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The impact of the US Sunshine Act

A new dawn begins for pharma’s payments to doctors in the US

The financial relationship between pharma and doctors in the US reached a watershed moment this year as the so-called 'Sunshine Act' showed for the first time just how much the industry pays healthcare professionals.

The Physician Payment Sunshine Act, to give the law its full name, was part of President Barack Obama's healthcare reform bill and was adopted in March 2010 - but it wasn't until February 2013 that the US Centers for Medicare and Medicaid Services (CMS) released final regulations to implement the Act. When the law was finally put into place pharma companies had just six months to get ready to report their payments, with the onus on publishing on the industry rather than US doctors (see table 1 for the information that needs to be reported).

Table 1:

Under the Sunshine Act, the following information must be reported:

  • The name and address of the doctor
  • The amount and date of the payment (if more than $10)
  • The form of the payment, such as cash or stocks
  • The nature of the payment, such as consulting fees, gifts, or entertainment expenses

Pharmaceutical and medical device companies finally began reporting to the CMS on August 2013 and then in September this year the first publication of these figures was made public at the open website. What was revealed was much in line with what analysts and statisticians had expected to see - but the numbers are still huge, and this first release of data only covered the last five months of 2013.

It revealed that doctors and teaching hospitals received around $3.5bn from pharma companies and medical device makers between August and December 2013, amounting to the industry on average spending $23m a day in the US. Breaking this down, some 546,000 individual providers, including doctors, dentists and osteopaths as well as 1,360 teaching hospitals, received 4.4 million separate payments from healthcare companies.

US-based firms Lilly and Amgen made by far the most regular and highest amounts of payments to hospitals, although fellow US company Incyte made the highest total payment to a single institution, according to the data (see table 2). 

Table 2: Five largest payments to hospitals
Pharmaceutical companyHospital groupAmount ($)
IncyteThe Mount Sinai Hospital$4,893,774
LillyKaiser Foundation Hospitals$4,081,920
LillyUniversity of Texas M.D. Anderson Cancer Center$1,514,784
LillyCovenant Health System$1,372,060
LillyMayo Clinic Arizona$1,129,332
Source: CMS data for August - December 2013

But not all of the information has been released. In fact names of the recipients of about 40% of the payments reported by companies were initially withheld because CMS had concerns about 'data inconsistencies'. These have been one of the main anxieties of Robert Wah, president of the American Medical Association (AMA) - the main doctor's body in the US, who said that while AMA “is committed to transparency and the availability of this information to patients,” it remains 'very concerned' about the accuracy of the data. The CMS says it is working to fix this problem.

A need for transparency
But why bring in a new law that took four years to implement and has been beset by inevitable technical problems? Looking at historic relationships between the industry and physicians, the answer starts to reveal itself. A 2007 study from the New England Journal of Medicine (NEJM) revealed that 94% of US doctors had a relationship with industry - 83% received gifts, and 28% received payments for professional services such as consulting or research participation. Of those reporting industry relationships, 60% were involved in medical education, and 40% in creating clinical practice guidelines.

While these figures are all now estimated to have dropped, the glut of media stories over the past decades of bad behaviour on both sides seems to have finally sharpened the US government's focus on verifying that all payments are above board.

Moreover, in the 1980s, 1990s and early 2000s overtly lavish trips for doctors were regularly paid for by the industry in the hope that this would increase prescription rates. This sort of bad behaviour has been slowly filtered out in the past decade, with many firms including AstraZeneca and GSK saying in recent years that they will no longer fund trips abroad for doctors, and have changed the way they incentivise their sales staff.

But despite the changes, the bad behaviour still lingers in the public imagination and has the ability to damage the reputation of both pharma and physicians - which is why all involved are backing the new laws.

Public and pharma reaction

The reaction in the media to the publication of these figures has been relatively - perhaps surprisingly - quiet, with much of the American public seemingly unaware of the Act, or where the newly-released information can be accessed.

But Tim McGuire, director of global healthcare professional reporting at Lilly, says that despite there not being a large reaction since the data as published, the Sunshine Act will “inevitably draw more attention to the relationship between companies and healthcare providers”.

He says some may be concerned about the potential negative impact of this type of information, but he argues that in fact, the opposite is true.

“Disclosure of individual financial relationships between industry and healthcare professionals will be a positive force,” he says, “and further highlight the need and importance of co-operation between industry, academia, clinicians, healthcare organisations and patient groups.”

Changing behaviour?

But will this create a culture shift? Arguably this process has already begun - the Act has been on the cards for four years, and both doctors and pharma knew their payments would be made publically available in 2014. Consequently the amount of money spent by the industry has been gradually declining.

This is also not the first time that payments have been made public. A considerable amount of data was already in the public domain and several US states, including Maine, Massachusetts Minnesota, and Vermont, already require public reporting of financial relationships.

On top of this, 13 pharma companies (including Lilly, Johnson & Johnson and GlaxoSmithKline) must also post information about their ties with doctors under so-called corporate integrity agreements, all of which have come as a result of these firms' settlements with the US government over past marketing abuses.

But the Sunshine Act is far broader, mandatory and will allow the more informed and engaged healthcare consumer to evaluate a doctor using this information, along with other publicly available data. With one eye on this the AMA advised its members before the data was published to “be prepared for inquiries from the media, your patients and your friends”. The Association even provided a set of 'talking points' for its members to use in their conversations.

The Act and its disclosure requirements are emblematic of the wider societal shift pushing all governments and corporations toward being more open; even if this has to be forced through by freedom-of-information requests or new financial reporting laws.

Pharma is not immune to these pressures (they are, after all, at the heart of the clinical trial transparency debate) and understands that the tide is changing - it has also been caught out many times, and has slowly learnt that this is not the way to do business anymore (at least in mature markets).

For doctors, the relationship is more difficult - many require funding for their continuing medical education (which does not always need to be declared under the Act) and for research (which typically will need to be declared) as there is no central pot for these two expensive - but necessary - aspects of their jobs.

The AMA has remained quiet on how doctors have been reacting to this, but most do not see themselves as collaborators in an evil entente and the payments are for them a legitimate tender for services rendered.

The industry, as always, will need to adapt to a changing regulatory environment, and ensure that its reputation remains intact.

Article by
Ben Adams

is a health and life sciences writer

19th November 2014

From: Sales, Marketing, Regulatory, Healthcare



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