Life Science Compliance Update

December 06, 2016

Money in Medicine Report


In late November, a report was released that focused on money in medicine, and the top thirty drugs that were associated with pharmaceutical industry payments to Oregon doctors. Interestingly, the top thirty list did not include many drugs that are known to be household names. For example, the top three drugs – Bydureon, Invokana, and Toujeo – are prescribed for diabetes, a highly prevalent disease in America. Three others on the list are prescribed for multiple sclerosis, a debilitating condition that is incurable and can be hard to live with. Hysingla, an abuse-deterrent hydrocodone pill, is also high on the list.

According to the series, $2.6 billion in non-research payments were made by drug and device developers to U.S. teaching hospitals and physicians in 2015. In Oregon, 100 doctors collected $9 million in payments from industry.

This is interesting, in part because the media is always harping on the pharmaceutical industry for spending money and having “influence” on physicians. However, this article and the data show that the drugs (at least in Oregon) that are most associated with pharmaceutical industry payments tend to be drugs for diseases that are highly prevalent or diseases that are hard to beat. The author of the series also gives much time and attention to the physicians themselves, who help her (and the public) understand the benefits.

Doctors who receive the payments state that they are “being compensated for their time and expertise, or in several cases, the technology they devised to advance patient care.” They also “argue that safeguards are in place to prevent undue influence from industry, such as a prohibition on receiving royalties from your own practice or even region.”

Dr. L. Nelson Hopkins, a neurosurgeon and president of the Gates Vascular Institute at Buffalo General Medical Center, believes it is important for physicians and industry to have a good relationship, “To say that physicians shouldn’t work with industry is to say that innovation shouldn’t happen. If physicians weren’t working with industry to develop concepts and to advise industry on how it’s going in the marketplace, and working with industry to iterate the product to get better and better, then that technology would be stymied.”

Gerald Williams, Jr., both a practicing physician and the president of the American Academy of Orthopaedic Surgeons, notes that it makes sense that many of his group’s members account for a large portion of the non-research compensation because their practice areas account for almost 40 percent of the total health care spending in the United States. Williams states that many orthopedic surgeons fund their own product and equipment innovations, and that even more are asked by device makers to lend their expertise in developing new tools and approaches to delivering care.

Dr. Bryan Mehlhaff, a Springfield urologist who makes presentations about cutting-edge prostate cancer drugs, sums it up quite well, “this is very FDA regulated. A lot of my patients know I’m a speaker and that I participate on advisory boards and ask if I’ve heard anything new. A lot of them like that I’m on top of new developments and on the cutting edge of what might be possible for them.”

November 29, 2016

21st Century Cures Update - Includes Exemption for Education in Open Payments


When lawmakers head back to Washington, D.C. this week, one of the votes they have ahead of themselves is the 21st Century Cures bill, legislation that is intended to spur the development of new medical treatments. The bill was updated the Friday after Thanksgiving, leaving many of the provisions of previous versions intact, but also adding language intended to improve America’s mental health system and dedicates $1 billion over the course of two years to help combat the opioid epidemic.  

The updated package directs $4.8 billion in funding over a decade to the National Institutes of Health and includes $1.4 billion for President Obama’s Precision Medicine Initiative, $1.8 billion for Vice President Joe Biden’s cancer “moonshot” program, and $1.6 billion for a program focused on enhanced understanding of brain-related diseases like Alzheimer’s. The bill would be paid for mostly through sales of the U.S. strategic petroleum reserve and a fund created in the 2010 health care overhaul intended to promote disease prevention and public health.

The vehicle for the new bill will be existing legislation (HR 34) related to tsunami warning systems. Since the Senate has already passed an amended version of that bill, the package could be sent from the House back to the upper chamber and acted on relatively quickly. The vote is expected to take place on Wednesday, under suspension of the rules, preventing any amendments.

House Energy and Commerce Chairman Fred Upton of Michigan and Senate Health, Education, Labor and Pensions Chairman Lamar Alexander of Tennessee, the two main sponsors of the package, touted the bill as beneficial to virtually every American family. “What we have in the 21st Century Cures Act is an innovation game-changer, a transformational bill to bring our health infrastructure light years ahead to best match the incredible breakthroughs that are happening by the day,” the lawmakers said in a joint statement. “We look forward to swift and favorable consideration of the 21st Century Cures Act in both the House and Senate.”

Sen. Christopher S. Murphy, D-Conn., a vocal supporter of mental health changes, on Sunday released a statement praising the package. “I'm excited Republicans and Democrats have put politics aside and reached a compromise that will allow a mental health reform bill to pass side by side with major new funding to confront the nation's opioid crisis. Both parties needed to make concessions to get this deal done, but the deal that has been struck is good for patients and families. I hope we get it done,” Murphy said.

Key Provisions of the Bill

Measures related to the FDA largely remain intact from the previous House-passed bill. The biggest change is the addition of language to help speed the development of regenerative medicine, or treatments that are designed to help regrow damaged cells or tissues. Such a provision would give the FDA the ability to put some of these treatments through what’s known as “accelerated approval,” a pathway that allows companies to conduct clinical trials on smaller populations and requires follow-up studies once the drug is on the market.

The $1 billion to curb painkiller abuse would effectively grant President Obama’s budget request from February. Included in the funding is a bid to gather support from Democrats, as well as an acknowledgement that this year’s stalled appropriations process would not be adequate for funding the opioid response envisioned by the backers of an opioid abuse package signed into law this summer.

The bill’s section on mental health would make changes to the leadership structure at the Substance Abuse and Mental Health Services Administration and establish/reauthorize grants for state and community mental health services. It would give HHS tools to enhance compliance with parity laws, which require insurers that cover mental health to offer mental health benefits that are as valuable as other medical coverage.

The most notable additions are aspects of a bill from Sen. John Cornyn (S. 2002). Those provisions would offer grants to law enforcement and the judicial system to improve their capacities to deal with mental health problems. Lawmakers wound up dropping controversial language from Cornyn’s bill that would have restored gun rights to certain individuals who had been committed for mental health treatment.

The legislation also changes policies governing electronic medical records by directing the federal government to issue a voluntary model framework on the sharing of patients' health information, and creates a grant program to help develop a reporting system that would provide the government with more information about the use and security of electronic health records.

Open Payments

Inserted into the legislation is a provision from Congressman Defazio, Burgess, and Senator Barrasso to exempt applicable manufacturers from reporting payments made for continuing medical education sessions, medical journals, or textbooks. We tend to believe that the reporting requirements stifle access to important information and have a detrimental effect on continuing medical education (CME) programming.

This represents a smart tweak to the current regulation.  Unlike the other categories under Open Payments, education represents the free exchange of ideas.

“This is about patient care — doctors need good information fast and this facilitates the process,” said John Kamp, who heads the Coalition for Healthcare Communication, a group of ad agencies and medical publishers. “I want my doctors to have information about whatever the latest science is saying.” He noted that the Food and Drug Administration is currently weighing rules for allowing companies to distribute information to physicians about unapproved uses of medicines.

November 21, 2016

Open Payments Discussed at MedPAC November Meeting


The Medicare Payment Advisory Commission meets publicly in Washington, D.C. to discuss various Medicare issues and policy questions, as well as to develop and approve reports and recommendations to Congress. During the November public meeting, Ariel Winter and Amy Phillips discussed, “Payments from drug and device manufacturers to physicians and teaching hospitals, 2015.”

Ms. Winter and Ms. Phillips discussed the background and description of the Open Payments (public reporting) program, results of their analysis of 2015 data from Open Payments, as well as possible future changes to Open Payments.


The pair went back to where it all started, discussing the fact that the Commission recommended public reporting of financial relationships between drug and device manufacturers and providers and other organizations in 2009. In 2010, Congress created the public reporting system through the Patient Protection and Affordable Care Act (PPACA), and in 2013 CMS implemented the Open Payments system.

Since that time, the media and researchers have been trying to use the data found in the Open Payments system to shed light on physician-industry ties. For example, according to DeJong et al., 2016, “physicians who received industry-sponsored meals related to brand-name medications prescribed those medications at a higher rate.” Yeh et al., 2016, discussed the way physicians in Massachusetts who received industry payments prescribed brand-name statins to beneficiaries at a higher rate. And even prior to Open Payments being established, Wazana 2000 and Watkins et al., 2003, such a link was being discussed – prior studies found that physicians’ interactions with manufacturers are associated with prescribing of newer, more expensive drugs.

For new readers, the Open Payments program requires manufacturers and group purchasing organizations (GPOs) to report certain payments and transfers of value to physicians and teaching hospitals. The term physicians includes: medical doctors, osteopaths, dentists, optometrists, podiatrists, chiropractors, and others. Most financial interactions are subject to reporting (i.e., speaking fees, royalties, meals, research funding, investment interests, etc.), though samples, educational materials for patient use, product discounts and rebates are excluded. Presently, data from August 2013 through December 2015 is accessible to the public.

Data Analysis

According to Ms. Winter and Ms. Phillips, the total amount of payments was similar in 2014 and 2015, as evidenced by the slide below:


In 2015, physicians received about 80% of total payments (roughly $6.2 billion, split among 618,000 physicians). Of those 618,000 physicians, 502,000 were MDs or Dos, and 116,000 were dentists, optometrists, podiatrists, and chiropractors. Generally, the mean payment per physician was $3,242, while the median payment per physician was $157. The mean ownership/investment interest per physician was $264,990, while the median ownership/investment interest per physician was $4,651.

Interestingly, the top 5% of physicians accounted for 86% of general payments, in dollar amounts. Half of those top 5% of physicians are from five different specialties: internal medicine, cardiology, orthopedic surgery, psychiatry/neurology, and oncology/hematology.

In 2015, teaching hospitals received the other 20% of total payments (roughly $1.3 billion). General payments to hospitals amounted to $605 million, with one hospital alone accounting for half of general payments to hospitals. Royalty or license payments accounted for 70% of general payments to hospitals, but received by only 8% of hospitals. Additionally, gifts were most prevalent type of payment – they were received by 78% of hospitals, but account for only 2% of general payments.

Below are some slides showing physician payment and ownership breakdowns:



Future Changes to Open Payments

Based on MedPAC’s 2009 recommendations, possible changes to Open Payments include: require reporting of payments to advanced practice nurses and physician assistants (the number of APNs and PAs billing Medicare has continued to grow); require reporting of payments to patient advocacy organizations; and require manufacturers and distributors to report information about drug samples to the HHS Secretary, which should then be made available through data use agreements.  


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