Drug, Device Companies Paid $3.5 Billion to U.S. Doctors

U.S. doctors and teaching hospitals were paid $3.5 billion by drug and device makers over five months in 2013, according to the first comprehensive disclosure of the companies’ financial ties to the medical professionals that prescribe and use their products.

The payments, released yesterday by the U.S. government, are listed in two categories: money to fund research and payments to doctors for consulting and other non-research services. They cover everything from the royalties paid to hospitals to help develop products to fees provided to medical opinion leaders to speak at a dinner with colleagues.

Roche Holding AG’s Genentech unit spent $135 million in non-research payments, the most of any company. Of that, 90 percent went to a Southern California hospital network for royalties, the company said. Bristol-Myers Squibb Co. led in research payments, with $329 million, which the company said was largely attributed to the value of experimental medicines used in studies. Consumer advocates said publicizing the data may lessen the chance that drugs or devices will be used based on how much a doctor or institution is paid.

The pay has “an insidious corrupting influence on the practice of medicine, research, the development of clinical guidelines and clinical practice,” said Michael Carome of Public Citizen, a Washington-based nonprofit watchdog group. “The reason companies pay physicians honoraria and give them gifts and consulting fees is ultimately to influence the prescribing practices.”

550,000 Doctors

The disclosures by the U.S. government cover 4.4 million payments to about 550,000 doctors and 1,360 teaching hospitals from August to December 2013. The companies were required to provide the information as part of the 2010 Patient Protection and Affordable Care Act, or Obamacare.

While doctors are allowed to prescribe any treatment they think will help a patient, makers of drugs and medical devices can market products only for uses approved by the Food and Drug Administration. In some cases, companies have used their financial links to the medical community to get around that limitation, critics have said.

Some doctors were listed as receiving hundreds of thousands of dollars, according to the data. The device maker Medtronic Inc., for instance, paid almost $3 million to one unidentified doctor, who was among six who individually received more than $500,000 over the five-month period.

Four of the doctors in the highly paid Medtronic group weren’t identified in the data. The Obama administration withheld the names of about 40 percent of medical professionals receiving payments due to difficulties in verifying the identity of the recipient. Medtronic, the world’s biggest maker of heart rhythm devices, paid a total of $30.1 million over the five months.

Influence on Doctors

Johnson & Johnson, which makes drugs and medical devices, gave doctors and hospitals $68 million for non-research expenses, second among all companies, through its Janssen Pharmaceuticals and DePuy Synthes Sales units.

The payments reflect J&J’s “considerable role” as the world’s largest and most comprehensive health-care company, said Amy Jo Meyer, a spokeswoman for the New Brunswick, New Jersey-based company. The payments largely related to the development of new surgical devices, medicines and tests to improve health care and patients’ lives, she said.

Drug Costs

Along with the $329 million in research payments, Bristol-Myers paid doctors and hospitals $11.9 million for consulting, travel and other activities. The New York-based drugmaker, a leader in developing a new generation of cancer medicines that use the body’s own immune system to attack tumors, said “a significant portion” of its research payments included the value of drugs provided to conduct clinical trials.

“We cannot comment on how other companies reported or attributed value to this type of support, but this was the primary driver for research or transfers of value reported by Bristol-Myers,” Laura Hortas, a company spokeswoman, said in an e-mail.

Pfizer Inc., the biggest U.S. drugmaker, gave doctors and hospitals $30 million, including a $1 million payment to Duke University’s health system. It gave another $90.6 million in research payments, according to the database.

Medtronic began voluntarily disclosing payments to doctors in 2010, as did many other drug and device makers.

Working Relationships

Working directly with doctors provides the company important insights, spurs technological advances and improves physician education, said Cindy Resman, a spokeswoman for the Minneapolis-based company.

“We also understand the importance of public trust in collaboration and are committed to transparency in an effort to increase patient confidence and protect our ability to work with physicians,” Resman said in an interview.

Spokesmen from Pfizer and Duke didn’t immediately respond to questions about the payments. The large majority of non-research payments from Genentech went to City of Hope, a major cancer research center in Duarte, California, that was part of the development of some of the top products from the South San Francisco, California-based unit of Basel, Switzerland-based Roche.

An official at the Centers for Medicare and Medicaid Services, which released the data, said the motives and consequences of the payouts are complex.

Potential Benefits

The information doesn’t “identify which financial relationships are beneficial and which could cause conflicts of interest,” Shantanu Agrawal, director of program integrity at CMS, said in a statement. While the disclosure may help stop inappropriate payments, “they could also help identify relationships that lead to the development of beneficial new technologies.”

Past analyses have found that “off-label” uses made up a fifth of prescriptions, and companies have sometimes stepped over the line in what they can tell prescribers. In the past decade, drug companies paid billions of dollars in legal settlements after a series of lawsuits by the U.S. Justice Department, many of which targeted drugmakers for pushing unapproved uses of their products.

While this is the first time that payments data have been required by all drug and device makers, the information released yesterday has several shortcomings.

Data Deficiencies

It covers only five months and has no historical comparison. Even within that short window, the data are also incomplete. Drug and device companies can delay reporting payments to researchers that were for the development of experimental products not yet for sale, which led to 190,000 records being withheld.

De-identified data will be “completely useless,” said Carome, the director of health research at Public Citizen. “The purpose is to identify specific payments to individuals and teaching hospitals. Anonymized data is meaningless data.”

Still, “despite some of the shortcomings in timing and despite some of the withholding of data, this is an important step in the right direction,” he said.

The drug payments data have been four years coming, after the Physician Payments Sunshine Act was signed into law in 2010 as part of the Affordable Care Act. Consumers will eventually be able to search the data and look up their own physician.

The roll-out of the information has been plagued by reports of technical errors.

Drug companies have had trouble uploading the data to the government’s servers, John Murphy, assistant general counsel of drug industry lobbying group, Pharmaceutical Research and Manufacturers of America, said in a telephone interview.

Limited Review

Physicians also complained about the process, saying CMS didn’t give them enough time to review the data that were submitted. After one doctor found payments attributed to him that belonged to another doctor with the same name, CMS temporarily suspended the website.

“The physicians had a 360-page instruction manual,” said Robert Wah, president of the American Medical Association, which represents doctors. “Then the website crashed. It was a pretty small window to review the data.”

For example, one researcher at the Mayo Clinic who was conducting company-funded research was also given a grant for work related to writing up the findings. The grant was recorded as a gift, said Richard Ehman, a professor of radiology and vice chairman of the conflict interest review board at the Mayo Clinic in Rochester, Minnesota.

Too General

“The data aren’t inaccurate so much as it’s grouped in bundles that don’t apply,” he said in a telephone interview. “Perhaps the categories aren’t specific enough. Some people have looked at the payments and feel the way it’s described isn’t accurate.”

In general, though, there haven’t been a lot of complaints from physicians, Ehman said.

“It’s the law of the land,” he said. “That’s just the way it is. The legislation originated because there were examples of lack of disclosure and lack of transparency. It’s unfortunate we have examples like that.”

Ehman said the law hasn’t caused doctors to stop working with private companies. “We’re highly engaged with the commercial sector,” he said.

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