Proposed Rules for Physician Payment Sunshine Act: Some Clouds on the Horizon

Proposed Rules for Physician Payment Sunshine Act: Some Clouds on the Horizon

The Centers for Medicare and Medicaid Services (CMS) released their proposed rule for the Physician Payment Sunshine provision of the Affordable Care Act (see "CMS Releases Proposed Physician Sunshine Act Regulations", where you can also download the proposed rule). Because CMS was late issuing this rule, the drug industry will NOT have to begin data collection on Jan. 1, 2012, as "required" by the Sunshine provision, and will not need to begin data collection until final regulations are issued. Final regulations come AFTER comments on the proposed rule are accepted through Feb. 17, 2012.

That means that only PART of the 2012 payments may be submitted on Mar. 31, 2013 and available for public scrutiny by Sep. 30, 2013.

It's possible, however, that CMS may be further delayed if the comments received are plentiful and difficult to respond to before the agency issues the final rule.

Of course, pharma companies by now should be ready to begin data collection by January 1, 2012. Which means that they could theoretically submit a full year's (2012) worth of data regardless of the timing of the final rule. CMS said "we recognize that some manufacturers and GPOs may begin to collect certain data voluntarily." How many companies, however, will do this when they can claim they were waiting for CMS? It's just another test of willingness of the industry to be pro-actively transparent and open.

Also, CMS is seeking comments "on the amount of time applicable manufacturers and applicable GPOs will need following publication of the final rule in order to begin complying with the data collection requirements." I anticipate that many comments might cite CMS's estimate of 90 days to be too little and request more time. Thus, we may not see any 2012 data at all!

CMS's Tardiness in Issuing Sunshine Act Rule May Mean We'll See No 2012 Data!
"Finally," says CMS, we also seek input on specific challenges that applicable manufacturers and applicable GPOs may face when setting up the necessary data collection and reporting systems."

This is the Achilles' Heel that may mean that we will not see any 2012 data at all! If drug and device companies cite significant challenges that CMS's final rule must mitigate, that could delay issuance of the final rule or significantly limit how the information is reported. The industry may claim, for example, that it is "challenged" to breakdown payments into specific categories and ask that payments be lumped into larger, more encompassing categories. This would make it more difficult to analyze the data to see exactly what physicians are being paid to do, especially research versus marketing assistance.

Here are some other tidbits from CMS's proposed rule:

Foreign Drug Companies Must Also Report Payments
CMS proposes that any drug or device company that sells or markets products in the U.S. are subject to the rule regardless of where their corporate headquarters are located. Thus, says CMS, "Under this definition, manufacturers of a covered drug, device, biological, or medical supply are deemed to be an 'applicable manufacturer' if their products are sold or distributed in the United States (U.S.), regardless of where the covered drug, device, biological, or medical supply is actually produced or where the entity is actually located or incorporated... The opportunity for undue influence or inappropriate relationships caused by payments or transfers of value to covered recipients is the same for manufacturers of drugs, devices, biologicals, or medical supplies sold or distributed in the United States regardless of where the product is actually manufactured, and we, therefore, propose to treat them the same."

"Common Ownership" Loophole Closed
CMS wants to be sure that a wholly or even partially owned subsidiary of a drug or device company set up to dole out payments to physicians cannot escape the regulation. Such companies under "common ownership" -- as when "the same individual, individuals, entity, or entities, directly or indirectly, own any portion of two or more entities" -- "are also subject to the reporting requirements under this provision, even though they themselves may not be involved in the "manufacturing" process." CMS is seeking comments regarding its definition of "common ownership" to see if changes are necessary.

OTC Drug Manufacturers Excluded
CMS's proposed rule excludes manufacturers/marketers of drugs and biologicals that are considered "over-the-counter" (OTC) from being covered by the regulations. "We believe that this exclusion may be appropriate for manufacturers that manufacture only these products (and not also products which fall within the proposed definition of 'covered drug, device, biological, or medical supply'), since physicians and teaching hospitals have less influence over patients' choice of OTC products."

Perhaps physicians have less influence over patients' choice of OTC products, but they surely play a role in Rx-to-OTC conversions. They sit on FDA advisory boards, for example, which determine if an Rx drug can be sold OTC.

Identifying "Covered Physicians"
There is some confusion on how to uniquely identify physicians. There are more than one "unique identifier" for physicians. The law refers to a National Provider Identifier (NPI) number, which is required under HIPAA.

CMS states "We seek comments on what other unique identifiers could be used, including whether these unique identifiers are readily obtainable by applicable manufacturers."

CMS is also closing a loophole I noticed in data already being reported by some drug companies; ie, certain payments are reported to be made to institutions or organizations rather than to individual physicians. CMS proposes that "payments or other transfers of value provided through a group or practice should be reported individually under the name(s) of the physician covered recipient(s)."

Categories of Information to be Reported
This is probably the most important issue that needs clarification. CMS provides details of how data such as names, addresses, medical specialty, date of payment, etc. are to be reported.

Name of Drug: The Sunshine Law requires that manufacturers to report the name of the covered drug, device, biological, or medical supply associated with that payment, if the payment is related to "marketing, education, or research" of a particular covered drug, device, biological, or medical supply.

"In cases when a payment or other transfer of value is reasonably associated with a specific drug, device, biological, or medical supply, the name of the specific product must be reported," says CMS. "For example, if a sales representative takes a physician to dinner to explain the benefits of the applicable manufacturer's new product, the name of the product must be included since it was associated with the dinner."

The Multiple Drug Conundrum
If the payment relates to multiple drugs, only one drug needs to be named. CMS, however, does not mention how the named drug should be chosen.

As an alternative, however, CMS is considering "allowing applicable manufacturers to report multiple covered drugs, devices, biologicals, or medical supplies as related to a single payment or other transfer of value. Allowing the reporting of multiple covered drugs, devices, biologicals and medical supplies may be easier for applicable manufacturers since many financial relationships are not specific to one product only, but would make aggregating payments by product difficult. We seek comment on this approach."

I'm betting the drug industry would prefer the one-drug naming approach where they have the option to name the drug of choice. This could make it difficult to link specific payments to specific drugs or assign payments to specific drugs to "even out" the distribution, Say, for example, that a sales rep is responsible for promoting 2 drugs at a dinner meeting, but is given a physician payment budget that apportions 80% to just drug A. The total budget could be reported under drug B, thus diverting attention away from drug A. I think you get what I mean!

Nature of Payment - Nondisclosure of Assumptions Make an Ass Out You and Me!
This is important. The Sunshine Act lists the following categories of payment:

• Consulting fees. 
• Compensation for services other than consulting. 
• Honoraria. 
• Gift. 
• Entertainment. 
• Food. 
• Travel (including the specified destinations). 
• Education. 
• Research. 
• Charitable contribution. 
• Royalty or license. 
• Current or prospective ownership or investment interest. 
• Direct compensation for serving as faculty or as a speaker for a medical education program. 
• Grant. 
• Any other nature of the payment or other transfer of value (as defined by the Secretary).

CMS suggests that manufacturers explain the reasoning behind how they categorize payments (in a mandatory "assumptions document") since there may be significant differences among manufacturers on this issue. However, CMS will NOT make these"assumption documents" public because "they may contain information applicable manufacturers would consider proprietary."

That's a pretty big "transparency loophole," IMHO. Although CMS will monitor the assumptions, there is no way for the public to monitor CMS! The drug industry can be free to define these categories as it sees fit and not run into trouble unless different companies use wildly different assumptions and raise red flags at CMS. Also, the politically-appointed HHS Secretary may overrule the CMS as she did with the FDA!

Also, the CMS is seeking comments on whether or not the "assumption document" submission should be mandatory or voluntary! I can only guess what industry's comments will be about that!

One Category for ALL Speakers' Fees
CMS does, however, specify how manufacturers should interpret "Direct compensation for serving as faculty or as a speaker for a medical education program." CMS proposes that this category be "interpreted broadly to encompass all instances in which applicable manufacturers pay physicians to serve as speakers, and not just those situations involving 'medical education programs.'"

Under that rule, accredited CME programs would be lumped in with all other speaking activities, such as satellite symposia.

"We are considering, and welcome comments on, whether to limit this category to CME-accredited speaking engagements and report other speaking engagements in another category, such as compensation for services other than consulting, or additional category."

I anticipate a lot of comments on this issue will be submitted.

There are many more proposed rules in the CMS document, which runs to 121 pages! I have gotten only as far as page 34 in this summary. I hope to publish a more complete summary with comments from experts in an upcoming issue of Pharma Marketing News (subscription required).

I invite you to submit comments to this post.

Physician Bailout Part Deux: On Average, Device Manufacturers Pay Every US Orthopedic Surgeon Over $9,000 Per Year!

Physician Bailout Part Deux: On Average, Device Manufacturers Pay Every US Orthopedic Surgeon Over $9,000 Per Year!

File this under Pharmaguy's Believe It or Not! An analysis of financial payments made by orthopedic device manufacturers to orthopedic surgeons -- published today in the Archives of Internal Medicine (Arch Intern Med. 2011;171[19]:1759-1765) -- documents that if these payments were evenly distributed to all 25,000 surgeons, each surgeon would have received $9,120! This dwarfs the $750 per US physician that the drug industry pays to physicians every year (see "Physician Bailout: On Average, Pharma Pays Every US Physician Over $750 Per Year").

Of course, not every orthopedic surgeon receives money from the 5 largest orthopedic implant makers responsible for approximately 95% of all knee and hip implants used in the United States. (FYI: the 5 are Biomet Orthopedics, DePuy Orthopaedics, Smith & Nephew, Stryker Orthopaedics, and Zimmer.) In 2008, only 526 orthopedic surgeons received a total of more than $228 million (including $109 million in royalty payouts). On average, each of THESE surgeons received $433,460!

NOTE: 2008 may have been an unusual year due to royalty payouts. In 2007, 939 orthopedic surgeons received more than $198 million, which works out to $210, 863 on average per surgeon. Also, these figures do NOT include remuneration for meals and travel. Most payments are for consulting, royalties, and "research."

[In comparison, drug companies paid, on average, $1,520 to each physician that received payments, which DO incude meals and travel expenses.]

The authors were able to study payment trends for 3 of the 5 companies -- DuPuy, Smith & Nephew, Stryker -- over a 4-year period from 2007 through 2010. The mean payments per surgeon are plotted in the following chart.

The authors note that the average surgeon's salary is between $370,000 and $525,000 and they calculate that these payments by device companies would "likely represent 25% or more of an average orthopedic surgeon's annual income."

The 939 surgeons paid big bucks by device companies in 2008 represents only about 4% of the 25,000 orthopedic surgeons in the US. In comparison, drug companies made payments of some kind (including meals and travel reimbursement) to approximately 50% of ALL US physicians.

Apparently, device manufacturers are more selective than are drug companies regarding the physicians who receive payments. At least 44% of surgeons receiving money from device makers had an academic affiliation. The study's authors suggest that device makers may "curry relationships" with academic surgeons because they have the "potential to influence the future implant choices of all residents passing through a given program." Other critics have noted that high-volume surgeons also receive large consulting payments from device companies.

In a commentary published along with the study cited above, Robert Steinbrook, MD, of the Yale School of Medicine, noted that the term “consulting” is ambiguous. "Consulting related to research and development differs from consulting related to sales or marketing, and payments for consulting differ from research support or royalties. Consulting should be explicitly defined, and different types should be reported separately."

Meanwhile, CMS has yet to specify in regulations exactly how payments are to be classified when it comes time for ALL drug and device companies to report these payments to the federal government as required by the Patient Protection and Affordable Care Act (payments for 2012 must be reported by March 2013 and HHS will make these data public in September 2013).

Physician Bailout: On Average, Pharma Pays Every US Physician Over $750 Per Year

Physician Bailout: On Average, Pharma Pays Every US Physician Over $750 Per Year

The pharmaceutical industry has been very generous in making payments to physicians. Last year (2010), for example, a mere dozen pharmaceutical companies paid $760 million to physicians and other health care providers for consulting, speaking, research and expenses, according to ProPublica's "Dollars for Docs" project. ProPublica has taken "translucent" -- ie, difficult to analyze -- data reported by pharmaceutical companies and created a single database that makes comparisons simple (see here).

The database contains information about payments made to about 500,000 doctors. That's about half of ALL doctors in the US (including Peurto Rico). That works out to about $1,520 per doctor (or about $760 per EVERY doctor in the US), on average.

Of course, some doctors were paid MUCH more than this -- eg, pain specialist Gerald M. Sacks raked in $270,825 from Pfizer, Johnson & Johnson, Lilly and Cephalon in 2010, up from $225,575 in 2009. And some doctors received only $50 for lunch. At least 20 doctors, however, received "meals worth $2000 or more from Pfizer between July 2009 and March of this year," said ProPublica reporter Charles Ornstein.

According to the ProPublica database, Pfizer paid my doctor -- Catherine Spratt-Turner -- $388 for meals and $1,500 for speaking in 2010. This worries me because she wants me to come in and discuss my high cholesterol. Apparently, generic pravastatin is not doing the job and I suspect she wants to switch me to another anti-cholesterol medication. Will she suggest Pfizer's LIPITOR? I'll let you know when I see her. Previously, she was hot to get me on AstraZeneca's CRESTOR, which I resisted because of its published side effects. BTW, Spratt-Turner did NOT get any money from AZ last year.

This is exactly what worries some physicians who receive payments from pharmaceutical companies. As more and more searchable data becomes easily available to the public, they fear that patients will rebel and resist their advice if it appears that payments are influencing that advice. Oh, well! Welcome to the social media age!

The table above shows physician payments made by some pharma companies compared to sales. Surprisingly, Lilly spent about 2 times as much as did Pfizer despite having only about half Pfizer's sales volume. Perhaps Pfizer is more efficient than Lilly in targeting influential physicians? Nah! Viagra sales don't need much physician goosing to prescribe, whereas Lilly's Cialis needs as much help as money can buy. [I suspect, however, from the fees paid to pain docs like Dr Sacks, that Lilly is more concerned with promoting Cymbalta for pain.]

Overall, it appears that pharma companies tend to spread payments among physicians such that there is a more or less direct correlation between the number of physicians in a state and the amount of payments made to physicians in that state (see chart below).

Of course, $760 (or $1,520) per every physician is not going to improve a physician's lifestyle very much (although I am sure YOU and I would be happy to have an extra thou to spend every year!).

No, this money is central to what I call pharma's "prescribing recovery act" designed to grease the drug prescribing economy.

[This post originally appeared in Pharma Marketing Blog. 

Make sure you are reading the source to get the latest comments.]

Medical Schools Don't Ask & Faculty Don't Tell If They Violate Ban on Paid Pharma Speaking Gigs

Medical Schools Don't Ask & Faculty Don't Tell If They Violate Ban on Paid Pharma Speaking Gigs

ProPublica -- the non-profit newsroom that produces investigative journalism in the public interest and which received a Pulitzer Prize for investigative reporting -- recently published a story revealing that physicians from Stanford, Penn and the Universities of Pittsburgh and Colorado Denver have faculty members who have accepted money to promote drugs despite the fact that these universities have conflict of interest policies that restrict their doctors from accepting pharma money (see "Medical Schools Don't Verify Faculty Compliance with Ban on Pharma Speaker Fees").

This is just the latest revelation made possible by comparing names in ProPublica’s Dollars for Docs database of payments publicly reported by seven drug companies with names of faculty members at a dozen medical schools and teaching hospitals.

Here's an example:

The University of Pennsylvania health system’s 2006 policy states that faculty “should not participate in industry marketing activities.” Penn’s chief medical officer, Dr. P.J. Brennan, said he interprets that to prohibit delivering drug company lectures.

“It flies in the face of what a professional ought to be,” he said.

ProPublica found 20 Penn speakers in its database. Five, including one who left Penn last month, made more than $40,000.

The top paid, according to Dollars for Docs, was Dr. Corey Langer, director of thoracic oncology at Penn’s Abramson Cancer Center. He received nearly $70,000 speaking for Lilly since 2009.

Langer also received unknown amounts from other companies, including Genentech Inc., OSI Pharmaceuticals Inc., Bristol-Myers Squibb Co. and ImClone Systems, according to his disclosure for a medical education program this month.

In an e-mail, Langer said he was “now fully aware” of Penn’s policy and is “taking measures to curtail speaking for pharmaceutical companies.”

"When it comes to enforcing the policies, universities have allowed permissive interpretations and relied on the honor system," said the authors of the article. "ProPublica’s review shows that approach isn’t working: Many physicians are in apparent violation, and ignorance or confusion about the rules is widespread."

Several physicians claimed they didn't know they were in violation of their school's policies. This is similar to what you might say to a cop after being caught running a late-night blinking red stop light.

“For God’s sake, if the media can look at these websites, why can’t we?” said David Rothman, president of the Institute on Medicine as a Profession at Columbia University. “Why trust if you can verify?”

But it's not yet easy for all schools to verify compliance using ProPubica's database or any other database of pharma payments to physicians. For one thing the majority of drug companies in the United States don’t report such payments. This is supposed to change by 2013 when the Physician Sunshine Act will require all drug companies to report these payments (see "Capturing & Reporting HCP-Related Meeting Spending"; use discount code 'HCP399' to get it FREE!).

Abbott Fetes Barred Cardiologist with High Cholesterol Pig Roast

Abbott Fetes Barred Cardiologist with High Cholesterol Pig Roast

Practically every week I read amazing stories about stupid, immoral, unethical, or illegal activities perpetrated by the pharmaceutical industry. Stories that are bolstered with juicy quotes from internal corporate emails written by dumb executives. And I don't have to wait for Wikileaks to publish this stuff when the U.S. Senate and the Wall Street Journal (WSJ) are already doing it!

Take today for example. A story in the WSJ titled "Abbott Hired Barred Doctor" caught my attention (find it here). At first, I thought it was nothing new -- I already know that pharmaceutical companies have hired questionable physicians in the past, so it's not too exciting to learn that Abbott "hired a Baltimore-area cardiologist as a sales consultant after he was barred from practicing at a local hospital last year for allegedly putting heart stents in hundreds of patients who didn't need them."

What's interesting is the juicy stuff that the Senate learned from internal emails written by Abbott executives.

For example:

"In 2008 Abbott paid more than $1,000 for a pig roast, complete with mobile pig pit, at a party to fete the cardiologist the same week Dr. Midei, then head of the cardiac catheterization lab at St. Joseph Medical Center in Towson, Md., set a possible company record by implanting 30 stents in a single day."

and

"Charles Simonton, the medical director of Abbott's vascular division, said in another email cited by the [Senate report to be released today] that Dr. Midei should 'clearly avoid' the Baltimore area, but Dr. Simonton encouraged colleagues to 'please find key physicians or cath labs you'd like him to get in front of with our data.' Abbott wanted to hire Dr. Midei 'because he helped us so many times over the years,' yet another Abbott executive said in an email."

and

"Around that time, an Abbott executive complained to a colleague by email about one of the [Baltimore] Sun's journalists [who reported on the alleged overuse of stents at St. Joseph] 'Somebody needs to take this writer outside and kick his ass. Do I need to send in the Philly mob?' he wrote, according to the report."

What's really amazing is that a company supposedly dedicated to saving lives of patients with cholesterol-blocked coronary arteries would host a $1,407 pig roast complete with a mobile "Alabama pig pickin' pit," a whole pig smoked for 15 hours, Memphis-style ribs, chicken, hot dogs, cole slaw and two big peach cobblers. The only thing heart-healthy on that menu may have been the cole slaw! I can forgive the threat to kick the reporter's ass, but a pig roast in a cardiologist's back yard? Unforgivable!

Certain Physician-Industry Relationships Have Declined Dramatically Over the Past 6 Years. Why?

Certain Physician-Industry Relationships Have Declined Dramatically Over the Past 6 Years. Why?

According to a recent survey published in today's issue of Archives of Internal Medicine, 83.8 percent of physicians reported some type of relationship with the drug industry during 2009. This included nearly two-thirds (63.8 percent) who received drug samples, 70.6 percent who received food and beverages, 18.3 percent who received reimbursements and 14.1 percent who received payments for professional services. This is despite a number of efforts over the past several years that were aimed at reducing or eliminating certain types of physician-industry relationships (PIRs).

There has been some decline, however, in the percentage of physicians receiving PIRs from 2004 to 2009. "In 2004," reports the study authors, "more than 80% of physicians reported that they received food and beverages in their workplaces and 78% received drug samples. More than one third (35%) were reimbursed by companies for costs associated with professional meetings or continuing medical education (CME), and more than one-quarter (28%) received payments for consulting, speaking, or enrolling patients in clinical trials."

I plotted some of the more relevant survey results to more easily compare the 2009 data with data from 2004 (click for an enlarged view):

What's immediately striking to me is sharp drop in % of physicians receiving payments for consulting, participation on speaker bureaus and advisory boards, and for enrolling patients in clinical trials. That percent decreased from 28% in 2004 to 14% in 2009 (see last group of bars in chart above). This is in contrast to modest decreases seen for other PIRs.

It can be assumed that this is due to two factors: (1) passage of the Physician Sunshine Act as part of the Healthcare reform passed last year, and (2) the increase in the number of drug companies required by legal settlements to report payments to physicians (eg, see "Drug companies paid N.J. doctors millions to promote their products". Eventually, all pharma companies will have to report payments to physicians unless, of course, healthcare reform is repealed or scaled back by the new US Congress.

The authors of the study conclude "given that 83.8% of physicians have PIRs, it is clear that industry still has substantial financial links with the nation’s physicians. These findings support the ongoing need for a national system of disclosure of PIRs." Such a system is part of the Physician Sunshine Law, which is scheduled to go into effect in 2013. As I said above, a national disclosure of PIRs may be among the first items on the new GOP agenda's chopping block.

However, one other factor may be at play here: the decreasing number of new brand name drugs coming to market in last several years. While the authors cite cut backs in marketing due to the global financial crisis as a possible contributing factor, they do not mention that PIRs may be declining in part because of the depressed number of new drugs in the pipeline that require marketing to physicians.