Doctors Face Scrutiny over Payments from Drug and Medical Device Companies

Doctors Face Scrutiny over Payments from Drug and Medical Device Companies | Pintas & Mullins Law Firm

Medical malpractice lawyers at Pintas & Mullins Law Firm report that, under new guidelines imposed by the Affordable Healthcare Act, U.S. physicians will now have to disclose all payments and gifts they receive from pharmaceutical and medical device companies.

Beginning in August 2013, these companies have to report every transaction with physicians to the federal government. This includes everything from pizza purchases to payments for expert advice on data. Companies must also report individual information on physicians on how much they receive, which will be compiled for public viewing starting in September 2014.

According to the Wall Street Journal, the new requirements are making many doctors reconsider their relationships with companies like Pfizer, Johnson & Johnson, and Merck. Others are concerned that the public will misconstrue the information provided on the government’s website and interpret it as damaging to their medical decisions.

Hundreds of millions of dollars are paid to American doctors every year from these companies; in 2012, Pfizer alone shelled out over $173 million. Such payments can be made as consulting or speaking fees, reimbursement for lunches or travel, and expert analysis. Some physicians are paid a modest few thousand dollars a year for legitimate speaking events. Others reap in hundreds of thousands of dollars annually from less-than-legitimate transactions.

The move toward transparency in American healthcare is much awaited and desperately needed (American healthcare costs recently exceeded $3 trillion). Over the past decade or so several major pharmaceutical companies have been subject to lawsuits over off-label marketing and paying doctors to prescribe their medications for unapproved treatments. One of the most recent suits concerned anti-seizure drug Depakote and its manufacturer Abbott Laboratories. Abbott was accused of fraudulently profiting from off-label marketing of the drug, even creating a separate sales division for this purpose.

Abbott was also accused of paying doctors to encourage others in the healthcare field to prescribe the drug, whether for ailments included on Depakote’s labels or not. The company eventually pled guilty, was made to pay about $1.6 billion to federal and state governments and disclose information on physician-payment data. A similar case ended with a settlement of nearly $491 million between Pfizer and the U.S. Department of Justice over the fraudulent marketing of Rapamune for unapproved uses. During the course of this trial it was revealed that Pfizer paid physician speakers to hype the benefits of Rapamune at medical conferences.

In addition to the physician-corporation payment disclosures, the Affordable Healthcare Act will also now disclose data concerning hospital-specific charges for the top 100 most frequently billed procedures. The new system is called the Medicare Provider Charge Data, and will provide information from over 3,000 U.S. hospitals. This information has proven quite compelling – we recently reported on the wide discrepancy between hospitals just in the Chicago area alone. For example, Loyola Gottlieb Memorial Hospital charges about $98,000 for kidney failure treatment, whereas John H. Stroger Hospital, just 12 miles away, charges just over $17,000.

Although some physicians are concerned about inaccuracies, after Medicare and Medicaid receives payment information from drug companies it will relay that data to doctors and give them about two months to review it and make corrections before it is made public. The government will also break down the information into twelve separate categories, such as travel, speaking fees, meals, and research reimbursement. 

Companies that fail to report their data face penalties of up to $1000 per transaction, or an annual penalty of $1.15 million. The wealth of information provided to the public through the Affordable Healthcare Act will prove beneficial in a wide range of ways which will become more clear as we dig deeper into the data. Particularly, it will be interesting to see if larger doctor payments and hospital fees actually equate to better clinical outcomes. Pricing alone, of course, is not sufficient to judge a doctor or hospital, but it can reveal illegitimate practices that are the driving force behind our massive healthcare crisis.

Medical malpractice lawyers at Pintas & Mullins Law Firm will continue to report on this issue as more information comes to light. If you or a loved one was seriously injured by medical negligence or a defective drug or medical device, you may be entitled to significant compensation for your medical bills, lost wages, and emotional distress, and should contact a qualified malpractice attorney as soon as possible.