Drug Companies To Be Forced To Disclose Doctor Payments

Drug companies are bracing for forced disclosure of doctor payments. The standard is being implemented by the Obama administration in an effort to minimize medical conflicts of interest.

As we’ve written, the relationships and finances exchanged between industry and researchers have long pointed to a bias in which patients are often not the prime concern. Now, the Obama administration is readying to implement a mandate requiring drug companies to disclose payments made to physicians for “research, consulting, speaking, travel, and entertainment,” said The Kansas City Star.

When industry pays physicians, treatment options are potentially influenced and doctors often opt for more expensive drugs and devices, which in turn, tends to drive costs. Some in Congress and consumer advocates feel the new standards will likely benefit patients and look forward to the standards being issued under the new health care law.

A New York Times review revealed that about 25 percent of all physicians accept cash from drug and device makers and about 2/3rds accept meals in exchange for advice and speaking, said The Kansas City Star. The Times also revealed that physicians receiving money from drug makers tend to practice medicine in different ways than physicians who do not accept industry gifts, and that doctors working with industry also tend to prescribe medications in riskier and unapproved ways.

The new standards will mandate that drug and device companies with just one product covered by Medicare or Medicaid disclose all of payments to nonemployee physicians. Payment information will be posted by the government on a publicly accessible website and includes doctors receiving payment for assisting in the development, assessment, or promotion of a new product; providing food gifts—as low as $25 worth—to a doctor’s office; paying royalties to physicians for inventions or discoveries; and paying teaching hospitals for activities, such as research.

Also included is the amount of “any ownership or investment interest” held by “doctors or their immediate family members,” that are not the holdings of publicly traded stocks, said The Kansas City Star. The same disclosure requirements will be applied to physician-owned firms that distribute medical devices, because this allows doctors to receive financial benefits from the sales of devices utilized during surgeries.

Obama administration estimates reveal that over 1,100 drug, device, and medical supply companies must file reports, generating “large amounts of new data,” it said, wrote The Kansas City Star. Federal officials confirmed they would be inspecting and auditing company records under the new standards, which are part of the healthcare reform legislation enacted in 2010, said UPI. Senators Charles Grassley (Republican-Iowa) and Herb Kohl (Democrat-Wisconsin) pushed the provision in the Affordable Care Act. “The goal is to let the sun shine in and make information available to foster accountability,” Grassley told The New York Times.

Failure to report subjects firms to penalties up to $10,000 for every payment not reported; knowingly failing to report payments can lead to a penalty of up to $100,000 per violation, up to a $1 million annually. A senior official—the chief executive, chief financial officer, or chief compliance officer—will be required to confirm the accuracy of the reports. The Congressional Budget Office said that savings are not expected immediately, but should be seen “over time” and that “disclosure has the potential to reduce spending,” by reducing over-prescribing, according to The Kansas City Star.

The Obama administration is taking comments on the rules until February 17, said The Boston Glove.

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