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Drug Companies May Be Required to Reveal Payments to Doctors

January 16, 2012 — According to an article in the New York Times the Obama administration may soon require drug companies to reveal payments they make to doctors for research, consulting, speaking, travel, and entertainment. Consumer advocacy groups hail this impending decision as vital to help prevent doctors from being bribed or swayed by payments from drug-companies promoting their products.

Drug companies and medical device companies routinely pay doctors large sums of money in exchange for providing advice and giving lectures. The Times estimates that one out of four doctors takes payments from a drug company or medical device company, and two out of three accept gifts of food.

Many consumer advocates see a problem with these payments, because these payments may influence a doctor’s treatment decisions. Ideally, doctors would be looking out for the patient’s best interests alone — not a drug company’s interests. A doctor who is receiving payments from a drug company might choose to prescribe a person with a higher-cost drug, or be more likely to prescribe a medication to a child.

If information about how much money a doctor is receiving from a particular company is made public, prospective patients could make their own decisions about whether to trust the judgment of that doctor. Obviously, a doctor who is accepting large amounts of money from a company might have a conflict of interest when determining the best care for his or her patients.

The disclosure will affect companies that have at least one product covered by Medicare or Medicaid, which will affect an estimated 1,100 companies. Top officials at each company would be held liable for failing to report payments, or for the inaccuracy of reports, which would be subject to federal audits. Accidental failures to report payments would be fined $10,000; knowingly failing to report would be fined $100,000 per instance, up to $1 million per year.

Medicare and Medicaid pays more than $100 billion on drugs and medical devices for older Americans, the indigent, and disabled. Advocates for transparency in the payments say that it is in the best interests of the American taxpayers to know which doctors are receiving money from drug companies, prescribing expensive drugs, and then billing the federal programs. The new transparency and accountability could reduce spending by deterring over-prescribing.

The U.S. Department of Health and Human Services has criticized the payments that medical device manufacturers made to doctors who performed hip and knee replacement products, citing these as examples of inappropriate payments. Some doctors who subsequently performed these surgeries were paid thousands of dollars or given lavish perks. In the wake of the criticism against these companies, the manufacturers of several types of medical products are facing lawsuits after the products were found to be defective, including hip and knee replacements.

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