Policy and Medicine

Developing Fair Market Value for Physician Payments

Pharmaceutical companies have long relied on healthcare practitioners to provide perspective on developmental and marketed products. Physicians and clinical researchers who specialize in a product’s intended therapeutic area can offer their expertise on how to structure clinical trials and analyze results, assess the likelihood of product uptake and educate other physicians on the benefits of those products. 

The compensation physicians receive for their services must be at fair-market value, but determining FMV can prove difficult.  If a payment exceeds the fair-market value of the services, the pharmaceutical company risks regulatory reprimands, as well as various penalties and fines that can be enforced through the Department of Justice (DOJ) or the Office of the Inspector General (OIG) for the Department of Health and Human Services (HHS). 

No company wants to be seen as offering kickbacks to physicians, which can damage the reputation of both parties, but non-compliant FMV practices can easily put companies in such a position. On the other hand, when companies offer too little to physicians, they find it difficult to attract the thought leaders necessary to help them make tough product and brand development decisions. 

Because the life sciences industry has been hit hard with corporate integrity agreements, compliance audits and OIG fines, they are keeping a close eye on new expert compensation regulations cropping up worldwide. 

Companies are paying attention to how much they spend on individual experts, but when it comes to developing a global strategy for fair-market value compensation, it is rare to find a company that has established consistency across all of its affiliate markets. 

Consequently, a recent study from Cutting Edge Information focused on global expert management and the differences in expert compensa­tion levels between the United States and the European Union.  

Cutting Edge Information is a widely recognized leader in pro­viding fair-market value (FMV) consulting to help life sciences companies develop their physician fee schedules. CEI performs custom, client-driven studies using proprietary databases and research methodologies. Cutting Edge Information’s data found that only 9% of drug and device companies have global FMV fee schedules in place. 

Cutting Edge Report 

The report noted that, “part of the difficulty with proactively establishing a global FMV compensation strategy is that there are too many local regulations — not to mention local customs — to consider. For example, if company policy is to pay experts through flat fees in exchange for their services, companies may have trouble in countries where experts expect to be paid hourly.” 

The report also noted that global strategies for paying experts is a fairly new concept that was “brought about by the OIG’s Guidance for Pharmaceutical Manufacturers, published in 2003.” The OIG guidance called for drug and device companies to compensate consultants and advisors (in other words, experts) at a fair-market value.

With no additional guidance as to how to calculate FMV, drug companies have turned to benchmarking data, historical payments and other forms of aggregate spend tracking and documentation to determine fair-market value. 

Only recently has the FMV concept taken hold in Europe. The Association of the British Pharmaceutical Industry’s (ABPI) recent code of practice changes calls for physician fee schedules to be “reasonable and to reflect the fair-market value of the services rendered.”  With similar language appearing in more and more regulations, life sciences companies have started to turn their attention toward developing global FMV strategy. 

The report also acknowledged that establishing FMV for experts is important considering the Physician Payment Sunshine Act, which requires pharmaceutical companies to start tracking expert payments this January 2012 and to publicly disclose them in 2013. Accordingly, the report noted that, “In the wake of the requirements in the United States, the largest companies in the EU are instituting global disclosure policies.” 

FMV Compensation Lower in Europe than in US 

To provide a guidepost for European thought leader compensation, CEI analysts calculated average hourly rates for the US and for Europe. These averages were derived from 596 data points for the US and 245 data points for the European rate. 

Based on average hourly rates for every expertise level, company size, therapeutic area and type of activity, CEI analysts determined that the average US hourly rate is $306; the average European hourly rate is €183. Therefore, at the most general level, analysts can determine that a US rate is higher than a comparable European rate by close to 13% (exchange rate of 1.4814 on May 4, 2011). 

When taken as a case-by-case basis, this difference does not seem to amount to much, but when extrapolated to total yearly cost, it can easily represent tens or even hundreds of thousands of dollars and/or Euros. 

The number of different factors that influence compensation in the US and Europe makes a single, standard calculation model impossible. At many companies, compensation varies based on both the type of medical professional and the activity he or she performs. Considering just these two factors, there are up to 135 different combinations of qualifications and activities. Also expanding these possibilities are company size and therapeutic area. Finally, companies can elect to pay an hourly rate or a flat rate. 

Because any single formula used to calculate European compensation based on US values would not yield accurate, actionable figures, but instead indicate a trend, CEI analysts closely examined compensation differences to further identify the areas where these differences can be seen. The report noted that experts-in-field in the US have rates ($462) that are 23% higher than the hourly compensation for similar professionals in Europe ($376). For surgeons, the difference is not as pronounced, with a variation of 12% more in the United States ($353) than in Europe ($316). 

Annual Compensation Limits 

Although not yet a widespread practice in Europe, companies are beginning to set limits on how much is paid to thought leaders. Similar to the trend in rates for select thought leader types, companies in Europe are setting limits lower than the ones reported in United States. 

Though companies in the US average compensation limits of nearly US $64,000 per expert, European executives reported limits averaging close to US $50,000, or 22% lower than their US counterparts. CEI analysts believe that regional influences such as country-specific income levels, extent of activities performed by experts, and access to these experts impact the levels of compensation found in Cutting Edge Information’s research. 

Establishing Region or Country-Specific Fee Schedules 

Global FMV strategy has developed organically, emphasizing local market nuances and customs. Accordingly, the report recommended that, “without more formal regulation around expert compensation from governments in Europe or other parts of the world, companies should avoid establishing blanket policies or global fee schedules for” experts. 

Instead, the report recommended that companies “develop regional fee schedules that encompass two or three countries to better accommodate to  regional demand, influences and regulations.” 

Additionally, the report maintained that, “Companies must be careful not to allow these regional fee schedules to spill over into too many other markets. Otherwise, they may find themselves overpaying or underpaying [experts] and running afoul of any local regulations that may preclude physician compensation. 

Finally, the report recommended that companies “monitor individual governments’ policies for working directly with medical professionals prior to contracting these professionals as” experts.”

Transparency as a Powerful Tool illustrating Collaboration and Empowering Patients

 
Continuing their “Campaign of Shame,” the so-called “investigative journalist” shop ProPublica has been running a series of articles in national and local media sources.  In a recent LA Times article, the reporters told readers that, “patients should know if their doctors get paid by drug firms.”

They try to paint a picture of patients wanting to know whether their doctor is paid by industry to consult, teach, research, or develop a product.  They believe that knowing this information is important because “many brand-name drugs are wildly expensive, and some carry an array of dangerous side effects” and “sometimes similar drugs, either those made by competitors or generics, are cheaper or have fewer risks.” 

Of course, the authors clearly ignore the fact that over 75% of drugs used today are already generics.  Moreover, they clearly ignore the fact that brand name drugs are not what is making American health care so expensive, since drugs only account for 10 cents out of every dollar.

Nevertheless, the authors point to “a recent string of scandals that has raised questions about whether patients need to know more,” particularly because pharmaceutical and medical device makers have paid billions of dollars to settle accusations of kickbacks to doctors and improper marketing of their products.”

The authors recognize that physician-industry collaboration leads “to new and more effective medications, life-saving innovations and a better-educated profession.” Yet they take issue with the fact that these “relationships also can cause physicians to — consciously or not — downplay side effects and poor research outcomes.”

Accordingly, the authors promote their Docs for Dollar database so “patients can learn about their doctors' financial ties before they are in the exam room.”  Even though there were hundreds of thousands of doctors listed on this database, the authors make sweeping generalizations and statements to convince readers that any doctor working with industry is inherently unethical. 

They claim that, “Many of the doctors who received the most money hadn't published much in the way of research, and many didn't have associations with academic medical centers. Some had no credentials beyond a medical license. And some had been sanctioned for misconduct by their home state medical boards.”

What is even more shocking about this reporting is that the “journalists,” who have no medical training or health background—other than trying to discredit hardworking physicians—tell patients to ask their doctors about other drugs, side effects, and even if non-drug solutions should be tried first.  Can you imagine, journalists giving you medical advice?  These are the same journalists who have papers to sell, deadlines to meet, and their own personal missions as well as supporting those of their funders (i.e. Pew).

PhRMA’s Response to ProPublica

Consequently, Diane Bieri, executive vice president, general counsel for the Pharmaceutical Research and Manufacturers of America (PhRMA), gave a firm response to ProPublica’s article.

She first noted how “transparency is a powerful tool and that framed properly to illustrate the collaboration between America's biopharmaceutical companies and physicians, it can empower patients to become more engaged in the care they receive.”

But she also recognized that “transparency can also lead to misinterpretations, discouraging even the most ethical, unbiased doctors from future collaborations that could improve patient health.”  This is what the “journalists” at ProPublica have done.
 
As Ms. Bieri correctly points out, “by listing only names and compensation figures with limited context, patients may assume their care is compromised by tainted doctors.”  The reality is, “such an incomplete picture creates unnecessary confusion and, in most cases, is completely unfounded.”

PhRMA agreed with ProPublica that patients should know that many physicians work with biopharmaceutical companies.  To be completely transparent, however, they should also know why it benefits them and how the relationship is closely managed to ensure it remains ethical.
 
From consulting on research to helping other physicians learn about the most up-to-date clinical data, physicians play a productive role in America's biopharmaceutical ecosystem. Company-sponsored peer education programs, for example, allow expert physicians to engage their fellow healthcare providers and exchange the latest FDA-regulated data on new medicines, new uses of existing medicines and new safety information. For their time away from their practices, these physicians are reasonably compensated.
 
Likewise, representatives from biopharmaceutical companies can provide important information to physicians, whose daily schedules of back-to-back appointments with patients leave little time available to discuss new medicines. In some cases, companies provide informational presentations to physicians and their staff during one of the few free moments of their busy days: lunch.
 
Access to this information is essential for physicians, who juggle the demands of patient care with the need to stay aware of ever-evolving science. Last year alone, 21 new medicines were approved by the Food and Drug Administration; patients deserve doctors who are well versed on these cutting-edge medicines as they become available.
 
According to recent research, these programs work. A survey by KRC Research, found that roughly three-quarters of physicians attend peer speaker programs, including 86% in rural areas where physicians would otherwise have limited access to professional development opportunities. Nine out of 10 attendees reported that the information they received was up-to-date, useful and reliable, and more than half said they often gain knowledge or skills helpful to their practice.

These speaker programs complement other sources of professional education, such as medical association-led conferences, by facilitating physician-led exchanges of the latest regulated information about the benefits, risks and appropriate uses of medicines.
 
Importantly, the doctor-biopharmaceutical company relationship also allows companies to obtain on-the-ground information from physicians more easily, helping companies to target future research and respond to treatment gaps.
 
Bieri noted that “while ProPublica and the critics they cite imply that physicians are influenced --  consciously or not -- to make judgments not in their patients' best interest, the KRC survey found that physicians factor many considerations into their prescribing decisions, including clinical practice guidelines, a patient's financial and insurance status, and, of course, the patient’s health, including drug interactions and side effects.
 
Moreover, Bieri asserted that PhRMA stands by the quality of these ethical relationships and, therefore, supports transparency. She noted that PhRMA understands that patients may want to know if their physicians collaborate with companies, and they should also understand how their care improves as a result. That is why PhRMA supported the physician payment sunshine provisions of the 2010 healthcare reform bill, which will require companies to report payments for services or other transfers of value to physicians, with the government posting this information on a public website.

She noted that PhRMA eagerly awaits regulations on how to proceed with implementation. Companies also comply with internal policies, FDA regulations and the PhRMA Code on Interactions with Healthcare Professionals, which includes details specific to peer speakers' medical expertise, reputation and experience. These relationships are closely monitored to ensure they remain informative and ethical.
 
Unfortunately, Bieri recognized that “ProPublica's Dollars for Docs series -- the name alone is enough to convey the sensational nature of the material -- threatens to potentially undermine the ultimate goal of these interactions: strengthening patient care. The fact is, ProPublica's series would not be possible if many companies were not already being transparent about relationships with physicians.”
 
Ultimately, she noted that, “the lesson is clear. Rather than be alarmed, patients should take pride in their doctors serving as part of a vast team of scientists and physicians who closely monitor the medicines they prescribe, share findings with healthcare peers and offer feedback to biopharmaceutical companies. The collaborative relationship between doctors and the biopharmaceutical industry ensures that cutting-edge treatments will continue to enhance patient care.”

Physician Payment Sunshine: French Parliament Takes Up Industry Physician Payment Transparency

 
As part of a draft bill reforming the drugs approval and safety system, France may soon require that conflicts of interests between physicians/researchers and industry are publicly disclosed by directors and experts at regulatory agencies and made available publicly.  Failure to do so would now incur sanctions including fines of up to €30,000 ($43,000).

The proposal seems very similar to the Physician Payment Sunshine Act contained in the Affordable Care Act. 

If this bill is to pass, it will have significant implications for Foreign Corrupt Practices Act issues with respect to any companies that do business in France.

Etienne Caniard, president of Mutualité Française, a federation of most of France's nonprofit private health insurers, contends that the new rules will have a positive effect. “This proposal will help uncover the sectors where the state has given free rein to the pharmaceutical industry and where it should take its responsibility and regain control, such as continuous medical education,” he says.

The draft law should be presented to the French Parliament at the end of September with the objective to have it adopted by the end of the year. 

The law was developed as a response to one of the biggest French medical scandals of recent years about the Mediator,  a drug developed for treating overweight diabetics, and which side effects allegedly contributed to deaths of between 500 and 2,000 people before it was taken off the market in November 2009.

In addition, it is worth noting that the political climate is heavily affected by the up-coming presidential elections in 2012. The government therefore attempts to move this law forward through the accelerated legislative procedure.  Implementation decrees will however be required before specific items can come into force. 

Transparency requirements 

Specifically regarding the transparency requirements, in order to prevent conflicts of interest, the draft law provides on one hand a public conflict of interest declaration by all senior managers and experts working for health related public agencies, when they take office. These declarations are already an obligation for some officials. 

On the other hand, industry, drug and devices companies, will have to make public all [direct and indirect] benefits they provide to healthcare professionals, patient associations, hospitals, students, scientific societies and specialized media. 

Implementation details will be published in the follow up "implementation decree."

As far as the scope is concerned, it seems that the transparency requirements will apply to: 

• French healthcare professionals,
• French patient associations,
• French hospitals,
• French students,
• French scientific societies and
• French specialized media as well as French companies.  

Open questions at this point are the following: 

• Disclosure requirements will apply as of a certain threshold. For the moment, 100 Euros are considered for such a threshold.
• Moreover, "normal working relationships" (relations normales de travail) should fall out of the scope of the law.  Industry is lobbying in order to have a practical framework, where "normal working relationships" would be excluded.
• It is unclear at this point where the disclosed data will have to be published. The Ministry of Health informally mentioned that company’s website was a reasonable approach but following press articles seem to indicate that a central website/database is considered.  

The French are not known for such drastic measures, it is almost certain that whatever they adopt will be changed to a form that works best in the French system.  They should not throw away a medical system that has produced breaktrough medications just to placate critics.

Thanks to Marc Eigner at Polaris drawing our attention to this issue.

Physician Payment Sunshine: Compliance Will Be Extensive and Potentially Expensive

 
Eighteen months after the Patient Protection and Affordable Care Act (PPACA) became law on March 23, 2010, and was “reconciled” by the Health Care and Education Reconciliation Act (HCERA) of 2010 on March 30, 2010, the implementation challenges associated with health care reform continue. 

Unfortunately for the life sciences industry, the passage of PPACA’s Physician Payments Sunshine Act provisions did not standardize, curtail, or rationalize pre‐existing state‐specific aggregate spend reporting obligations. 

According to a recent update from Alliance Life Sciences Consulting Group, “companies will therefore need to possibly enhance compliance infrastructure to meet all state‐specific requirements as well as federal Sunshine Act provisions. 

Many companies are already busy making preparations to comply with the effective date for the federal Sunshine Acts reporting provisions ‐ March 31, 2013, by ensuring that source systems are able to capture the appropriate data starting January 1st, 2012. 

The Sunshine Act also includes provisions to allow recipients to review spend expenditure forty‐five days prior to September 30, 2013, when the data will be formally posted The same process is expected to continue in for successive years. 

The Sunshine Act’s provisions ask that all pharmaceutical, medical device, biotechnology, and medical supply manufacturers doing business in the U.S. report to the Secretary of the Department of Health and Human Services (DHHS) the payments or transfers of value that were made to covered recipients and teaching hospitals during the prior calendar year. These requirements are broad in scope. 

The challenge for life sciences manufacturers, according to Alliance Life Sciences, will be in the implementation of necessary business processes and systems to capture, store, and report such enterprise data. 

For small to mid‐size companies with limited operational wherewithal and infrastructure, the challenge is in implementing and testing processes, procedures, and systems to capture and query such data so as to produce sufficiently granular reports for compliance. 

Included in the Sunshine Act reporting are: 

• Charitable giving
• Consulting fees
• Compensation for non‐consulting services
• Education
• Entertainment
• Food
• Gifts
• Grants
• Honoraria
• Investment interests
• License fee revenue
• Research
• Royalty revenue
• Speaker/faculty fees for educational programs
• Travel 

Excluded from PPACA’s reporting obligations are: 

• Payments under $10, unless the aggregate amount paid to a covered recipient exceeds $100 per year
• Product samples and educational materials for the benefit of patients
• Loan of a covered device for a trial period under 90 days
• In‐kind items provided for use in charity care
• Items or services provided under a warranty
• Discounts (including rebates)
• Expert witness fees 

Independent of PPACA’s disclosure requirements, a manufacturer must be observant of state laws, as well. The primary areas addressed by state Sunshine laws are: 

• The adoption, training, auditing, investigation, and enforcement of a compliance program and code of conduct in accordance with the OIG Compliance Program Guidance for Pharmaceutical Manufacturers and the PhRMA Code or AdvaMed Code of Ethics
• The provision of gifts, meals, and entertainment to healthcare professionals
• Spending on promotion and advertising 

The challenge for manufacturers is that state laws and the Sunshine Act’s provisions have different coverage requirements, deadlines, expense allocations, reporting formats, fee structures, penalties, and policies regarding the confidentiality of disclosed data. Pharmaceutical and medical device marketing to prescribers often therefore implicates multiple laws, each with its own requirements. 

Manufacturers’ penalties for violating PPACA include civil money penalties ranging from $1,000‐$10,000 (up to $150,000 per annual submission) for failure to report each payment or transfer of value or ownership or investment interest “in a timely manner in accordance with rules or regulations” and ranging from $10,000‐$100,000 (up to $1 million per annual submission) for each “knowing failure to report.” 

State laws may also impose monetary penalties for violations of their prohibitions and requirements. State laws may also include cost‐shifting provisions that provide for the payment of attorneys’ fees and costs of investigation and enforcement. 

To avoid such penalties and costs, Alliance Life Sciences recommended that manufacturers consider taking proactive steps to comply with all applicable Sunshine laws. For example, manufacturers should: 

• Study and comprehend the requirements of state and Federal spend reporting provisions and monitor any related regulations or guidance as state health departments, Medicaid agencies, attorneys general, and boards of pharmacy may issue relevant subregulatory guidance on statutory requirements
• Draft and maintain internal operating procedures and policies requiring all affected company employees to comply with all relevant law
• Document company spending on educational items, meals, and advertising to the broad range of covered healthcare providers targeted by these laws in order to comply with prohibitions, spending limits, and disclosure requirements
• Develop timelines for reporting obligations by applicable jurisdiction and task competent compliance staff with execution
• Annually review all processes and systems to ensure optimal compliance with evolving regulatory guidance and law
• Quarterly review compliance with reporting processes and SOPs as part of internal audit (e.g. SOX) controls. 

Life science manufacturers and distributors will wish to allocate sufficient time and resources to develop and frequently update policies, procedures, systems, and training to address the statutory requirements of both state and federal Sunshine Acts. 

Further, all will wish to exercise ongoing due diligence in regard to evolving requirements on a state‐by‐state basis. As there is no shortage of enforcement zeal among state and federal officials, inconsistent state and federal compliance requirements will continue to pose risks and operational challenges. 

Alliance Life Sciences noted that, the data generated by the implementation of aggregate spend enterprise solutions can also provide opportunities to improve overall compliance and realize additional efficiencies through the adoption of newer technologies, which enable better real time data‐driven analytics and decision making. 

An enterprise solution can impact areas of critical operational importance such as: 

• Accurate and up‐to‐date customer masters
• Spend capture and accurate and timely categorization of all remuneration to physicians and hospitals or healthcare providers
• Enforced compliance with business processes
• Training representatives and internal staff on SOPs, policies and procedures
• Discipline and its imposition for scofflaws and rogue employees
• Robust reporting tools involving normalized, standardized and centralized data Adequacy of audit trail
• Centralized command and control and ownership of compliance processes with power to effectuate necessary infrastructure enhancements and organizational alignments to meet requirements
• Compliance leadership that is IT proficient, adept at managing operational complexity and well‐versed in audit and compliance processes  

There is no doubt that such investments in staff, training, and enhancements to compliance infrastructure are not likely to be inexpensive or particularly easy to implement. However, given regulatory enforcement risks and the extensive penalties, the far greater expense in terms of adverse consequences and exposure may be relying upon existing infrastructure and staff to manage what is an increasingly complicated, heterogeneous, and multi‐jurisdictional compliance requirement.

Physician Payment Sunshine: Medical Data Informatics Mines Currently Available Data

 
In response to the enactment of the Physician Payment Sunshine Provision (section 6002) contained within the Affordable Care Act (ACA), a number of stakeholders in the health care industry are beginning plans to help providers and practitioners with the reporting, disclosure and transparency provisions required under the act.  One company, Medical Data Informatics, provides a full range of data mining and analytics services. 

The  "Physician Payments Sunshine Provision" requires that companies begin reporting gifts or payments  starting  January 1, 2012. This information is to be reported to HHS  by March 31, 2013, and annually thereafter. HHS will then post this information on a publicly available, searchable on-line database as of September 30, 2013, and on June 30 of each year beginning thereafter. 

According to the company’s website, they have “wide ranging expertise in database technologies and can assist your organization in customized reporting, data mining or systems integration, from project planning and architecture to development and testing and can help you meet compliance requirements mandated by new legislation and transparency initiatives.” 

The company has their own database that contains records of payments to healthcare practitioners and other payees from pharmaceutical and medical device manufacturers who have made national data publicly available on their websites.  Medical Data Informatics updates its payments database whenever new national public data is available from Pharmaceutical companies and Medical Device manufacturers.  The website states that the database contains over 280,000 records of individual payments to over 200,000 healthcare practitioners in the United States.    

The company uses a variety of extract, transformation and load techniques and tools to load data and after each database update they use a quality assurance process to verify accuracy as far as is possible. Data fields maintained are: 

• Year payment made
• Reporting Company
• Health Care Practitioner Name
• Health Care Practitioner City and State
• Health Care Practitioner Professional Designation (e.g  MD, DO)
• Payee Name (Organization or Individual receiving payment)
• Amount Paid  or Payment Range (*)
• Payment Method (**)
• Payment Type 

Some reporting companies show a range of amounts paid e.g. "From $10,000 to $20,000.”  Some reporting companies list a Payment Method of Cash/Noncash or Payment in kind, but typically this field is blank. We also use this field to show a payment as "Partial" (flagged by an asterisk in the results next to the amount)  in cases where several Health Care Practitioners are listed as recipients of a total payment made to an organization but where the reporting company does not show how the distribution is made. Where the payment amount is zero, it indicates that the Healthcare Practitioner was identified as a recipient of a payment but that the amount is currently unspecified. 

To access their payments database individuals must register with the company and provide a valid email address and phone number.

ACRE Responds to the ProPublica Second Report Industry Payments to Physicians

 
ProPublica this evening released their compilation of payments to physicians "Dollars for Doc's and rather than report on what was spent in 2010, they once again showed their lack of fair balance and reported the aggregate of funds paid to physicians since the beginning of public disclosure which amounted to $760 million dollars over several years.   In response to this “Campaign of Shame” the Association of Clinical Researchers and Educators (ACRE)  announced its opposition to the improper use of physician-industry payment data by ProPublica.  

ACRE strongly recommends that ProPublica strictly abide by the Society of Professional Journalists Code of Ethics, which encourages all journalists to “promote public enlightenment” by, “seeking truth and providing a fair and comprehensive account of events and issues.”  ProPublica should develop, and publicly report on, safeguards and compliance mechanisms to ensure that it is providing objective, fair balanced reporting of all issues, including physician-industry collaborations which have wide ranging implications for patients everywhere.

Almost one year ago, ProPublica published its Dollars for Docs database, which combined compensation data for research, consulting and education, as well as transfers of value such as accompanying meals during such activities, from several biopharmaceutical companies and created a searchable website for journalists and, ostensibly, for the public to see how much a particular doctor earned for various activities. 

After publishing the data, ProPublica and other media outlets, to whom data and stories were provided, failed to objectively portray such payments and offered minimal, if any, contextual information.  Numerous articles were published describing the “potential” negative consequences of physician-industry collaboration, while failing to obtain any alternative perspectives, a tenet of high quality journalism.  News sources also frequently published articles with inflammatory headlines such as, “Docs paid to talk about drugs,” to further sensationalize and discredit ethical and legal collaborations that provide value to patients in the form of new treatments, drugs, devices, and more efficient and cost-effective care.

ACRE is concerned that ProPublica will continue to provide coverage of these issues that do not meet the basic principles of journalism.  In particular, we are concerned that ProPublica will continue its ad hominem attack on physicians who educate their peers, conduct clinical research, and consult with industry to ensure that Americans have the most advanced treatments and medicines, providing little opportunity for public enlightenment. 

What value does ProPublica bring to the American healthcare system by “analyzing” and publicizing such payments?  Will it lead to lower costs when drugs account for less than 15% of health care costs?  Will it lead to better patient outcomes?  Will drugs, devices or treatments get to patients sooner and through FDA approval faster?  Will clinical trials be conducted more safely and efficiently because payment data is now available? 

ACRE members from leading academic health centers across the country can attest that the answer is, no.  In fact, poor reporting of payments is having the opposite effect.  Reporting on payment data without proper contextual information is having a chilling effect on important collaborations, which hurts progress and patients.  Fewer researchers are doing research, educating their peers, and consulting with companies.  These added costs of one-sided transparency campaigns do not outweigh the benefits.

ACRE will continue to shine the light on ProPublica until they meet their journalistic duties and provide balanced coverage of this important health care issue.  We will also defend the physicians and health care providers who collaborate and work with the biopharmaceutical industry.  They are responsible for the advances in medicine that we rely on now and hope for in the future.

Financial Times Reports 150 Million Paid in 2011 to Physician Practices for Research, Education, and Consulting

 
With ProPublica set to release its second report on pharmaceutical company payments on Thursday to physicians, continuing its “campaign of shame,” a recent article from the Financial Times noted that twelve companies have paid doctors in the US nearly $150 million so far this year, suggesting an increase in these “marketing and support practices.” 

The article however is incorrect in some of its assertions – hardly surprising.  First, the article claims that these “figures highlight the extent of entertainment, travel, consulting, education and research support to doctors.”  While the majority of these categories are correct, entertainment is explicitly prohibited by the AdvaMed and PhRMA Code of Ethics, and accordingly, is not a cost included in the above numbers. 

The author does at least note industry’s firm belief in such payments, noting that companies believe they are “ethical and enhance health outcomes.” Critics believe such payments can influence prescribing practices. 

While some large companies have so far not released any data, those that did collectively reported payments of $437 million to 262,000 doctors last year. That breaks down to less than $1,700 on average per physician, hardly anything to be concerned about, especially since that probably represents the fair market value of the services physicians provided to industry—whether they be consulting, education, research, etc. 

The data mainly from the first quarter of this year shows $148 million has been given to 165,000 doctors so far, including $48 million from Eli Lilly and $42 million from Pfizer.  Again, this number should not be shocking because on average, this is less than $1,000 per physician. 

This analysis by the Financial Times, prepared in conjunction with PharmaShine, a data provider, comes at a time of intensifying scrutiny of – and prosecutions concerning – pharmaceutical groups’ marketing practices. Government agencies are finalizing guidelines that will make the publication of industry support compulsory by 2013 as part of US healthcare reforms, known as the Physician Payment Sunshine Act. 

According to the article, publication of such payments “is designed to allow regulators, medical institutions and patients to better scrutinize doctors’ links with companies, but the extent of current disclosures and the way they are presented varies widely – making comparisons and analysis difficult.”  What is problematic about this assertion is that there is no evidence that the use of such payments will do anything to improve patient outcomes, make research and drug approval more efficient, or save more lives. 

The article goes on to quote industry critic Allan Coukell, head of the Pew Prescription Project, who said that: “We need the medical community to work with the industry on research, but the marketing model is problematic. The first step is transparency and we are not even there yet.” 

Eli Lilly is one of a few companies to include funding for medical research at doctors’ institutes in its figures. Others list only support directly to individual doctors. 

A spokesman said: “Lilly is committed to ensuring that our relationships with healthcare providers are conducted in a manner that complies with applicable legal and ethical standards. Our collaboration with healthcare providers is essential to our ability to provide innovative medicines, improve health education, better understand patients’ needs and improve individual patient outcomes.” 

Among the individual doctors receiving the highest level of support was Zale Bernstein, an associate professor from the Roswell Park Cancer Institute in Buffalo, New York, who received $234,000 in 2010 from Cephalon, Eli Lilly and Pfizer. He has received more than $57,000 already this year. 

Dr. Bernstein received most of his money in speaker fees as part of extensive industry-supported medical education programs targeting other doctors.  Despite this larger sum, which clearly recognizes Dr. Bernstein’s expertise, the Financial Times recognized that, “the vast majority of physicians received far smaller sums – often limited to a small gift or a sandwich lunch of a few dollars.” 

Ultimately, as more and more local and national news sources begin to publish stories on physician payments from industry, it will be crucial to scrutinize the biased and negative portrayals of such payments.  

Stories that only explain the “potential influence” that such payments will bring are not objective and should be largely ignored because they do not offer balance or insight from the doctors and researchers who value the collaboration they experience with industry, and the positive outcomes it brings to their patients and colleagues through better education and training.

ProPublica Dollars for Docs Campaign of Shame II: Coming to Your Local Media Outlet September 8th

 
In the old west posters were put up around town looking for criminals and wanted men.  Today, industry critics are assembling wanted posters and list of who they consider their enemies, but this time it is hard working doctors as opposed to criminals.  They are seeking to shut down the relationships between physicians and industry scientists working on cures with their Dollars for Docs “campaign of shame.”  

Almost one year ago, the infamous and so-called “investigative journalist” shop known as ProPublica, published its Dollars for Docs database.  The database combined seven pharmaceutical companies’ payment data and created a searchable site to see how much a particular doctor was paid. 

Of course, the website and media stories that followed failed to portray such payments in an objective manner and offered minimal, if any context of such payments, publishing numerous articles about only the potential negative consequences of physician-industry payments and collaboration.

Consequently, ProPublica announced this week that it is preparing a major update to its Dollars for Docs database on September 8, 2011.

In doing so, ProPublica privately invited “news organizations to participate in a roll-out of stories based on the new data.”  In other words, ProPublica is getting ready to attack more hardworking physicians who educate their peers, conduct clinical research, and consult with industry to ensure that Americans have the most advanced treatments and medicines. 

In fact, ProPublica is “offering the data in advance to all interested news organizations that agree to withhold publication of their stories prior to the launch of their update.”

ProPublica said it “will make the data available on Aug. 22, under an embargo that lifts at 9 p.m. on Sept. 7.”  In addition, ProPublica stated that they can provide media sources “with payment data for the state or states you cover, as well as a guide to using the data,” and reporters Charles Ornstein and Tracy Weber will also be available to offer advice and tips.  Essentially, ProPublica will be feeding their stories and biased viewpoints to local media sources.

In the past, local media sources simply would do a “search” on the ProPublica database for doctors in their area, and then publish a one-sided article critical of industry.  Such articles were hardly if ever “objective,” and almost never included an opposing viewpoint showing the value of physician-industry collaboration.

According to their email, ProPublica will publish an updated version of their searchable database of payments that will now include data from 12 drug companies (about 40 percent of the U.S. market). The new information includes a full year of data from eight of those companies, allowing the first head-to-head comparisons of the fees paid by those companies. ProPublica “guaranteed” local media sources that its articles and update will “have a local angle of interest to your audience.”

Clearly all ProPublica cares about is getting media sources to expand the reach of their shame campaign, not truthful and objective journalism.

In addition, ProPublica claimed in their email that, “conflicts of interest in medicine have been a major issue for the past several years,” and noted how the Physician Payment Sunshine Act was enacted as part of the Affordable Care Act to address these so called “conflicts.”  The Sunshine Act requires pharmaceutical and medical device companies to post all payments to physicians of $10 or more, with certain exceptions.  They noted that while, “some companies have started doing so before then, either voluntarily or as the result of legal settlements, the payments listed on the companies’ individual sites are not easy to search and analyze.” A reason they use to justify the creation of their database, which they claim is “easy to use.”

The real question is, of what value is “analyzing” such payments?  Will analyzing such payments lead to better patient outcomes? Will drugs, devices or treatments get to patients sooner and through FDA approval faster?  Will clinical trials be conducted more safely and efficiently because payment data is now available?  Or will the publishing of such payments have the opposite effect?  Will posting physicians name chill the willingness of researchers to do research, educate their peers, and consult with companies? Will the added costs of transparency have any benefits to outweigh the administrative and resource burdens?

ProPublica asserts that its database has now “become even more useful for consumers.” But in what way? Is there any research to show that over the past year, since ProPublica published its first data, that patients are safer and healthier? No. ProPublica has not offered one shred of evidence to show that their database has done anything positive to make Americans safer or healthier.

Instead, ProPublica just wants to ostracize physicians who collaborate with industry and make lifesaving treatments and scientific discoveries.  They want people to “see which doctors in your communities have stopped speaking on behalf of drug companies and which have recently joined up.” And for what? Will this mean that patients will stop seeing their doctors, or will they ask their physicians why they take the time out of their busy schedules and family lives to educate other physicians, conduct clinical trials, and do research and consulting?

Ultimately, ProPublica will continue to abuse and slant the portrayal of physician-industry collaboration, throwing sand into the gears of medical and scientific progress, harming patients and leading to Americans and patients suffering.  In the coming weeks, we will be getting comments from local physicians who work and collaborate with industry to offer the counterpoint to ProPublica to highlight the tremendous value physician-industry collaboration brings to patients and America.

Physician Payment Sunshine: Astra Zeneca to Report All Payments to Physicians

 
Beginning this week, there is a significant addition to the AstraZeneca US website – a searchable database that discloses all payments and transfers of value to US-based physicians.

It includes consulting and speaker fees, modest meals and travel in association with contracted services or in conjunction with a product or informational discussion, educational items, pre-clinical or clinical research payments, royalties, license fees, and ownership or investment interests.

According to the company’s blog, they are including both direct payments to physicians, as well as payments made to entities related to a physician at the request of, or on behalf of, that physician. In addition, the database lists certain payments to physicians made through third-party entities, such as clinical research organizations, on behalf of AstraZeneca.

AstraZeneca is also reporting payments to US-based medical and research institutions, hospitals, clinics and group practices for clinical and pre-clinical research. This includes both direct and indirect payments through a contract research organization or academic research organization.  In addition, similar to Eli Lilly, AstraZeneca also provided several reasons to explain why the company is disclosing this information.

Why does AstraZeneca pay physicians and institutions?

The company partners and collaborates with physicians and institutions as part of their responsibility to educate the healthcare community about the approved uses and the safety and efficacy of their medicines so they can provide the best care possible to patients. They also engage with institutions and physicians to conduct scientific and medical research.

Why are they disclosing these payments?

AstraZeneca believes it is important to be open about how they conduct business, and this new reporting expands on a major initiative announced three years ago to provide greater public visibility into how AstraZeneca does business. More information on what AstraZeneca is doing in this area can be found here. On this website, people can find out more information about:

• AZ on the Issues: How AZ is working with health care professionals, patient advocacy groups and policymakers to find solutions to some of the complex health issues facing Americans today
• Community Support: Learn how AZ partners with nonprofit organizations to achieve the shared goal of helping people to live longer, healthier lives, and view biannual reports of their contributions to nonprofit organizations
• Compliance Program: Find details about AstraZeneca’s US Compliance Program, and learn how they are ensuring the highest standards of conduct in all our operations
• Clinical Trials: View details of new and ongoing clinical trials sponsored by AstraZeneca
• Independent Medical Education Grants: View biannual reports of independent medical education grants to educational provider organizations
• Physician Engagement: View a summary of payments and transfers of value to US-based physicians and institutions  
• Political Contributions: View quarterly reports of all political contributions made by employee Political Action Committee (AZPAC), and learn how AstraZeneca is committed to participating in the political process as a responsible corporate citizen
• Postmarketing Study Commitments: View a summary of clinical and preclinical commitments that are currently active for AstraZeneca products

What sorts of payments are being disclosed?

The report includes:

-       Consulting fees

-       Speaker fee

-       Meals

-       Travel

-       Certain educational items

-       Research payments

-       Royalties and license fees, and

-       Ownership and investment interests

What time periods are covered?

Payments and transfers of value that took place in the second quarter of 2011 are included, and these reports will be updated quarterly. Because of delayed reconciliation for certain indirect payments involving third-party vendors, some payments and transfers of value may not be included until a later reporting cycle.

The speaker reports cover compensation to US-based physicians for speaker programs from January 2010 through March 2011.

Why were certain physicians reimbursed for travel and meals?

AstraZeneca reimburses physicians for reasonable meal and travel expenses incurred in connection with speaking, consulting or research engagements.

What are research investigators and institutions being paid for?

AstraZeneca partners with institutions and investigators to conduct research to discover and develop new medicines. Research studies help the company evaluate the safety and effectiveness of potential medicines for patients who need better treatment options. Pharmaceutical companies contract with physicians and academic research centers to perform a variety of work that is critical to the development of new medicines and the sharing of medical information with the goal of improving patient care.

Doctors – who are on the front lines of patient care – also help to identify patients who might be appropriate for clinical trials or provide input to AstraZeneca on how their clinical trials can be designed.

Why might an institution receive millions of dollars?

AstraZeneca partners with institutions and investigators to conduct research to discover and develop new medicines for patients who need better treatment options. Bear in mind that when you look at the total payments to institutions, many of AstraZeneca’s large-scale investigational research trials entail multi-year contracts which are milestone driven.

Quite simply, this means that while certain dollar amounts may have been paid to an institution in a given quarter, the patient care, testing, and monitoring activities provided by that institution may span well beyond that quarter.

Conclusion

Ultimately, the medicines that AstraZeneca and other companies discover and develop and the interactions they have with physicians and institutions play an integral role in the US healthcare system.  Companies take great responsibility for their actions because it is critically important that the public trusts their ability to carry out this responsibility ethically and in the best interest of patient health.

By being open about how companies conduct business, about the safety and risks of their medicines, about their interactions with health care professionals, and their relationships with key stakeholders and partners in the community, companies such as AstraZeneca can help to earn this trust and continue with their mission of helping to improve patients’ health through meaningful medicines. AstraZeneca should be applauded for their leadership in transparency and other companies should be encouraged to follow their example.

Physician Payment Sunshine: Eli Lilly Reports All Payments to Physicians

 
Continuing its commitment to transparency and integrity, Eli Lilly launched its physician payment registry for payments as low as $10, a website that enables visitors to search payments to individual U.S.-based physicians and the institutions or research organizations that receive payments on behalf of a physician.

Lilly was the first company (in 2004) to establish an online database of clinical trial results, and the first company (in 2007) to establish a public registry of grants and charitable contributions. And, in 2009, Lilly became the first company to report payments to physicians for speaking and advising services. Lilly strives to be a leading voice and example in transparency efforts in the biopharmaceutical industry.

The drug maker said that its website, which is in line with its corporate integrity agreement (CIA) with the U.S. government, aims to show how the company works with U.S. physicians and compensates them for their services and how these collaborations benefit patient care.

Eli Lilly Payment Registry

Payments are reported in several categories, including research-related payments, educational programs and other services, such as commercial consulting. The registry also discloses noncash forms of value provided (e.g., business meals), as well as travel expenses paid by Lilly when a physician is performing services for the company. The registry is organized in an easy-to-use manner.  You can sort payments by

•          Entity Paid 
•          Physician/Professional Paid
•          State; and
•          Total

Users can also download the full report, or type into a search box to look for specific names of practitioners or entities.

Eli Lilly noted that 63% of payments reported on the registry are related to research, including clinical studies for investigational medicines.  Without these collaborations, new medicines could never reach millions of patients that are suffering with diseases such as cancer, diabetes, depression, and Alzheimer’s.

Specifically, Lilly explained how much of the cost to bring a new medicine to patients—estimated by Tufts Center for the Study of Drug Development at $1.3 billion—is associated with large, global Phase III clinical studies.  Lilly noted that the company is only able to gather evidence to determine their medicines are safe and effective before it reaches the patients by collaborating with research institutions and physicians—called principal investigators—who enroll patients in these clinical studies and oversee their treatment.

Lilly explained that, when an institution participates in a clinical study, it incurs not only the costs commonly associated with treating a patient, but also additional costs related to testing (for example, MRIs, scans, blood work) that must be conducted to provide the information necessary to evaluate the potential medicine. Additionally, institutions and physicians sometimes incur expenses related to advertising required for patient recruitment into the clinical study, and they pay fees to independent regulatory review boards that oversee the study process. Lilly pays for these expenses because they are required by the study.

Lilly pay’s for other research and development work including: basic research conducted before studies begin in humans, consulting related to the clinical study design, and costs associated with clinical studies that are initiated by independent investigators.

Lilly’s clinical study payments are made to an institution such as a hospital or university or a principal investigator (physician overseeing patients in the study) to cover all these costs associated with the clinical study. In most cases, Lilly does not know the amount of compensation, if any, that the principal investigator receives from the institution for involvement in the study.

In addition, principal investigators, as well as physicians conducting educational programs, consulting, or other services to Lilly can and should be compensated at fair market value for their time and expertise.

To minimize taking time away from treating patients, Lilly may meet with practicing physicians during meal times and, in doing so, as a courtesy, occasionally provide them with meals. Lilly also reimburses physicians for reasonable expenses, such as meals, airfare or lodging, incurred while conducting business on behalf of Lilly.

For the period January 1 to March 31, 2011, Lilly’s payments (compensation, reimbursement, and costs associated with research and development) to physicians and institutions or research organizations totaled $48.1 million.

Discussion 

On their new webpage, Eli Lilly noted that, “When doctors work together with the pharmaceutical industry, and patients benefit — because collaboration makes new medicines possible, delivers quality health education, and provides better insights into unmet patient needs.”

To achieve Lilly’s mission of helping people live longer, healthier, more active lives, Lilly collaborates with a variety of health care professionals and other external parties. Without their support and expertise, Lilly asserted that it “simply could not be successful in bringing new medicines to patients.”

In fact, to fulfill regulatory requirements for approval of medicines and proper education of prescribers regarding those medicines, Lilly asserted that it must work in partnership with physicians and other health care professionals.

Accordingly, Lilly acknowledged that the new registry “site is intended to share important background information on why these collaborations are essential and how they are structured, including information about the payments and other forms of non-cash value that Lilly provides to the physicians who work with us.

In creating this new registry and making it public, Lilly hopes to show Americans their commitment to disclosing their financial relationships with physicians to help earn Americans trust.

Conclusion

In announcing the payment registry, Lilly's U.S. medical division VP Jack Harris, MD, asserted that, "When healthcare professionals work together with the pharmaceutical industry, patients benefit from our combined expertise." Harris further recognized that, "through these collaborations, Lilly is able to develop innovative medicines, improve health education and better understand patients' needs. Without our joint efforts, new medicines could never reach the millions of patients who need better treatment options for diseases, such as cancer, diabetes, depression and Alzheimer's."