New federal law will expose ties to medical device, drug companies.
Updated: July 28, 2013 - 11:53 AM
WASHINGTON – The nation’s medical device makers and drug companies will begin collecting this week what is expected to become a massive stockpile of data on their financial relationships with doctors, researchers and teaching hospitals.
A new federal disclosure law mandates that an array of pharmaceutical and medical manufacturers report payments to physicians, hospitals and other health care businesses that are more than $100 a year. Payments can include travel expenses, entertainment, consulting fees and research support.
The new rules emerged after six years of legislative and regulatory battles to address growing concerns that health companies were gaining inappropriate influence over research, education and clinical decisions. The provisions were eventually folded into the Affordable Care Act in 2010.
“Patients should have the right to know if their physician is getting paid by a certain drug company or has a financial interest in something that they are prescribing,” said Sen. Amy Klobuchar, D-Minn., who co-sponsored the 2007 bill to require disclosures.
Executives within Minnesota’s multibillion-dollar medical technology sector, as well as other health-related companies, say they hope the data will dispel worries that their financial ties with doctors and researchers lead to unethical behavior or unsafe patient outcomes.
“We need to restore public confidence in why a company like [ours] would be interacting with doctors,” said Tom Schumacher, vice president of ethics and compliance at Medtronic Inc.
Those ties lead to innovation and better care, said Chris White, the general counsel for the Advanced Medical Technology Association (AdvaMed). “The public needs to understand the value of these relationships,” he said.
A recent case that highlighted worries over doctor payments involved Fridley-based Medtronic, one of the world’s largest device makers.
The U.S. Senate Finance Committee alleged in October that Medtronic heavily influenced the content of medical-journal reports about its spinal fusion product, Infuse. The committee questioned whether doctors who supervised the studies understated Infuse’s risk and overstated its benefits while receiving $210 million in royalties and consulting fees from Medtronic over a 15-year period.
Medtronic has denied that it improperly influenced peer-reviewed reports or sought to minimize potential harm.
Sen. Chuck Grassley, an Iowa Republican who was the principal sponsor of the original bill, said Americans need a way to assess whether there’s an unethical relationship between a doctor advocating a product and the company that makes it.
“[Infuse] is an example of what this is aimed at, but it isn’t just aimed at Medtronic,” said Grassley, adding that his staff has found many other instances.
Dr. Eugene Carragee, a Stanford University surgeon and editor of the Spine Journal, was among those who revealed the links between Medtronic and the Infuse scholarship. “If your main mission is taking care of patients, you have an obligation not to be so financially vested in the outcome of the equipment you’re using,” Carragee said.
The new law doesn’t outlaw payments or business deals between companies and doctors or teaching hospitals, but it makes those transactions easily accessible to all Americans.
Starting Thursday, drug and medical companies must track transactions with doctors, teaching hospitals and some other health-related businesses. The first round of data must be submitted to federal regulators by the end of the year and will be made public by next September.
The new law comes with fines of up to $1.15 million for companies that fail to disclose. It also requires senior managers to sign off on the data, making them personally accountable to the Centers for Medicare & Medicaid Services, the agency compiling the information.
The federal disclosure law is much broader than a Minnesota one that since 1993 has banned certain gifts and required drug companies to reveal certain payments to doctors. The federal rules require disclosure of various forms of compensation to doctors or their immediate family members, including consulting fees, speaking fees, gifts, charitable contributions, royalty or license fees, stock options or other investment incentives. This includes payments of more than $10 or payments under $10 that together top $100 in a year.
“Virtually every interaction with a covered recipient has to be kept and analyzed,” said AdvaMed’s White.
Medtronic has spent more than a year and an estimated $10 million preparing to track interactions with an estimated 60,000 physicians.
Medtronic had to integrate and make adjustments to computer systems to make sure they capture information consistently. In particular, it meant identifying doctors who might have done business with different departments or company locations.
Schumacher said some doctors have told the firm they are uncomfortable with the change, saying “it’s not worth the stigma of having their income posted on a website.”
A greater concern may be that doctors don’t realize those dealings with will now be tracked.
The American Medical Association has a website devoted to the change and the AMA president posted tips in a blog.
Schumacher believes that may not have been enough. “I’m not sure the physician community knows this is coming,” he said.
At Advanced Circulatory, a 25-person company in Roseville, CEO Mike Black had to create a system for gathering payments and other valuable transfers to doctors or their immediate families. That includes more than software: It means making sure salespeople get information they never had to gather before.
Black estimates that the adjustments will cost his firm $20,000 a year to implement.
He already has heard from doctors who don’t want to participate in his company’s symposiums because they are afraid the free lunch might land them in a government database. Black worries that the new law will cause doctors “to shy away from perfectly legitimate educational opportunities” about his products, which are used to increase blood circulation.
Black has his doubts that many Americans will make use of this new trove of information. “I don’t believe the average consumer is going to take the time to go look at a database for a particular device or a particular company,” he said.
Grassley counters that even if individuals don’t, the media will. Concern about negative publicity will discourage doctors from giving biased information, the senator said.
Doctors may not like it, Carragee acknowledged, but the law should help ensure that “research done with industry financing will have to be vetted.”
That’s “how science is supposed to work,” Carragee added.
Jim Spencer • 202-383-6123
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