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.
Nearly every top U.S. pharmaceutical company has paid fines to settle federal charges around these unsavory practices -- and some repeat offenders have been penalized on multiple occasions. Still, these cases have kept coming, and one reason is that Big Pharma has so much to gain from influencing doctors -- and relatively little to lose, even when they get caught. As a 2010 study by Public Interest stated:
The danger to public safety and the loss of state and federal dollars that comes with these violations require a more robust response than the government’s current practices. Given the relatively small size of current financial penalties when compared to the perpetrating companies’ profits, both increased financial penalties and appropriate criminal prosecution of company leadership may provide a more effective deterrent to unlawful behavior by the pharmaceutical industry.
That kind of tougher crackdown has yet to occur and don't hold your breath that it will. Big Pharma is an influential player in Washington, spending $115 million on lobbying last year and making nearly $18 million in campaign donations in the 2010 election, with these funds spread evenly between both parties.
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.
These new rules were called for in the 2010 healthcare law, so none of this is all that surprising. But as we have seen with other big reform laws, it's one thing to call for new rules. Quite another to write and enact them. (Most of the rules stipulated under Dodd-Frank haven't gone into effect.)
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.