How Widespread is Fraud and Abuse in the Pharmaceutical and Medical Device Industries?
Posted by
Armand RossettiSeptember 07, 2008 2:47 PMTags:
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Probably the best people to ask are Senators Charles Grassley (R-IA), Ranking Member of the Committee on Finance that includes Medicare and Medicaid oversight, and Herb Kohl (D-WI), Special Committee on Aging. These two senators, together with Assistant Inspector General for Legal Affairs, Gregory Demske (OIG), have uncovered a vast array of kickback and continuing education schemes that manufacturers have been employing for years to influence providers to use their products.
In fact, manufacturers' influencing schemes have been so prevalent for such a long time that many doctors think of them as commonplace and widely accepted. Let’s take a brief look at what these investigations have uncovered.
On August 28, 2008, I posted, “Medtronic’s Sprint to the Marketplace.” In the last two paragraphs of that blog, I noted that Medtronic had become the focus of a Senate kickback investigation. However, I did not realize the extent of manufacturer influence in the pharmaceutical/medical device industry on doctors’ decision making until I had an opportunity to investigate further.
A few days after I posted the Medtronic’s Sprint blog, one of my colleagues at Searcy Denney, Brian Sullivan, emailed our group a Wall Street Journal Health Blog article. As I read that article, I thought about the story that I had used, concerning Senator Charles Grassley’s Medtronic kickback investigation. I figured that I might learn more on the subject, by accessing the US Senate website.
However, I found much more information than I was looking for. Let’s focus on just a few details.
In September 2007, the Justice Department reached settlement agreements with the top five US orthopedic device manufacturers. Together, those five manufacturers had spent a startling $230 million dollars on “consultant and other payments” to health care providers. Later, on February 27, 2008, Gregory Demske appeared before the Senate Special Committee on Aging and testified in great detail about the negative impact that manufacturer influence peddling might have on patient safety. Demske made the following statement:
“We do not know how much money device manufacturers pay to physicians. However, the Government’s recent investigations of several manufacturers of hip and knee surgical implants offer some insight. In 2005, the orthopedic device market for hips and knees witnessed domestic sales in excess of $5.1 billion and worldwide sales of more than $9.4 billion. We found that during the years 2002 through 2006, four manufacturers (which controlled almost 75 percent of the hip and knee replacement market) paid physician consultants over $800 million under the terms of roughly 6,500 consulting agreements.”
Mr. Demske also testified that Medtronic had to pay $40 million to settle a False Claims Act case. The outcome as a result of the September 2007 settlement was that hip and knee device manufacturers Zimmer, Inc., DePuy Orthopaedics, Inc. Biomet, Inc, and Smith & Nephew, inc. each entered into agreements with the Government in settlement of False Claims Act case against them. That settlement collectivellt totaled $311 million dollars. However, cefore the aforementioned OIG investigations took place, the largest kickback settlement involving PharMerica, Inc. had totaled only $6 million.
Prompted by substantial information indicating widesprread manufacturer-physician influence, Senators Grassley and Kohl are seeking transparency. Those senators expect nothing less than disclosure of financial ties between physicians and pharmaceutical/medical device companies, disclosure to the public and to professional colleagues. And as a result, both Senators have sponsored the Physicians Payments Sunshine Act (S2029/HR5605).
Congrerss, however, is not the only group concerned with the problem.
In a 2008 editorial which appeared in The Journal of the American Medical Association (JAMA), the Journal's editors agreed that physicians have succumbed to the practice of accepting fees and gifts from drug companies to become commonplace, and that they have allowed that practice to influence them. JAMA's editors have called for physicians to reject such payments and gifts in any form.
For example, let's look at Schering-Plough’s “49 Plan,” which was an aggressive seven-week sales push to increase Zetia prescriptions across the country. Schering-Plough's representatives offered free meals and entertainment to doctors to influence them to use their more expensive drug, Zetia, instead of the much cheaper alternative drug, Zocor. Studies showed that both drugs produced the same results. But how far are manufacturers going to influence the entire community?
Notwithstanding manufacturers' efforts to influence individual phyicians, influence peddling can reach right to the heart of the FDA.
Taking his investigation a step further, Senator Grassley has been investigating conflict of interest issues concerning FDA advisory boards, and he has examined the policies and reporting practices at over a dozen medical schools in the United States. As a result of his effort, Senator Grassley has learned that medical schools have not adequately monitored the outside income of their researchers and faculty, and as Senator Grassley has stated, “There’s evidence that this money can alter medicine and the public deserves to know the facts in considering any potential conflicts of interest.”
Further, it is not hard to perceive that influence payments to doctors can come in all sizes, ranging from a simple dinner after work to tens or even hundreds of thousands of dollars in payment to a single physician each year. And as Senator Grassley has stated. “That’s pretty shocking.”
For example, Medtronic reportedly paid $400,000 to one doctor for only eight days of consulting. In addition, some companies recruited physicians to participate in device development and paid long-term royalties to physicians totaling millions of dollars.
As Senator Grassley has also noted:
“Companies wouldn’t be paying this money unless it had a direct effect on the prescriptions doctors write, and the medical devices they use. Patients, of course, are in the dark about whether their doctor is receiving this money.”
In fact 94 percent of physicians have received food and beverages, medication samples, and other gifts and payments from drug companies. With all of the above in mind, however, there are additional schemes that manufacturers use to influence doctors, and education is on the list.
On March 12, 2008, Senator Kohl held a hearing before the Senate Special Subcommittee on Aging that questioned the delivery of physician education about drugs and medical devices. The hearing concluded that the industry’s outreach is essentially a marketing program, because pharmaceutical sales representatives are currently one of the only ways that doctors can learn about new drugs (or devices) on the market.
To meet that problem head on, Senator Dick Durban (D-IL) has co-sponsored a bill to provide doctors with unbiased information on prescription drugs. Senator Durban has stated the following:
“Studies confirm that when unbiased health professionals, armed with educational materials, provide guidance to doctors, they are more likely to purchase the best drug for the patient instead of the best deal for the pharmaceutical company.”
Senator Grassley has also taken an interest in how manufacturer can deliver biased continuing medical education (CME), and how such biased information, posing as education, might influence doctors to prescribe certain medications or medical devices over others. In an effort to zero in on such manufacturer sponsored "education," Senator Grassley has written letters to medical educators, seeking more information about their ties to manufacturers and the origins of their "course" content.
With all of this ongoing investigation and results therefrom, it is very easy for consumers to become jaded about manufacturers and their motives. However, it is good to see that at least one manufacturer, Eli Lilly was one of the first to volunteer transparency in its financial dealings with health care providers. Of course, after Senators, Grassley and Kohl, and Inspector General, Gregory Demske, provided substantial oversight, forcing False Claims Act settlements, other manufacturers have followed suit.