Lawmakers look to improve transparency of physician-industry relationships

The health care industry is following a nationwide trend in making transparent any potential conflicts of interest in financial and business relationships. Amid skyrocketing prescription costs and concerns about care quality, lawmakers, physicians and industry are examining practitioner-industry relations and seeking ways to enhance public scrutiny.

William L. Rich, MD, believes the Physician Payments Sunshine Act hit a nerve with both physicians and industry. Image: Rich WL

One proposed federal law would require full public disclosure of physician-industry relationships. Another bill would create a mechanism for funding the distribution of scientific information on prescription drugs to physicians. This is aimed at reducing or eliminating the practice of detailing.

In addition, a U.S. Senate committee is examining an American Medical Association program that enables physicians to block the use of their prescribing data by pharmaceutical, device and biologic manufacturers.

The American Academy of Ophthalmology supports disclosure of physician-industry relationships, William L. Rich III, MD, AAO medical director of health policy, said.

“The ball is rolling,” Dr. Rich said. “The Academy’s Board of Trustees’ retreat [agenda] was based on conflicts of interest and future relations with industry. I think every single association in the United States is really looking very carefully at their relationships with industry.”

Reporting and transparency initiatives are intended to end the familiar practice of industry representatives presenting physicians with meals and gifts.

“The era of taking docs out to dinner and schmoozing them up is over,” Dr. Rich said.

Allison Weber Shuren, MSN, JD, an attorney at the Washington, D.C.-based law firm Arnold & Porter, cited the need to preserve legitimate physician-industry relationships while making them more transparent.

“There are certainly plenty of very legitimate and necessary relationships between physicians and companies that result in improved products and product ideas,” Ms. Shuren said. “We don’t want that stifled over transparency.”

Allison Weber Shuren

Ignoring or violating existing disclosure rules may have serious consequences. In 2007, an investigation by the U.S. Department of Justice and Office of the Inspector General of five orthopedic device manufacturers found improper financial kickbacks being made to some physicians.

According to the Office of Inspector General of the U.S. Department of Health and Human Services, four orthopedic implant companies paid physician consultants more than $800 million between 2002 and 2006.

Under a settlement agreement, the manufacturers must publicly report all compensation to physicians to avoid prosecution, Ms. Shuren said.

“One piece of the settlement agreement was that they had to post on their Web site the names of every physician that they provided any kind of financial remuneration to for any reason,” she said.

The orthopedic investigation should serve as an example for ophthalmologists, Ms. Shuren said.

“I’d tell [ophthalmologists] the same thing I’ve always told them,” she said. “They should not be receiving financial benefits from companies unless they are for services that are being rendered by the physician that are necessary, that are actually being performed and that have some need for the company.”

George O. Waring III, MD, FACS, FRCOphth, a clinical professor of ophthalmology and former chief investigator in U.S. Food and Drug Administration clinical trials, said physician-industry collaboration spurs innovation.

George O. Waring III

“Without physician input, the medical device industry and pharmaceutical industry have very little basis on which to develop their products,” he said. “On the other hand, without industry to develop the instruments, devices and drugs that physicians need to practice, of course physician practice would recede into the Dark Ages. It’s very clear that a facilitation of physician-industry relationships is what is needed and not an obstruction or invalidation of physician-industry relationships.”

Dr. Waring said that some physicians and staff may appreciate the benefits of an industry-physician relationship, which may include anything from free lunches to a resort vacation, as an extreme example.

“But since that is not payment for work done, it is simply a form of appreciation for the practice using the medication. This could easily be perceived as bribery, and this creates a conflict of interest,” he said.

Excessive self-policing may be counterproductive, he said, and the integrity of physician-industry relations ultimately hinges on mutual trust.

“In the end, we are dependent upon basically the moral character of the physician who has spent 15 years of his or her life becoming a practicing doctor as the final stopgap,” Dr. Waring said. “Trust is the fundamental bedrock of physician-industry interactions and physician disclosure and transparency even though rules and regulations are required.”

The American Medical Association’s Code of Medical Ethics addresses conflicts of interest and has four main guidelines: Reward or financial gain must be subordinate to service to humanity; physicians may not put financial interests ahead of patient welfare; it is unethical for a physician to needlessly hospitalize a patient, prescribe drugs or conduct diagnostic tests for financial gain; and any conflict between a physician’s financial interest and obligations to a patient must be resolved in favor of the patient’s well-being.

Physician Payments Sunshine Act

In fall 2007, Sens. Chuck Grassley, R-Iowa, and Herb Kohl, D-Wis., introduced the Physicians Payments Sunshine Act, which would require drug and device companies to disclose payments to physicians.

If passed and signed into law, the reporting requirement would take effect on March 3, 2011.

In its current form, the bill requires companies to report payments or other transfers valued at more than $25, including compensation, gifts, honoraria, speaking fees, consulting fees, travel, discounts, rebates or services. Transfers would not include product samples intended for patients, payments or other transfers of value for the general funding of clinical trials, or transfers to physicians undergoing medical care and not acting in a professional capacity.

Companies would be required to electronically report payments and transfers on an annual basis. Penalties for noncompliance would range from $1,000 to $5,000, with an annual cap of $50,000 for failure to report, and $5,000 to $50,000, with an annual cap of $250,000, for knowing failure to report.

The law would pre-empt existing state reporting requirements and require the U.S. Department of Health and Human Services to post disclosures on the Internet.

The bill was referred to the Senate Finance Committee in September 2007, and to date, it has not been put up for vote.

“There’s no doubt about it that Sen. Grassley et al and Sen. Kohl hit a nerve,” Dr. Rich said.

The Medicare Payment Advisory Commission, an independent congressional agency, also supports the Physician Payments Sunshine Act but is planning to issue recommendations for even stricter reporting requirements, Dr. Rich said.

“They support it, but they actually encourage even further enhancement of it to report not just physician support, but support to different medical associations and societies,” he said.

Industry groups’ ethical guidelines

The Pharmaceutical Research and Manufacturers of America (PhRMA), the drug industry’s largest advocacy organization, and the Advanced Medical Technology Association (AdvaMed), the device industry’s leading advocate, have their own guidelines regarding industry-physician relationships.

In March, in testimony to the Institute of Medicine Committee on Conflict of Interest in Medical Research, Education and Practice, PhRMA officials outlined the PhRMA Code on Interactions with Healthcare Professionals. The code was adopted in 2002.

“PhRMA’s member companies are committed to following the highest ethical standards as well as all legal documents in their interactions with health care professionals,” the organization testified. “The PhRMA Code sets out concrete standards that apply in particular situations. The code, for example, states clearly that it is inappropriate for companies to provide to a health care professional entertainment or recreational activities, such as golf or theater tickets.”

However, companies may provide modest meals in connection with presentations by representatives or other speakers, if the meal is appropriate to an exchange of information. Also, companies may offer gifts that are designed to benefit patients, PhRMA said.

The Office of Inspector General had praised the PhRMA Code as a key document that “provides guidance for manufacturers concerning the legal requirements that govern pharmaceutical marketing practices,” PhRMA testified.

The AdvaMed Code, adopted in 2004, stresses the need for meals and other industry gifts to be relevant to a bona fide exchange of information, according to an AdvaMed document.

That code limits gifts, aside from textbooks and educational anatomic models, to a maximum fair market value of $100.

Reaction to the Sunshine Act

In the spring, PhRMA and AdvaMed publicly endorsed the Physician Payments Sunshine Act. Merck & Co., Eli Lilly and Astra-Zeneca International have also endorsed the legislation, according to a news release from the Senate Special Committee on Aging.

Ken Johnson, senior vice president of PhRMA, praised the Physician Payments Sunshine Act.

Ken Johnson

“PhRMA commends efforts by Senators Herb Kohl and Charles Grassley to improve transparency while preserving the critical interactions with health care providers that help in developing new medicines and enhancing patient care,” he said.

However, PhRMA conditioned its acceptance of the proposed law on the pre-emption of various state disclosure laws to avoid confusion among those posting and accessing information, Mr. Johnson said.

Ms. Shuren said the Physician Payments Sunshine Act is an honest attempt at transparency, in the wake of the orthopedic investigation and settlement.

“I think that there’s a balance to be struck, and I’m just not sure whether the Sunshine Act strikes that balance or not,” Ms. Shuren said.

The requirement that the orthopedic device manufacturers under investigation must report compensation to physicians may serve as a demonstration project for public disclosure and shed light on the efficacy of public reporting requirements, Ms. Shuren said.

“We ought to look at how effective the public reporting of those relationships has been to some extent as to whether or not this whole idea of transparency to the public is the right way to go rather than perhaps just transparency to government officials who might have more of an understanding of consulting agreements and research agreements and other things that are perfectly legitimate,” Ms. Shuren said.

Overlapping state laws

Attorneys Chandra N. Branham, JD, and Daniel A. Kracov, JD, also of Arnold & Porter, voiced concerns about potential impediments to the Physician Payments Sunshine Act, such as reporting thresholds, overlapping state laws and public disclosure format.

“There are some issues in the details, like the thresholds for when those gifts should be reported, what information should be made public and the context in which it is made public,” Ms. Branham said. “But the general concept of improving the transparency of those relationships is a good thing that I think most folks in industry are supportive of.”

Mr. Kracov called for an equitable law that encompasses the reporting of a wide range of payments.

“The legislation requires some further thinking through,” he said. “One, it’s primarily manufacturer-oriented. There are a lot of different payments that are made in the health care arena. If you’re going to go down this road, it may make sense to make it a more equitable and rounder representation of payments, for example, between plans and physicians and so forth.”

Mr. Kracov questioned the logistics of meeting strict reporting requirements in a timely fashion.

“It is not easy to get a hold of all of these payments in a quick time period that the legislation would contemplate and to have an accurate accounting of all of them, particularly in the larger companies,” he said. “It’s quite a big task, and I think it has been underestimated. The other issue is pre-emption. I just don’t see this making sense unless you have at least very strong pre-emption of state law.”

Mr. Kracov has concerns about the minimum payment that would have to be reported. For example, a revised draft of the Senate bill to be introduced in the new session of Congress would likely set a threshold of $500, while the Medicare Payment Advisory Commission is recommending a threshold of only $100.

He also said state reporting laws would need to be pre-empted. Currently, California, the District of Columbia, Massachusetts, Minnesota, New Hampshire and Vermont have payment disclosure laws on the books.

“I find that these state laws are a real problem, logistically, from a compliance perspective, differing requirements,” Mr. Kracov said. “If you don’t get it right, I think there’s a good chance that the act as such could get held up in Congress.”

Academic detailing proposal

In late July, Sen. Kohl and Senate Majority Whip Dick Durbin, D-Ill., introduced the Independent Drug Education and Outreach Act of 2008, which would fund the distribution of prescription drug information to physicians by medical professionals, not pharmaceutical company representatives. If passed and signed into law, the bill would create an academic detailing program in which grants would fund the production and dissemination of educational materials on the safety and efficacy of prescription drugs, including generics and over-the-counter alternatives.

Another grant program would fund the assignment of trained medical professionals to physicians’ offices to distribute educational materials. The program would reduce health care costs by increasing the use of low-cost generic drugs.

Dr. Rich called for physicians to receive a combination of industry-generated and peer-reviewed information on prescription drugs.

“I think it’s very important that industry supplies an important source of that education, but it shouldn’t be the sole source,” Dr. Rich said. “Physicians … should demand access to peer-reviewed literature and not just industry-based studies.”

According to Dr. Rich, Sen. Edward Kennedy, D-Mass., proposed legislation in 2007 that would bar drug and device companies from distributing educational materials to medical students, residents, health staff officers and physicians. The legislation would also create a separate educational arm that distributes non-industry-supported studies to physicians.

However, Dr. Rich said he doubts that the proposal will become law.

“I don’t think that has any chance of passage, but it’ll show you the depth of the concern about how doctors get their education from pharmaceutical companies,” he said.

Mr. Johnson said checks on drug company-physician interaction are sufficient and academic detailing is not necessary.

“PhRMA historically has been neutral on counter-detailing efforts considered in state government health care programs,” Mr. Johnson said. “However, the federal government proposal to drive particular prescribing decisions by physicians needs to be approached with great caution and with the recognition of the many factors in the current system that can impact prescribing decisions,” such as physician judgment, peer-reviewed data, patients’ needs, insurance formularies and information from drug company sales representatives.

“Finally, it is important to stress that the representatives of America’s pharmaceutical research companies who meet with physicians to explain medicines must comply with strict FDA regulations, as well as other federal laws,” he said.

For example, companies and trained representatives must convey information that is consistent with FDA-approved pharmaceutical product labeling. The FDA informs the U.S. Department of Justice of violations, Mr. Johnson said.

“By contrast, counter-detailing programs are not held to the same standards,” he said.

Mr. Kracov also said he was skeptical about the academic detailing program as proposed. “I’m not sure it makes a whole lot of sense for the government to be spending money on academic detailing,” he said.

“I think there’s a notion that somehow academic detailing will be pure and untainted by any biases and not focused on cost-effectiveness but focused on patient interest,” Mr. Kracov said. “I think that remains to be seen.”

Prescribing Data Restriction Program

To address the use of physician prescribing data for marketing campaigns aimed at physicians, the American Medical Association has implemented a Prescribing Data Restriction Program (PDRP), which gives physicians the option whether or not to allow pharmaceutical company employees to access their prescribing data.

In a letter to Michael D. Maves, MD, MBA, AMA executive vice president and chief executive officer, Sens. Durbin and Kohl praised the AMA for eliminating a rule that required physicians to renew their participation in the PDRP every 3 years.

Mr. Johnson said PhRMA supports the PDRP as a sensible alternative to broader federal or state laws. He cited the AMA’s opinion that restricting access to prescribing data should be a physician’s individual choice and that the availability of physician prescribing data may benefit clinical trials, drug recalls and FDA review of drugs’ benefits and risks.

Mr. Kracov questioned the necessity of overly broad restrictions on access to prescribing data.

“There are ways data could be used to better target marketing activities to make them more appropriate,” he said. “There are ways they could be used to improve patient care. I understand privacy and other concerns, but this type of information can also serve a valuable purpose.”

The debate over prescribing data should ultimately focus on patients’ best interests, Mr. Kracov said.

“At the end of the day, various parties, stakeholders, physicians will do what they think is right, but I think all of the sides should be considered rather than making it a purely rhetorical debate,” he said. “The ultimate issue is in the patient interests.” – by Matt Hasson

Are we about to reach a point where increased transparency and regulation become counterproductive to the best practice of medicine?

• Chandra N. Branham, JD, can be reached at Arnold & Porter LLP, 555 12th St. NW, Washington, DC 20004-1206; 202-942-5659; e-mail: chandra.branham@aporter.com.
• Ken Johnson can be reached at Pharmaceutical Research and Manufacturers of America, 950 F St. NW, Suite 300, Washington, DC 20004; 202-835-3581; e-mail: kuhlendorf@phrma.org.
• Daniel A. Kracov, JD, can be reached at Arnold & Porter LLP, 555 12th St. NW, Washington, DC 20004-1206; 202-942-5120; 202-942-5999; e-mail: daniel.kracov@aporter.com.
• William L. Rich III, MD, can be reached at American Academy of Ophthalmology, Governmental Affairs Division, 1101 Vermont Ave. NW, Suite 700, Washington, DC 20005; 202-737-6662; fax: 212-737-7061; e-mail: hyasxa@aol.com.
• Allison Weber Shuren, MSN, JD, can be reached at Arnold & Porter LLP, 555 12th St. NW, Washington, DC 20004-1206; 202-942-6525; 202-942-5999; e-mail: allison.shuren@aporter.com.
• George O. Waring III, MD, FACS, FRCOphth, can be reached at InView, 301 Perimeter Center North, Suite 600, Atlanta, GA 30346; 678-222-5102; fax: 404-250-9006; e-mail: drgeorge@georgewaring.com.