Life Science Compliance Update

June 22, 2016

JAMA Internal Medicine Bias – Now You See Me

Merlin the Magician would be proud of a recent study published in JAMA Internal Medicine attempting to prove that doctors who receive small gifts of food are more likely to prescribe a branded drug than generic drugs. The authors linked two national data sets in an attempt to quantity the association between industry payments and physician prescribing patterns.

The "researchers" utilized the most-prescribed brand-name drugs in four categories according to Medicare Part D information from 2013. They then cross-referenced those prescribing rates to the five months of data in the Open Payments database available for the year 2013. According to the authors, physicians who received only one meal promoting one of the four target drugs had higher rates of prescribing those medications.

The conclusion and relevance of the study in the abstract reads: Industry payments to physicians are associated with higher rates of prescribing brand-name statins. As the United States seeks to rein in the costs of prescription drugs and make them less expensive for patients, our findings are concerning.

However, once one digs a little deeper, it is clear that the investigation lauded by the press as evidence does not meet the scientific rigor that one would expect from a JAMA publication.

The Problems (Not an Exhaustive List)

First, the media reports all focused on the propensity of physicians to prescribe brand-name drugs when cheaper alternatives were available, not at all taking into consideration weather the patient may actually be better off on the branded drugs. In their main argument around statin use, many patients tolerate one statin and not another.

Second, when looking at the table of financial payments types and their association with brand name prescribing rates for statins, (the only table with actual numbers) food payments which was the source of many media stories did not meet statistical significance of .05 or 5%. The confidence intervals on meals actually skewed toward fewer prescriptions with a range of -2.56 to +.42. We recommend that the authors and the JAMA internal medicine editors review the Wikipedia definition of statistical significance, to help them understand that drawing inferences on data that does not meet the null hypothesis may not be in the best interest of their journal. But then again, pharmascolds hold to the believe to never let facts get in the way of a good narrative. Unfortunately, their allies in the media hold that same view.

Third, if one looks closely at Figures 1 and 2, out of almost 2,500 physicians analyzed, only a handful are creating the upward slopes between the covariates. The relationship is non-existent for physicians who receive less than $2,000, and for those who receive above $2,000, there are a few data points. Overall, the actual change listed at the end of their article was less than .1% increased prescribing per $1,000 increase in the open payments database.

Fourth, all the media mentions that the study looked at three therapeutic areas, lipids, hypertension and depression, yet their paper only discusses statins.  The editing and peer review process takes many months.  The authors would have had ample time to know what was actually being published.  So where is the "study showing even small meals influencing physicians."

Fifth, we have made clear time and time again that the Open Payments data made available through the Affordable Care Act can be misused. Once again, we see opponents of marketing using the national registry as a stepping stone in their ultimate goal of eliminating any and all payments to physicians. As we have noted before, the data available through Open Payments has minimal pre-release vetting by the physicians, and can contain de-identified and disputed payments.

Sixth, some physicians may choose to attend industry events where information is provided about drugs they already prefer to prescribe. Such a choice would have little to no effect on their prescribing patterns. The authors of the study failed to take that into account.

The authors of the study recognized that there were several limitations, including equating five months of payment data to twelve months of prescription data. Comparing an entire year of prescribing patterns to five months of payment data should almost be considered malpractice: the five months of payment data is more than likely not representative of a full year.

Further, the study did not differentiate between new prescriptions and refills. By failing to take into account whether a prescription was a refill, the number of prescriptions written could very easily be inflated for each physician.


The media absolutely missed it on this one headlines included:

Wall Street Journal

Free Meals Influence Doctors' Drug Prescriptions, Study Suggests

"Doctors who received a single free meal from a drug company were more likely to prescribe the drug the company was promoting than doctors who received no such meals, according to a study."

New York Times

Drug Company Lunches Have Big Payoffs

A free lunch may be all it takes to persuade a doctor to prescribe a brand-name drug instead of a cheaper generic, a new study suggests.


Feed Me, Pharma: More Evidence That Industry Meals Are Linked to Costlier Prescribing

A study published online Monday in JAMA Internal Medicine found significant evidence that doctors who received meals tied to specific drugs prescribed a higher proportion of those products than their peers. And the more meals they received, the greater share of those drugs they tended to prescribe relative to other medications in the same category.

To ProPublica, perhaps you should take that course on statistics as well as the editors.

Several publications took a second look:

Bloomberg actually did a good job laying out the alternative scenario in an article titled: Maybe Pharmaceutical Reps Actually Aren't Bribing Doctors by Megan McArdle where she elegantly outlines how there are many more scenarios that the doctor being bribed as most the media coverage has focused on. In her analysis the physician may be doing this out learning new things about better drugs or perhaps he already writes the scripts.

Forbes in an editorial outlines how the choices of medications is important, and medical decisions are not made in a vacuum. The Way To Doctors' Prescription Pads Is Through Their Stomachs So, once again, the pharmaceutical industry is under attack for coercing physicians to prescribe its drugs. This time the temptation involves food ...

Industry Response

The Coalition for Healthcare Communications issued a statement in response to the "investigation," stating,

Nothing new here.  Information is power.  The more information prescribers obtain, the more they are likely to use a drug safely and effectively. Dinner meetings are regulated by the FDA to ensure that the information is consistent with the basic information about the drug and is not false or misleading in any way. The fact that the doctors have dinner as part of the process does not change the facts of the presentation in any way. Education informs effective prescribing.

 The Pharmaceutical Research and Manufacturers of America also responded, noting that:

This study cherry-picks physician prescribing data for a subset of medicines to advance a false narrative. Manufacturers routinely engage with physicians to share drug safety and efficacy information, new indications for approved medicines and potential side effects of medicines. As the study says, the exchange of this critical information could impact physicians' prescribing decisions in an effort to improve patient care.

Physicians' prescribing patterns are dynamic and based on individual patients' needs. According to a survey of physicians, 91 percent felt that a great deal of their prescribing was influenced by their clinical knowledge and experience. The survey also found that factors such as a patient's particular situation, including drug interactions, side effects and contraindications; articles in peer-reviewed medical journals; and clinical practice guidelines, affected prescribing decisions a great deal.

Normally, an editor and peer reviewers would have had the authors pull back on many of the assumptions made by this article. One has to hope that this lack of checks and balances does not also apply to their clinical articles. Unfortunately, this study will be added to the lexicon and quoted by many opinion papers and journal editorials as fact, adding to the vicious cycle. We encourage the American Medical Association to do a full review on how this paper passed publication.

June 15, 2016

Ex-Pharma Sales Staff Arrested on Anti-Kickback Charges

It was recently announced that Jonathan Roper, a former District Manager at Insys Therapeutics, and Fernando Serrano, a former sales representative at Insys Therapeutics, were arrested and charged with violating the Anti-Kickback Statute. The allegations are made as a result of their participation in a scheme to pay doctors thousands of dollars to participate in sham educational programs, in order to induce those doctors to prescribe millions of dollars' worth of a fentanyl spray.

The fentanyl spray at issue was approved by the FDA around January 2012, solely for the management of breakthrough pain in cancer patients who are already receiving, and who are tolerant, to opioid therapy for their underlying persistent pain. The spray is the only FDA-approved product Insys currently has on the market, and they reported approximately $330 million in net revenue from the spray in 2015.

The FBI and Department of Justice (DOJ) allege that in order to market the spray, Insys established a program to educate healthcare processionals about the spray. Doctors that were selected to be speakers for the program were compensated for "providing educational presentations to a peer-level audience of healthcare professionals using a preapproved PowerPoint presentation." In reality, however, many of the Speaker Programs that the two individuals organized and attended were predominantly social gatherings at high-end restaurants that had no educational component or slide presentation at all. Many of the programs also lacked a proper audience.

In an attempt to make these "speaker programs" seem legitimate, sign in sheets were forged by adding names and signatures of physicians who had not attended the program. Repeat attendees were also common at speaker programs organized by Serrano. Since all legitimate speaker programs required the use of the same preapproved slide presentation, there was really no educational purpose for healthcare professionals to attend multiple times.

There were a handful of doctors in particular that often acted as the purported speakers at the speaker programs. Those doctors were highly compensation by Insys for their duty as "speaker": one doctor received over $147,000 and another received over $112,000 in speaker fees in 2014 alone. Those two physicians were also the two largest prescribers of the spray in the United States during that time period: prescribing over $3 million and over $2 million, respectively.

While it was widely understood at the company that doctors were selected as speakers in an attempt to induce them into prescribing large quantities of the spray, Roper explicitly instructed his sales team as such, in one email stating

Where is the ROI [Return on Investment]??!!! All prescribers from this team that are on this list are [Pharma Company-1] speakers. We invest a lot of time, $, blood, sweat, and tears on "our guys" and help spreading the word on treating BTCP [breakthrough cancer pain]. We hire only the best of the best to be apart [sic] of our speaker bureau and dropping script counts is what we get in return?

. . . 

This is a slap in the face to all of you and is a good indication as to why NONE of you are climbing in the rankings this quarter. DO NOT be afraid to set your expectations and make them crystal clear as to what they are before, during, and after HIRING these priviliged [sic] set of docs who are fortunate enough to be a part of the best speaker bureau in the market in the world of BTCP [breakthrough cancer pain]. Please handle this immediately as funding will not be given out to anymore [sic] "let downs" in the future. Thanks. 


Roper and Serrano were each charged with one count of conspiracy to violate the Anti-Kickback Statute and one count of violating the Anti-Kickback Statute. Each of the two counts carries a maximum term of five years in prison.

According to FBI Assistant Director Diego Rodriguez,

This case should be something the medical industry and the general public should pay close attention to because it's one of the reasons we're experiencing an epidemic of overdoses and deaths in this country.  Not only did the defendants in this case allegedly bully sales reps into pushing this highly addictive drug, they paid doctors to prescribe it to patients.  The more prescriptions written, the more money the doctors made.  Instead of seeing a way to help people who are dealing with extreme pain, they allegedly saw a huge payday that potentially put people's lives in danger.

There are two interesting things to note with respect to this case. First, Insys was not mentioned by name in any of the charging documents; however, it is clear from other details in the document – i.e., when the drug was approved and its annual sales in 2015 – make it clear that Insys is the company in question. Insys has also previously disclosed that it is under a federal investigation for its sales and marketing practices.

Second, the FBI agent utilized both Open Payments data and Medicare Part D data to make his case against Serrano, once again showing that those data can, and will, be used against physicians and others in the healthcare industry.

May 12, 2016

Senate Finance Committee Majority Staff Releases Updated POD Report

Orin hatch

The Senate Finance Committee Majority Staff recently issued a report entitled, “Physician Owned Distributorships: An Update on Key Issues and Areas of Congressional Concern.” This report serves as an update to the Committee’s 2011 Physician Owned Distributorship (POD) report, which focused on concerns Senator Orrin Hatch had about the “spike in the utilization of medical procedures by physicians invested in these entities.”

The 2011 Report

The 2011 report came about based on information provided by a surgeon who was offered the opportunity to become an investor/owner in a POD and who felt that the arrangement appeared questionable. The Senate investigation concluded that “in the absence of stronger enforcement guidance, these entities would continue to grow at a rapid pace,” and resulted in two bipartisan letters being sent by Hatch and other senators, one to the Centers for Medicare and Medicaid Services (CMS) and the other to the United States Department of Health and Human Services (HHS) Inspector General, both calling for an investigation.

The HHS OIG stated that the guidance it had already issued was more than sufficient and that additional guidance was not necessary. CMS indicated in its response that it would address these issues in its final regulatory language. The final regulations issued in February 2013 did include PODs among the entities that are required to report to CMS any ownership interest and investment interests that are held by physicians.

2011 to Present

Since the time of the 2011 report, the Senate Finance Committee and its staff have continued to keep an eye on the growth and development of PODs. In forming this updated report, Committee staff reached out to “healthcare entities, including physicians (both those who participate in a POD and those who do not), insurers, medical device manufacturers, state and federal government agencies, medical ethics boards, hospitals, and patients.” In addition to those stakeholders, Committee staff spoke with representatives of several PODs and POD advocacy groups.

On November 17, 2015, the Finance Committee held a hearing on PODs, for which Chairman Hatch and Ranking Member Wyden issued the following joint statement:

While the vast majority of doctors operate with the highest ethical standards, those with a vested stake in medical device distributorships raise a number of concerning questions about the physician’s motivation in prescribing a procedure, as well as the overall cost to the health care system. When physicians have a financial incentive to recommend and perform a surgery, a potential conflict of interest and occur and jeopardize the health of patients. With this hearing, the Committee will have the opportunity to hear views on all sides of the debate, and we look forward to a constructive conversation on how to ensure major health decisions are made in the best interest of the patient and not the physician’s pocketbook.

That hearing did hear from several different viewpoints, including: Dr. Scott Lederhaus, President of the Association for Medical Ethics; Dr. John Steinmann, of the American Association of Surgical Distributors; Suzie Draper, the Vice President of Business Ethics and Compliance at Intermountain Healthcare; and Kevin Reynolds, the son of a patient who was treated by a POD physician.

Throughout the hearing and in the days that followed, it became clear that PODs are a concern for several members of the Committee, including the Chairman. Therefore, it is likely that, even following the release of this report, the Committee will conduct additional oversight efforts.

The 2016 Report

The 2016 report essentially went through the history of PODs from 2011 through today. The report discussed the Special Fraud Alert (SFA) issued by the HHS OIG, which was issued to “inform the medical community of the dangers posed by PODs,” and many health systems have implemented new policies to avoid those dangers.

The report also discussed an analysis of whether or not POD surgeons perform surgery at a higher frequency than non-POD surgeons. The Committee found that POD surgeons saw 24% more patients than non-POD surgeons, that POD surgeons performed fusion surgery on nearly twice as many patients as non-POD surgeons, and that POD surgeons performed surgery 44% more often than non-POD surgeons. Those findings concerned the Committee, and prompted several recommendations, covered in more detail below.

The Sunshine Act

The report also carved out a section on the Sunshine Act and its impact on POD arrangements. The Committee believes that “there are serious gaps in Sunshine reporting of POD arrangements,” and that those “shortcomings prevent patients and hospitals from having access to information about the financial interests of physicians.” It will be interesting to see if the Committee tries to force further transparency of PODs through the Sunshine Act, via additional inquiries and requests for CMS to release additional rules. 

Committee Recommendations

The Committee is concerned that there is a lack of transparency relating to PODs and issued three recommendations along those lines:

(1) for an update to federal law, requiring physicians to disclose any ownership they or their family members have in non-publicly traded device companies to the hospitals where they practice, and also disclosure to patients;

(2) to require hospitals and ambulatory surgical centers to not only examine Open Payments data, but also document that they have taken that data into account when making device purchasing decisions; and

(3) that CMS and HHS OIG should examine whether current compliance guidance about PODs is sufficient, or if it needs to be supplemented.

The Committee also issued a recommendation to the GAO to examine the costs and benefits of CMS requiring hospitals that choose to purchase from PODs to perform enhanced quality assurance and utilization review activities in connection with surgeries using POD-supplied products, out of a concern that hospitals that purchase from PODs perform medically unnecessary or overly complex surgeries.

The Committee is recommending law enforcement continue (and expand) their efforts to charge and prosecute doctors, PODs, and hospitals, that are violating the law.

The Committee is also making recommendations relating to PODs and their shifting payment structures. The Committee makes three recommendations revolving around that general idea:

(1) that CMS undertake increased enforcement actions to ensure compliance with Sunshine Act reporting requirements;

(2) that HHS OIG study the impact of the Special Fraud Alert (SFA) and recent litigation on PODs and update its 2013 report and SFA as needed; and

(3) that CMS provide additional Sunshine Act guidance or rulemaking to make clear that the exception from reporting requirements for employment applies only to manufacturers, and only to bona fide employment.


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