Does Disclosure Pay Off?

28 May 2008 (Last Updated May 28th, 2008 18:30)

The US government may be offering more freedom in its new physician payments act but it comes at a price. The question is, are you ready to deal with it? Penny Jones reports.

Does Disclosure Pay Off?
"If approved, the industry will only have to disclose gifts that are valued over $500."

Medical device makers dealing with the US will be closely watching the debate surrounding a proposed revision by the Senate which could see the watering down of some requirements, and an increase in others under its Physician Payments Sunshine Act (S.2029).

At present, the bill mostly relates to pharmaceutical companies, but with the new amendments, which are due to come in place in 2011, medical device companies could have some new restrictions placed on their operations.

AMENDMENTS AND THEIR EFFECTS

Currently, all gifts over $25 must be disclosed. This is for anyone dealing with a physician. If approved, the industry will only have to disclose gifts that are valued over $500 – a rise that allows the practise that is currently condemned by many external industry bodies to become a lot more acceptable to the industry.

What might not be seen as being so fair, however (in the industry's eyes at least) is that the amended version of the Act asks for all medical device companies to adhere to this law – at present only companies worth more than $100m in annual revenue have to operate under the Act's terms. For those that do not adhere – and there are plenty of reports of companies that had been fined in the past for not obeying the $25 law – the slap on the wrist is there, but lessened. Device makers under the law will now only face fines of $1,000 to $50,000 per violation.

Under the Physician Payments Sunshine Act all payments, including gifts, honoraria and travel reimbursements given to doctors will also be disclosed in a searchable online database of payments to physicians.

"To date the Act has received widespread industry support from insiders and lawmakers alike."

To date the Act has received widespread industry support from insiders and lawmakers alike, as well as the education industry which also suffers and frowns down upon 'medical bribes'. But just how much support the Act will garner once it is in place is still unknown.

Medical device maker Zimmer Holdings could, however, be one case in point. It came under investigation by the US Justice Department in 2007 along with four other top orthopaedic device makers in the US for offering payment to doctors who use their products. Zimmer never admitted guilt, and reached a settlement with the case. However, it has lead to a widespread shift in the way the company aims to do business.

SUITABLE INFLUENCES

Senior vice president Chad F Phipps highlighted some of the reasons behind this change at the US Senate Special committee on Aging Hearing which looked into the issue of payments by companies to physicians in February 2008.

"Because physical skill level is a key driver of successful patient outcomes, physician training on the safe and effective use of today's complex products and procedures has also been central to the significant benefit patients have experienced with medical devices," Phipps says. He adds that proper models for such collaboration are consequently required to allow such relationships to continue, which include repayment to a physician for their input in such trials.

"A report released by the New England Journal of Medicine discovered 75% of doctors had accepted 'freebies' from the industry."

"In this industry, the same physician we rely on as a consultant to develop or train on the safe and effective use of our products may also select products for patients. Despite what were then regarded by industry as proper and adequate programmes to manage and control these circumstances, with hindsight it now appears that as industry expanded to meet patient needs, the use of physician consultants may have been excessive at times.

Zimmer is obviously not the only company to feel this way. In 2007 a report released by the New England Journal of Medicine discovered 75% of doctors had accepted 'freebies' from the industry, and more than a third had taken on roles of consulting or had enrolled patients in clinical trials. Just how the Act will affect these figures is unknown. But companies should be working now to ensure practices are reviewed and safeguards put in place to ensure practices are in harmony with the Act once it comes in place.

Zimmer has vowed it will remove contact between sales and distribution teams and physicians, and says it will make all its payments through independent third-party organisations that will choose applications and programmes that can receive Zimmer funding. It is also reviewing all royalty-bearing agreements.

But this is just one story out of many hundreds and one approach that could be taken. What every company should be doing leading up to the Act is asking how much of these practices account for basic good business, and how much of a shift each company will require to reach its stringent accords.