Life Science Compliance Update

July 07, 2015

What Are Reporters Writing About Open Payments 2014 Data?

Media

Last week, the Centers for Medicare and Medicaid Services (CMS) released the second year of Open Payments data, detailing the transfers of value made from pharmaceutical and device manufacturers to physicians and teaching hospitals in 2014. While the data release did not garner quite as much attention as in 2013, articles this year did focus on the improved CMS data compared to last year and the top line totals—industry payments were $6.5 billion, with research ($3.23 billion) and royalties ($803 million) as the top payment types (See NY TimesWashington PostReuters, and Wall Street Journal).  

A number of outlets have dug into the numbers in the week since CMS released its data.

Medical Device Royalty Payments

Minnesota based Post-Bulletin ran an in-depth story looking into royalty payments made to Mayo Clinic doctors. These payments often reflected innovative orthopedic products. "We are very proud of our invention activity," Dr. Clark Otley, Medical Director of Mayo Clinic Ventures states, as quoted in the article. "We invent all different sorts of devices, tests, imaging technologies, drugs and information technologies. We feel we handle them very responsibly through a royalty sharing plan which brings a large portion of the revenue back to Mayo Clinic and our three shields."

Indeed, “[s]ince royalties are shared with the clinic,” much of the physicians’ reported royalty payments was shared with Mayo Clinic, states the article, which also noted that one doctor’s royalty revenue reflects the popularity of an uncemented hip replacement. Dr. Otley called it "one of the best designs over the past 10 years.” He added: "Many of the most successful implants in the world today are generated from Mayo Clinic research."

ProPublica and Obsidian HDS Analysis

ProPublica’s Dollars for Docs has used the 2014 Open Payments data for a number of articles with the help of Obsidian HDS, the developer of PharmaShine (www.pharmashine.com), an online service for the management of data on pharmaceutical and device industry payments to healthcare professionals.

Frequency of Payments

An article published in ProPublica, and simultaneously in NPR and MedPage Today, focused on doctors that are paid most often as defined by separate line items in the Open Payments database. Entitled A Pharma Payment A Day Keeps Docs’ Finances Okay, the article uses the dates corresponding to expenses and frequency of payments to rank doctors in the order of how many days per year they received payments.

While the article provides an interesting look at industry-physician interaction, it is important to understand how the structure of the Open Payments database affects the accuracy or interpretations of such analysis.

For one, ProPublica takes aim at a doctor who received around $6,000 throughout 2014. “She received payments on 286 days of 365, more than anyone else,” notes ProPublica. Taking a quick look at her 2014 payments shows that 100 payments were for $1.75 or less—all for “Food and Beverage”—and odds are for coffee. The vast majority of her payments are for $10 or less. While the crux of ProPublica’s article is on the frequency of daily interactions, CMS has specified that “manufacturers have flexibility to determine the methodology for reporting when the date of the transfer of value was ‘provided.’” CMS notes: “For example, in the instance of travel benefits, there is flexibility for reporting travel because the purchase date (of airline tickets, for example) may be different than the date the transfer of value is actually “provided” to the covered recipient (i.e., when the physician takes the flight).” Furthermore, CMS gave manufacturers “flexibility to report payments made over multiple dates either separately or as a single line item for the first payment date.” See FAQ 10086 and FAQ 8153.

Thus, it is worth noting that one company’s $20 entry may be another company’s 5x$4 (or 20x$1) entry.

CMS’s FAQs also shed light on another basic, yet important, clarification regarding payment breakdown and frequency--how expense sheets work. For example, if you imagine a fairly routine speaker program, the individual line items add up for simply giving a presentation. An expert may have a cab fare from her home to the airport, air fare, cab ride to the hotel, hotel expense, cab fare from the hotel to the speaking venue, a coffee, snack, and lunch, cab ride back to the airport, flight home, and then a return cab from the airport within a 24 hour period. While the ProPublica articles are correct in that these constitute transfers of value under the Sunshine Act, costs associated with time in a cab do not sound particularly exciting, nor will such payments “keep[ ] docs’ finances okay.” Furthermore, companies may report these payments on different days based on their own internal processes. Thus, five or even ten different small transfers may represent the travel logistics of getting a doctor to a speaker program.  

Dollars Pro

                                                                            (ProPublica, https://projects.propublica.org/docdollars/)


Covered Recipients Do Not Include Nurses

Another recent article argued for including nurse practitioners in the Open Payments database (Transparency Program Obscures Pharma Payments to Nurses, Physician Assistants). This came a few days after an Advanced Practice Registered Nurse (APRN) in Connecticut was charged with accepting kickbacks from a drug company. ProPublica noted that “when the federal government released data Tuesday on payments by drug and device companies to doctors and teaching hospitals, [these] payments were nowhere to be found.” 

The article argues that nurses should be included as well in the database, though it does not mention the cost of each manufacturer instituting such tracking. It bears mentioning here that in our analysis of Massachusetts payment data (whose state law considers nurses to be “covered recipients"), less than one percent of payments went to APRNs.  

Payments Added Up

Media reports have tended to add payments from 2013 to 2014 to better support “Dr. X is awash in cash” type articles.  Currently the Dollars for Docs search tool, though similar to Open Payments, lists payments over 17 months next to a doctor’s name when you use their database.  We can expect this trend to only continue as the Open Payments rolls out in 2016 and beyond.

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We will continue to look into interesting trends in the Open Payments database as well as the media response. 

July 02, 2015

Inside the Open Payments Data: Two-Thirds of Transactions Worth $20 or Less; Research and Royalties Account for Majority of Total Value


Yesterday, the Centers for Medicare and Medicaid Services published the second year of Open Payments data, detailing the transfers of value made from pharmaceutical and device manufacturers to physicians and teaching hospitals in 2014. The top line total has received most of the headlines—“docs get $6.5 billion from drug and device companies.” 
Here, with data courtesy of Open Payments Analytics, we break down some of those payments in detail, with more to follow in subsequent articles.

Small Payments Fill the General Database:

Overall, there were 11.41 million records published, covering 607,000 physicians and 1,121 teaching hospitals. Small “in-kind” transfers of value—mostly meals, some educational materials, and occasional travel—dominated the number of transactions in the Open Payments records, and were often the most cumbersome for companies to track at the individual physician level. As found in the graph below, the majority of the payments in the general database (66 percent) were for transfers of value of $20 and below. Eighty-seven percent of payments were for transfers of $100 or less. We also found that almost 150,000 transactions were under a dollar; 591 were for one penny. 

  General Payments by size


Research and Royalties Make Up Majority Of Total Pay

Of the $6.49 billion in transfers of value during 2014, more than $4 billion was attributed to research grants or payments associated with royalties or licenses. For example, the Modern Healthcare article discussing “Which companies disclosed the most to Open Payments,” noted that the vast majority of Genentech’s payment total reflected royalty payments to City of Hope, “the California comprehensive cancer center that holds the patents on research underlying Genentech's biggest drugs, Avastin, Rituxan and Herceptin.”  Royalties are also paid to, for example, orthopedic surgeons who invent surgical products.  

On the research side, manufacturers spent a total of $3.23 billion on research payments and associated funding. This included $705 million to teaching hospitals and $2.52 billion listed under a specific physician’s name. CMS notes that this physician research payment total includes: “payments where the company making the payment has named a physician as the primary recipient, and payments to a research institution or entity where the [ ] physician is named as a principal investigator on the research project.”

Research payments can be especially prone to misinterpretation given that an entire institutional research grant—covering practice overhead, salaries for research staff, and a host of other expenses—can be attributed to one principal investigator physician who receives a salary. As academics from Johns Hopkins pointed out last year, the cost of donated drugs to clinical trials are also attributed as “research payments.”

Top Five Nature of Payments Categories By Value

Nature of Payments

Total Transactions

Value of Payments

Average Payment

Research

 585,079

 $3,225,148,909

 $5,512

Royalties

 14,291

 $803,485,046

 $56,223

Compensation for services other than consulting, including serving as faculty or as a speaker at a venue other than a continuing education program (this was a catch-all category for certain payments, including large acquisition payments)

 231,456

 $632,444,040

 $2,732

 

Consulting Fee

 126,276

 $369,443,088

 $2,926

Food and Beverage

 9,865,494

 $224,542,921

 $22.76


Year Over Year Changes

While the first year of Open Payments covered only five months of data (payments from August 2013 - December 2013), and included notable data discrepancies, the year over year fluctuation is interesting. We averaged out the monthly payments for general and research payments for a more easily discernible yearly change. Broadly, it looks like general payments went up about 10 percent (which may be due to the fact that almost 100 more companies are reporting in 2014 over 2013), and research payments went down by about 13 percent. As we noted yesterday, investment holdings by physicians look to have taken a hit in 2013 v. 2014, perhaps as a result of the Open Payments scrutiny. 

Avg monthly payment

 

Type of Payments

2013 – 5 months
(8/2013-12/2013)

2014 – 12 months  
(1/2014 – 12/2014)

General

$972 million

$194 million/month

$2.56 billon

$213 million/month

Research

$1.55 billion

$310 million/month

$3.23 billion

$269 million/month

Ownership

$908 million

$703 million

Total

$3.43 billion

$6.49 billion

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We will be offering research payment related analysis in our next article. A full detailed analysis of the open payment data will be available in the August issue of Life Science Compliance Update.  Thanks to Open Payments Analytics for providing the data for this timely analysis.  

 

 

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