Drug Company Payments to Prescribers

By June 17, 2019 Commentary

One potential driver of excessive drug spending is payments and benefits made by drug companies to prescribers.  A federal law, referred to as the Sunshine Act, now requires that drug and device manufacturers report such payments and benefits, which are then made public.  The intent was obviously to try to deter physicians from accepting such payments, since they would be reluctant to have the public aware of them.  Research in the Health Services Research journal explores the effect of such payments and the law.   (HSR Article)    Companies’ payments to prescribers include grants, gifts, meals, educational programs and similar items.  At one time, most physicians accepted at least some benefits from drug and/or device manufacturers, and concerns were raised about whether these benefits caused doctors to act in ways that were not consistent with a patient’s best interest, as well as raising costs.  Starting in 2013, the Sunshine Act required reporting of these transfers and the authors explored the effects of the reporting and public disclosure of such payments.  The researchers used data from 2014 to 2016 on reported transfers from drug manufacturers to physicians, data giving characteristics of the physicians and Medicare drug use data.  Categories of benefits included food and beverage, education, travel and lodging, consulting, and other services, which largely included speaking engagements and education that wasn’t connected to continuing medical education.

Across most categories, acceptance of transfers dropped from 2014 to 2016.  The proportion accepting any transfer dropped from 59% to 52%, with the largest drop for consulting, from 4.6% to 2.4%.  The mean payment also dropped for most categories, but not as substantially, indicating that those doctors who were getting transfers on average got more.  The other services category experienced no drop and the average payment was stable for this category.  It appears that the law did deter some physicians from taking benefits from manufacturers.  Male doctors are about 3 percentage points more likely to take a payment than female ones and receive about 27% more in average benefits.  Doctors in office-based settings, as opposed to hospital ones, are more likely to accept transfers.  Physicians who have been practicing longer also are more likely to accept a payment of some type.  Practice size had inconsistent results, although in general doctors in smaller practices were more likely to accept payments.  Those doctors who accept a payment had somewhat higher drug spending and were more likely to prescribe brand drugs.  It would be useful to have a more updated analysis to see if the percent of doctors accepting payments has continued to decline and if there are further changes in type or amounts of payment accepted, or if prescribing behavior may be more substantially affected.  But this early analysis suggests that the Sunshine Act has reduced the prevalence of payments and somewhat improved prescribing behavior and costs.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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