop paying outside doctors to give speeches about the company’s medicines by 2016.

Last September, CMS released the first batch of data, which covered payments for the final five months of 2013, or about $3.4 billion. But that set of data was riddled with errors, and recipient information was omitted for a big portion of the records because of data problems.

The batch of data released Tuesday included an updated presentation of the 2013 data, as well as the initial release of full-year 2014 payments. CMS said it was able to confirm that 98.8% of all records submitted for 2013 and 2014 had accurate identifying information about the recipient.

Doctors have expressed concern about having their names attached to money paid by industry. Some have scaled back their interactions with industry because they know it will be reported publicly.

Some companies have reduced spending on items such as speaking fees and meals in recent years. Some said they cut back because they have reduced the size of their sales forces.

The CMS Open Payments website gave doctors an opportunity to preview the payment data reported in their names before it went public, as well as to dispute information they believed was inaccurate. Only a portion did so. CMS said doctors and teaching hospitals reviewed about 30% of the total value of the data before it went public.

In its statement Tuesday, the AMA said “the vast majority of the data released today has not been independently validated by physicians, which makes it less usable for the patients it’s intended to benefit.” The group said the CMS process for allowing doctors to preview the data is cumbersome, limiting their participation.



Write to Peter Loftus at [email protected] and Joseph Walker at [email protected]

Source: Wall Street Journal Health