The following is an excerpt from Navigant Healthcare’s Pulse Weekly. Click here for a complete copy of this week’s article.
Amidst growing public angst about the Ebola virus outbreak, a wave of media attention was given to Tuesday’s release of information about drug and device company payments to physicians pursuant to the Physician Payments Sunshine Act in the Affordable Care Act (ACA).
Background: Under the Physician Payments Sunshine Act, all manufacturers of drugs, medical devices and medical supplies that have at least one product covered by Medicare or Medicaid must report payments and gifts to doctors and teaching hospitals of more than $10. Group purchasing organizations, middlemen who purchase on behalf of providers, must disclose physician ownership and investment interests in their organizations.
Here’s what we learned from Tuesday’s release of the Open Payments website:
- In the last five months of 2013, drug manufacturers made 4.4 million payments totaling $3.5B to 546,000 physicians and 1,360 teaching hospitals to encourage acceptance and use of their drugs/devices: $1.49B for research, $1.02B for ownership interests, $380M for speaking/consulting fees, $302M for royalties/licensing, $93M for meals, $74M for travel, and $128M for “other.”
- Recipients of 40% of these payments were not disclosed due to data problems (data verification/accuracy) per the Center for Medicaid and Medicare Services (CMS). 190,000 of the 4.4 million payments were for investigational drugs not approved for sale, or for drugs pending approval for new uses.
- 26,000 of the 546,000 physicians were able to review/correct their data before release (physicians and teaching hospitals were given 45 days to review data, correct inaccuracies before the September 30 release).
- The biggest drug companies had the most interactions with physicians—the Top Five: Pfizer (142,600), Astra Zeneca (111,200), Forest Labs (98,900), Johnson & Johnson (97,000), and Glaxo SmithKline (85,100).
But what does it really mean? And will it change the way doctors and hospitals relate to drug and device manufacturers going forward?
Conflicts of interest (COI) matter to the public: An organization’s COI policy is increasingly a focus of public scrutiny. Massachusetts required COI disclosures similar to the provisions in the Sunshine Act in 2010 without a major push by consumers. Connecticut requires COI disclosures for advanced practice nurses. A third of medical schools have COI policies in 2011 up from 10% in 2008 (Pew Charitable Trust). All major peer reviewed journals have strict COI disclosure requirements for authors, and so on.
CMS is all-in on transparency: In its news release announcing the site's launch, CMS said the goal is "to help consumers understand the financial relationships between the health care industry, and physicians and teaching hospitals." In advance of the release, reporters were given a sneak-peak and access to CMS officials for background and context. Clearly, CMS believes transparency is a bridge to health system transformation.
Much of the data on the Open Payments website is inaccurate/misleading: 64 health advocacy groups including the National Health Council, the American Heart Association and others, asked the data be withheld until inaccuracies were corrected. PhRMA, BIO, and AdvaMed asked CMS’s Marilyn Tavenner for a reprieve. The American Medical Association asked for 6 months and was given 12 days. And for 40% of the transactions, verification of the recipients could not be completed prior to release.
The Open Payments website is not user friendly: There's no prominent search box, confusing directions to “interact with full data sets,” an over-the-top 51-page data dictionary and methodology, and more. CMS paid $10M to CGI, the Federal lead contractor for Open Payments—the same contractor responsible for the problematic launch of Healthcare.gov. last year. If the goal is to equip consumers to see possible conflicts between physicians and manufacturers, they’ll be hard pressed to understand them on Open Payments.
In my view, the total spent on these activities does not seem unreasonable: the U.S. market for drugs and devices exceeds $450B. Annualized, these payments amount to less than 2%, and much of this spending drives the industry’s innovation—new drugs and devices that ultimately benefit the world’s health.
All this aside, transparency about financial relationships in the healthcare industry is likely to accelerate as consumers, policymakers, social activists and cost-conscious employers and health insurers seek to bend its cost curve. Powered by social media and healthcare journalism that’s asking tougher questions, the industry’s business ties are fair game.
Jaimy Lee, “Physician Payments Revealed: Providers focus on Managing Conflicts as Sunshine Act Disclosure Nears,” Modern Healthcare, September 29, 2014; Charles Ornstein, “Analysis: Government’s New Doctor Payments Website Worthy of a Recall,” ProPublica, October 1, 2014; Charles Ornstein, Ryann Grochowski Jones and Eric Sagara, “What We’re Learning About Drug Company Payments to Doctors,” New York Times, September 29, 2014; Peter Frost, “Feds to Publicize Drug Company Payments to Doctors,” Chicago Tribune, September 26, 2014; Jayne O’Donnell, “Online Doctor Data Questioned,” USA Today, October 1, 2014; Katie Thomas, Agustin Armendariz, Sarah Cohen, “Detailing Financial Links of Doctors and Drug Makers,” New York Times, September 30, 2014; Peter Frost, Alex Richards, Cynthia Dizikes, Ellen Jean Hirst “Obamacare Sunshine Act Sheds Light on $3.5B Paid to Doctors,” Chicago Tribune, October 1, 2014; Peter Loftus, “Doctors Net Billions from Drug Firms,” Wall Street Journal, September 30, 2014; Jeanne Whalen, Joseph Walker, Jonathan D. Rockoff, “Payments Reveal Range of Doctors’ Ties with Industry,” Wall Street Journal, October 1, 2014; Andrea M. Sisko, et al., “National Health Expenditure Projections, 2013-23: Faster Growth Expected With Expanded Coverage And Improving Economy,” Health Affairs, September 3, 2014
The opinions expressed in this article are those of the author and do not necessarily represent the views of Navigant Consulting, Inc. The information contained in this article is a summary and reflects current impressions based on industry data and news available at the time of publication. Any predictions and expectations noted herein are inherently uncertain and actual results may differ materially from those contained in this article. Navigant undertakes no obligation to update any of the information contained in the article.
© 2014 Navigant Consulting, Inc.