The Gig is Up: The Sunshine Act Will Include CME Payments to Doctors

Those of us who have followed the progress of the implementation of the Physician Payment Sunshine Act have been acutely aware of one potential loophole: drug companies might try to hide payments to doctors for industry-supported CME activities. That’s because these payments are not "direct" payments to doctors, but rather indirect payments.

In a 2007 op/ed piece for the New York Times, I referred to this arrangement as a money laundering scheme: “Essentially, this is a new twist on that well-known instrument of corruption, money laundering. Drug companies don’t directly pay doctors to teach courses. Instead, they pay someone else to cut the checks. Similarly, the drug companies don’t explicitly tell doctors to say good things about their products. Instead, they hire a company to write good things about their products and to pay doctors to deliver the messages.” 

Nothing substantial has changed about this cloak and dagger payment process since 2007—other than the fact that the total amount of commercial support for CME has dropped substantially, from a high water mark of $1.2 billion in 2007 to $830 million in 2010—a decrease of  37%. But $830 million is still a chunk of change, and some unknown portion of that sum is paid directly to physicians by the CME provider.

Therefore, those of us in favor of transparency were able to breathe a sigh of relief when CMS recently unveiled its proposed regulations. Drug companies will, in fact, be required to report payments that flow through third party entities and end up in doctors’ pockets, as long as the company is aware of the identity of the doctor. And how could they not be aware? ACCME requires all CME programs to publically disclose the identities of both the industry supporter and the faculty—meaning that companies will eventually always know which doctors end up partaking of their “educational grants.”

In closing this loophole, CMS officials were hardly acting on their own—they were simply implementing the Sunshine Act as it was approved by Congress. In fact, if you look at the text of the Act, it is hard to imagine any reasonable interpretation other than CMS's. Here’s the crucial opening paragraph of the law, which sets the context for the entire Act:

“On March 31, 2013, and on the 90th day of each calendar year beginning thereafter, any applicable manufacturer that provides a payment or other transfer of value to a covered recipient (or to an entity or individual at the request of or designated on behalf of a covered recipient), shall submit to the Secretary, in such electronic form as the Secretary shall require, the following information with respect to the preceding calendar year….” (my italics).

The language is technical, so let's unpack it a bit. “Applicable manufacturer” means a drug or device company. “Transfer of value” means giving a doctor anything of value, including cash, meals, and gifts.  “Covered recipient” means a physician, dentist, podiatrist, optometrist, or chiropractor—all of which are professionals covered by the law. So far, the law is saying, in common parlance, “Any drug company that gives money or something else of value to a doctor…will have to report this to the government.”

But the framers of the Act went out of their way to acknowledge that sometimes these payments are indirect, and that such indirect payments should be reported as well. How else could you interpret all the language in parentheses: “ …Or to an entity or individual at the request of or designated on behalf of a covered recipient.”  To translate again: the Act is saying here that drug companies must report payments to any “entity” (eg., a MECC, a medical society, a non-profit organization) that takes payments from drug companies when those payments are actually “designated” for a “covered recipient”, ie., a doctor.

It seems quite clear, but of course both drug companies and those MECCs dependent on drug company grants are viewing this issue differently--see, for example, Tom Sullivan's take in this article on his blog Policy and Medicine. So stay tuned. Hopefully CMS will stick to its guns and issue final regulations that will not allow drug companies to cast a shadow on a major source of physician payments. Let the sun shine in!

Eli Lilly: Ethical Confusion Continues

Eli Lilly just became the first drug maker to announce that it will voluntarily disclose payments to physicians of $500 or greater. (See this coverage in Pharmalot.)

This is the latest in a series of Eli Lilly firsts in transparency. They were the first company to disclose their educational grants, and the first to endorse the Physicians Payments Sunshine Act. This is all good stuff.

So why do I say Eli Lilly is "ethically confused"? Because they still shamelessly participate in marketing deception. They hid risks of Zyprexa from doctors long after they knew about them, and still deny that this was wrong. They continue to fund a malpractice insurance company, PRMS, to provide sham risk management education to psychiatrists in an effort to prevent them from switching patients to less toxic antipsychotics. In this particularly ugly marketing tactic, they are paying attorneys to do their "education," payments which would remain hidden even under their new disclosure policy.

So, to borrow a phrase from Merrill Goozner's Integrity in Science Project, Lilly deserves both cheers and jeers for their efforts to reform themselves.

Eli Lilly "Slashes" Hired Gun Payments in Response to Dr. Drug Rep

One of my moles in the upper echelons of the pharmaceutical industry informed me that officials at Eli Lilly are changing some payment policies to hired guns in response to the article, Dr. Drug Rep.

Prepare to be underwhelmed.

The officials involved were apparently discussing the negative publicity generated by the article, and decided to put a more stringent cap on their payments to physicans who hawk their drugs to other doctors. In the past, there was a $100,000/year maximum for regular talks, with an option of tacking on an extra $50,000 for certain "brand-specific" talks, such as talks specifically relating to Zyprexa or Cymbalta. So the maximum was $150,000 per year, and many doctors were happily maxing out at that figure. Reportedly, Lilly is worried that allowing physicians to make "6 figures" for whoring themselves appears unseemly, so as of 2009, the total cap will be slashed to...drum roll please...$75,000/year. That's only 5 figures.

The physicians affected are unlikely to be hitting the welfare rolls soon, however, as they might be able to make up this lifestyle-threatening shortfall by engaging in a novel professional activity--treating patients.

Hired Gun, M.D.: The Three Million Dollar Man

Recently, I spoke with a physician who speaks for various pharmaceutical companies on a scale that puts my brief 2002 foray to shame. "Hired Gun, M.D." gave over 500 talks in 2006, netting close to $1 million. Many of these talks were teleconferences done from the comfort of his office, which allowed him to average nearly two talks a day.

On a more hopeful note, however, Hired Gun (H.G.) has noted a "massive reorganization based on changing appearances" among drug companies. Most dramatically, companies have lowered the maximum salary caps that speakers can receive per year. Wyeth, for example, recently decreased its cap to $25,000 per year; Lilly, not quite so stingy, decreased it to $75,000.

This has done damage to H.G.'s bottom line. In 2007, he was able to do only about 200 talks, and he estimates that 2008 will be even more meager--perhaps only 100 talks. "The climate is changing," he said. "We've seen the signs for years, but now it's really happening. Most of us are just rolling with it."

Over his career, H.G. estimates that he has delivered 2500 lectures and has made $3 million. What makes him do it? "Different things," he said. "Obviously I like the money, but I also like being in the spotlight, and I enjoy providing education. I think you'll find a variety of motivations in most speakers you'd talk to." While H.G. doesn't deny a marketing component to some of his talks, he feels he does a good job being accurate and unbiased. But some of his colleagues are less scrupulous. He singled out one extremely well-known physician-speaker as being "incredibly biased, pro-[company X] and anti-[company Y]. He's not one of the good guys."

I've encouraged H.G. to go public. I know several senate and congressional offices that would love to hear his testimony. But he's reticent, for obvious reasons. In the meantime, I hope to post his observations from time to time.