Big Pharma Will Have to Reveal Doctor Payments

Few professions have been spared from the corrupting effects of today's intense focus on profits and the bottom line within corporate America. The medical profession has been one of the most notable casualties of this push, as top drugmakers have showered doctors with ethically questionable or illegal financial incentives to prescribe certain drugs. Research has found that these payoffs may influence doctor choices in ways that are not beneficial to patients -- for example, getting doctors to use drugs for risky off-label uses that have not been approved by the FDA. More commonly, these practices have been found to increase healthcare costs by incentivizing doctors to prescribe more expensive drugs that aren't any more effective than alternatives -- sticking Medicare and Medicaid with the tab.

Yet today brings some good news in the battle to curb the influence of drugmakers over doctors. According to the New York Times, new rules will soon go into effect that require drugmakers to reveal their payments to doctors. As the Times explains:

Under the new standards, if a company has just one product covered by Medicare or Medicaid, it will have to disclose all its payments to doctors other than its own employees. The federal government will post the payment data on a Web site where it will be available to the public.

Manufacturers of prescription drugs and devices will have to report if they pay a doctor to help develop, assess and promote new products — or if, for example, a pharmaceutical sales agent delivers $25 worth of bagels and coffee to a doctor’s office for a meeting. Royalty payments to doctors, for inventions or discoveries, and payments to teaching hospitals for research or other activities will also have to be reported.

The Obama administration estimates that more than 1,100 drug, device and medical supply companies will have to file reports, generating “large amounts of new data.” Federal officials said they would inspect and audit drug company records to make sure the reports were accurate and complete.

Companies will be subject to a penalty up to $10,000 for each payment they fail to report. A company that knowingly fails to report payments will be subject to a penalty up to $100,000 for each violation, up to a total of $1 million a year.

Top executives are potentially liable because a senior official of each company — the chief executive, chief financial officer or chief compliance officer — must attest to the accuracy of each report.

This new transparency will be good. But what is still missing are tougher rules that govern what payments Big Pharma can make to doctors in the first place. And without those rules, the integrity of the medical profession will remain at risk.