Payments to Doctors: The Bottom Line

There's a scene in Ghostbusters in which the characters are discussing gun safety.    

"Don't cross the streams."

"Why?"

"It would be bad."

"I'm fuzzy on the whole good/bad thing. What do you mean, 'bad'?" 

"Try to imagine all life as you know it stopping instantaneously and every molecule in your body exploding at the speed of light. Total protonic reversal."

"Right. That's bad. Okay. All right. Important safety tip. Thanks, Egon."

When it comes to the Sunshine Act and the massive database of payments just released, it's fair to say that we're all a little fuzzy on the "good/bad thing." 

 

Part of the problem is that there's too much data and too many categories, all wrapped up in a website that is tough to navigate. It's easy to lose the forest for the trees, but if we climb above the canopy we can begin to some patterns in Open Payments.  

First, let's do an overview of the large categories. CMS recently released this fact sheet explaining what has and has not been published in this first version of the website. (By the way, my sources for most of the figures in this article are ProPublica and the Open Payments website.)

• The total amount of money that companies paid out to doctors and teaching hospitals from August-December 2013: $4.6 billion.
• The amount of money that was actually published on the website: $3.5 billion
• The unpublished money: $1.1 billion. This includes both disputed payments and payments that companies are allowed by law to delay disclosing (mostly payments related to products not yet approved by the FDA). This unpublished money is a lot, but it represents a relatively small number of payments--only 199,000, as opposed to the 4.4 million payments that have been published.

Now let's play a game that I call "good payments/bad payments".

 

A "good" payment is money invested in medical innovation.  

 

A "bad" payment is money paid to doctors to join the marketing team. To be clear, there's nothing wrong with marketing per se, nor is there anything wrong with a company hiring doctors as employees to market products. Once a doctor becomes a company employee, he or she is transparently part of the company's team, and once you're a member of the team, everybody knows you can no longer be objective when you talk about your company's products.

By "bad" payments, I'm talking about money (and meals, gifts etc....) going to doctors who are apparently independent but actually are not. Their day jobs are to treat patients, but they freelance as speakers, consultants, and consumers of catered lunches. They portray themselves as objective arbiters of information, but in fact they are being paid in such a way that they are de facto members of a ghost marketing team. This is why they are such effective marketers. Ads that don't look like ads are the most persuasive ads.

 

If you're willing to accept this moral yardstick, let's start judging payments.  

Mostly good payments: $3 billion

• Research ($1.5 billion reported in Open Payments). Good because this is what gets us new medicines and devices. Sure, there are bogus studies meant to carve out market share for lousy drugs, but for the most part research is a good thing.
• Physician ownership ($1 billion). Good because this is money that doctors are getting in return for investing in companies, providing capital that encourages research and development. The $1 billion is a return on an investment in innovation. Do these docs have conflicts of interest? Sure. But they are not being used by companies as ghost-marketers.
• Royalties and licenses ($302 million). Good because these are rewards for doctors who have invented new medical devices or other products. Yes, companies have at times abused these payments, using them to curry favor with doctors. But on the whole these payments encourage medical innovation.  
• Consulting fees ($79 million, half of the $158 million reported). Consulting is a tough one to judge. Sometimes consultants help companies decide on what research to pursue (good); other times they are paid to look at ads and help companies market nonsense me-too products that cost the health care system money (bad). So for accounting purposes, I'm assuming a 50/50 split on the good/bad scale, and assigning half to the good bucket and half to the bad.

 

Mostly bad payments: $500 million

• Promotional speaking ($203 million). Bad because this turns doctors into drug reps. So bad, in fact, that GlaxoSmithKline decided it would end its promotional speakers' bureau program. The practice is now banned by half of all medical schools.
• Food ($93 million). The fastest way to a doc's prescription pad is through his or her stomach.
• Travel and lodging ($74 million). Join the marketers, see the world.
• Education ($27 million). Companies buying textbooks for doctors. Nuff said.
• Gifts ($19 million). Really??
• Non-accredited CME ($15 million). Companies teaching doctors=recipe for disinformation, with some exceptions, such as bona fide training on medical devices.
• Accredited CME ($4.2 million) Companies paying other companies to teach doctors. See above.
• Consulting fees ($79 million). See my comments under good payments. 

Granted, I've created a pretty simplistic moral universe here. Some of what I called "good" payments are probably sleazy, and some of the "bad" payments are probably legit. But, as a rough approximation:

--86% of companies' spending was mainly good for the public health
--14% was potentially bad for the public health, because it engendered inappropriate conflicts of interest in physicians.  

The question for companies is whether they can all get together and agree to stop throwing bad money after bad.
 

I'm Back! Now Let's Talk Sunshine.

Hi readers. Yesterday was my last day at The Pew Charitable Trusts--timed to coincide with the launch of the Open Payments website.

Before commenting on the website, here are some quick impressions about my last 2 1/2 years in Washington: fascinating, sometimes frustrating, often exhilerating, and overall just a great introduction to the arena of politics. Pew is amazing--work there if you can.

But now, let's talk Sunshine.

When I said my goodbyes to you in March of 2012, the Open Payments website was already delayed, and much of my work at Pew was aimed toward preventing that delay from stretching to infinity and beyond.  The site was finally launched yesterday, one year behind schedule--not too bad.

The website is not what most people were originally anticipating. Most of us were expecting a big search box where you could type in your doctor's name. Instead, what we have are downloadable spreadsheets of varying complexity. CMS--the agency in charge of the site--plans to make it more user-friendly within a month or so.

At this point, the best way to begin to peer through that complexity is by going to Propublica's website, where you can benefit from the wisdon of the undisputed guru of physician payment data-mining, Charles Ornstein.

The main headline is that companies have spent $3.5 billion on various "transfers of value" to physicians and teaching hospitals during the last five months of 2013. That sounds like a lot of money. It is. For fun, I did a back-of-the-envelope calculation and determined that companies spent $23 million/day, or roughly $1 million/hour over that period.

But let's not go overboard. Of that $3.5 billion, about $1.45 billion was for research, and roughly $1 billion was equity that physician-investors have in drug or device companies. That leaves about $1 billion in other payments to doctors and teaching hospitals. These are the potentially dubious payments.

So what do we make of these amounts? How do we judge them? Because ultimately, the reason the Sunshine Act was passed in 2010 was that not all drug company payments are morally equivalent. We must look at the data and judge which payments appropriate and which are not. 

Next post, we'll go through each category of business activity listed in the website and start to assign some moral valence to the payments.  

Preview: The Open Payments website makes companies look better than I would have thought. Stay tuned.