Pay To Promote: The Pharmaceutical Industry’s Financial Relationships With Doctors

In our last article, we discussed a series of charges filed by the US Department of Justice against the international pharmaceutical giant GlaxoSmithKline. We focused on federal allegations that the company had paid medical professionals to promote several drugs, including the anti-nausea medication Zofran, for unapproved uses.

Under the Food, Drug and Cosmetic Act (FDCA) of 1938, drug manufacturers are prohibited from directly marketing products for any uses other than those approved by the FDA.

The Deep Financial Ties Between Big Pharma & Health Care Providers

Today, we’ll continue in a similar vein, but cover the intimate, and lawful, financial relationships that many doctors and health care providers have with pharmaceutical companies.

While the FDCA forbids promotion for unapproved use, pharmaceutical companies are not barred from hiring members of the medical community, including doctors and nurses, to promote their drugs.

Data gathered by ProPublica, an independent network of investigative journalists, has revealed how extremely common this practice is, and new federal mandates seek to bring the often-close financials ties that pharmaceutical manufacturers maintain with physicians, teaching hospitals and other healthcare providers to light.

Among its many provisions, the Affordable Care Act of 2010 included a law called the Physician Payments Sunshine Act. Under the Sunshine Act, pharmaceutical manufacturers who market drugs covered by Medicare, Medicaid or another federal health insurance program are required to record any “payment or other transfer of value” made to physicians, teaching hospitals or health care providers. These reports must be submitted to the Centers for Medicare and Medicaid Services, and are then made public on a database called “Open Payments.”

The Centers for Medicare & Medicaid Services describes the practice in these terms: “sometimes, doctors and hospitals have financial relationships with health care manufacturing companies. These relationships can include money for research activities, gifts, speaking fees, meals, or travel.”

In a particularly common exchange, a pharmaceutical company will hire a doctor to speak at a conference, and then pick up the tab for the physician’s meals and accommodation. At some of these conferences, physicians in the audience have also been incentivized to attend, through the promise of free meals and luxury services all on the drug company’s dime.

Why Do Pharmaceutical Companies Pay Physicians?

In general, drug companies defend their payments to physicians as “just compensation for the laudable work of educating colleagues.” To be sure, many physicians give speeches and educational lectures to other doctors, presentations that often outline the effects and safety of pharmaceutical products. Many of these educators are hired directly by pharmaceutical companies to do so.

Under increasing pressure over the ethical implications of these financial relationships, a leading pharmaceutical industry group, the Pharmaceutical Research & Manufacturers of America (PhRMA), had this to say:

“Interactions between biopharmaceutical research companies and healthcare professionals play a critical role in improving patient care and fostering appropriate use of medicines.”

But notably, the PhRMA’s official statement fails to note that financial compensation is an integral part of these “interactions.” Instead, the press release mentions only what it terms “peer education groups,” conferences and seminars “in which expert physicians meet with their fellow healthcare providers on behalf of pharmaceutical research companies” [emphasis added].

Even these supposedly benign relationships may be too much for some patients.

In 2010, Consumer Reports gathered together a representative sample of 1,250 American adults. The survey’s administrators first informed their respondents that “some doctors take payments from drug companies in exchange for promoting the benefits of those companies’ drugs to other doctors in presentations at conventions and conferences.”

When asked whether or not they approved of this practice, 74% of respondents said that they disapproved, and 37% said they would feel concerned that their doctor’s judgment might be influenced by payments as low as $10 taken from a pharmaceutical company.

Do Drug Manufacturers Go Too Far?

Those concerns may be valid.

Many critics of this practice have argued that doctors who accept payments to promote specific drugs are liable to be caught within a “conflict of interest.” On the one hand, doctors are tasked with selecting the best available treatments for their patients. But on the other, physicians who accept compensation from pharmaceutical manufacturers may be biased to choose products made by those very companies, regardless of whether or not those drugs are in reality the best medical choice.

According to ProPublica “studies have shown that such payments, however small, bias physicians toward companies and their products.”

For a practical example look no further than the scandal broken by Spine Journal in 2011. This peer-reviewed publication devoted an entire issue to Infuse, a bone growth product used during spinal surgery. In a series of scathing critiques, multiple spinal experts repudiated the results of earlier studies that they claimed were authored by physicians with close financial ties to Infuse’s manufacturer.

A subsequent investigation by the US Senate found that Infuse’s manufacturer, Medtronic, had paid more than $210 million to 13 doctors over the course of 15 years. All 13 doctors had co-authored studies that, according to Spine Journal, had “overstated Infuse’s benefits and vastly understated its risks by claiming there were none.” According to the Senate’s press release, “Medtronic employees collaborated with physician authors to edit — and in some cases, write — segments of published studies.”

Framing The Conversation: Drug Companies Often Write A Doctor’s “Script”

How much influence pharmaceutical companies actually exert over supposedly “independent” academic research is an open question.

Pharmaceutical manufacturers often claim that the doctors they select to lead speaking engagements are simply the nation’s best and brightest, sharing research and clinical experience for the edification of other health care providers.

But contrast that position with what Dr. David Levine, a physician in Illinois, told the Chicago Tribune after being asked about the $73,750 he received in 2009 from Eli Lilly:

“in the last five years, it’s become distinctly less interesting to me. To be given a slide set and be told this is what you can and cannot say was not exactly drawing on my expertise.”

In an interview with PBS Newshour, Dr. Jerry Avorn of Harvard Medical School supported Levine’s claim that many speaking engagements are scripted affairs tightly-controlled by pharmaceutical companies:

“it’s quite common for drug companies to hire doctors to be on what they call speakers’ bureaus, in which the doctor will travel around and give lectures about a drug.

And, in many cases, the slides and the content and script are actually prepared by the drug company, and the doctor presents this information as the latest information[.]

It’s not always clear to the audience that this is material that was really scripted completely by the drug company that was paying the doctor to give the talk.”

Harvard Medical School’s Eric Campbell was even more candid, saying “let’s be honest: the purpose of these talks is to influence doctors to buy a company’s drugs.”

Hordes of whistleblowers have also spoken out. In numerous lawsuits, former sales representatives have claimed that their employers rewarded doctors, often in cash, for prescribing brand name medications over generics, and for promoting the use of drugs for purposes never approved by the FDA.

Notably, some of these lawsuits have been taken over by the federal government, and companies like Allergan, Cephalon and AstraZeneca have all pleaded guilty to charges similar to those described. ProPublica has found that since 2009, pharmaceutical companies have “agreed to pay over $13 billion to resolve U.S. Department of Justice allegations regarding fraudulent marketing practices, including the promotion of medicines for uses that were not approved by the Food and Drug Administration.”

Health Care Providers Rarely See Consequences

Accepting funds from Big Pharma can be ruinous for health care providers, too. Here are just two examples:

The American Pain Foundation, an organization that described itself as the nation’s leading advocate for patients with chronic pain disorders, received upwards of 90% of its annual funding from patrons among the pharmaceutical industry. After the US Senate Finance Committee began an investigation into the close ties between painkiller manufacturers and programs that advocate for their use, the APF announced that it would “cease to exist, effective immediately.”

Stanford University saw its vice chair of the Department of Medicine, Dr. Alan Yeung, step down from that position in 2011, after the venerable institution found he had accepted $64,000 from Eli Lilly between 2009 and 2010.

But more often than not, even those doctors named as participants in off-label promotion schemes by federal prosecutors are never pursued. ProPublica found that while “at least 15 drug and medical-device companies have paid $6.5 billion since 2008 to settle accusations of marketing fraud or kickbacks[,] none of the more than 75 doctors named as participants were sanctioned, despite allegations of fraud or of conduct that put patients at risk.”

GlaxoSmithKline: At Least $437.9 Million For Health Care Professionals Since 2009

The Sunshine Act’s mandatory reporting requirements only went into effect in 2014. But seven pharmaceutical manufacturers, including Zofran’s producer GlaxoSmithKline, had begun disclosing their financial relationships with healthcare providers long before that.

After pleading guilty to criminal charges of introducing “misbranded” drugs into interstate commerce, GlaxoSmithKline entered a “Corporate Integrity Agreement” with the Inspector General of the US Department of Health and Human Services. As part of this Agreement, GlaxoSmithKline was required to change its business practices in fundamental ways. For instance, sales representatives could no longer be compensated based on regional sales goals. The DOJ cited this “quota” system as a driving force behind much of the company’s alleged off-label promotion.

Before the Sunshine Act made public reporting mandatory for all pharmaceutical manufacturers, many Corporate Integrity Agreements required that pharmaceutical manufacturers begin reporting the payments they make to health care professionals. But notably, GlaxoSmithKline had begun voluntarily disclosing its payments to physicians several years before it was charged by the US Department of Justice.

How Much Has GlaxoSmithKline Paid To Doctors?

ProPublica started “Dollars for Docs” in 2010, and more than four years later, this searchable database contains over 3.5 million records of payments made to physicians by pharmaceutical companies, representing $4 billion from 17 different manufacturers.

And while you might assume that the government’s own “Open Payments” database makes “Dollars for Docs” largely redundant, federal officials have already admitted that “Open Payments” is missing over $1 billion in payments.

According to ProPublica’s database, Zofran’s manufacturer has paid out approximately $437.9 million to health care providers, but that number only includes records made public between April 2009 and December 2013.

Science For Sale: 90% Of Clinical Trials Funded By Big Pharma

Of that total, GlaxoSmithKline categorized the majority (62.58%) of its payments to health care professionals as compensation for “research.” And while 62.58% represents more than $274 million in payments, the company only began reporting research funding in January of 2011, two years after ProPublica’s database began.

ProPublica notes that funds categorized as “research” are likely tied to clinical trials, studies using human subjects that must be completed before a drug can be approved by the FDA.

Although you might be surprised to learn that pharmaceutical manufacturers fund the very studies that decide whether or not their products can be put on the market, as many as 90% of clinical trials are now paid for directly by drug companies.

Ben Goldacre, a British physician and journalist, found that clinical trials funded by pharmaceutical manufacturers are four times more likely to produce “positive” results, evidence that the drug under investigation is in fact “safe and effective,” than trials run independently. Ironically, Goldacre currently holds an academic fellowship established by the Wellcome Trust, a charity founded using the wealth of Sir Henry Solomon Wellcome. Founded in 1880, Wellcome’s pharmaceutical company would eventually merge with three other large drug manufacturers to become GlaxoSmithKline.

What Else Does Glaxo’s Money Do?

Paying doctors for their services at speaking engagements garnered the second highest proportion, at $137,826,640, or 31.47% of the total. Payments for “consulting” came in third, at $19,685,603. ProPublica has found that a bulk of the payments categorized as “consulting” are earned by physicians after they advise drug companies on their marketing for specific products.

Travel and meal expenses came in at $4,150,171 and $1,812,549 respectively. But note that GlaxoSmithKline only began reporting payments in these categories in October of 2012.

While meals account for a small fraction of GlaxoSmithKline’s total payments to physicians, ProPublica reports that individual meals vastly outnumber individual payments for any other category of expense, including public speaking.

GlaxoSmithKline’s “Dollars For Docs” Are Drying Up

On December 17, 2013, GlaxoSmithKline announced that it would no longer pay health care providers to promote its drugs.

According to the company’s self-reported record of payments, GlaxoSmithKline’s total spending for “promotional speaking” had already declined precipitously. In 2009, the average quarter saw the company pay $15.4 million to health care professionals promoting its products at industry conferences. By 2012, that average had dropped over 80%, to $2.5 million per quarter.

The company said it will continue to pay physicians for research and consulting.

Did GlaxoSmithKline’s Payments Go Too Far?

The most recent Zofran birth defect lawsuits have used these newly-public payment records to substantiate claims that GlaxoSmithKline paid kickbacks to doctors who promoted its anti-nausea drug to other physicians as a “safe and effective” treatment for morning sickness. While the US Department of Justice charged the company with doing just that, GlaxoSmithKline continues to deny the allegation.

In the most recent complaint, filed in the United States District Court of Texas, Texarkana Division, under case number 5:15-34, plaintiff claims that GlaxoSmithKline “voluntarily self-reported” payments totaling $37,754,759 “in Texas for speaking fees, consulting fees, research, travel fees, and meals” between April 2009 and December 2013.

Using information first reported by ProPublica, the complaint notes that GlaxoSmithKline “did not disclose the amount it paid for educational items, gifts, or royalty or licensing fees.”

Citing the “Federal Anti-Kickback Statute,” 42 U.S.C. § 1320a-7b, plaintiffs state that it is “illegal to promote certain drugs with various forms of remuneration, including cash payments disguised as consulting fees, expensive meals, weekend boondoggles and lavish entertainment to prescribers and other health care professionals to induce them to prescribe and recommend drugs, including those paid for by federal health care programs.”

Their next allegation only echoes that of the federal government. In 2012, the Department of Justice charged GlaxoSmithKline with violating the Federal Anti-Kickback Statute. The federal government’s allegations included claims that the company had “used a wide variety of gifts, payments and other remuneration to induce physicians to prescribe [GlaxoSmithKline’s] drugs, including trips to Bermuda and Jamaica, spa treatments and hunting trips, and sham consulting fees.”

Bribing Hospitals & Doctors In China

According to Docket 5:15-34, at the same time that GlaxoSmithKline was fielding the US government’s charges, the company was also “under investigation for bribing doctors in China to prescribe its products and using travel agencies to cover up the practice.”

On September 19, 2014, a Chinese court imposed fines totaling almost $500 million on the company. According to the New York Times, “Chinese authorities accused Glaxo of bribing hospitals and doctors, channeling illicit kickbacks through travel agencies and pharmaceutical industry associations — a scheme that brought the company higher drug prices and illegal revenue of more than $150 million.”

As multinational corporations expand their Chinese operations, many have come under scrutiny for violating Chinese law, facing charges of corruption and bribery like those leveled against GlaxoSmithKline. But Glaxo became the first such corporation to publicly “acknowledge[…] that its senior managers oversaw such a spree of bribe-giving and illicit sales tactics.”

All five of the company’s corporate managers who were charged with legal violations pled guilty, and in this press release, GlaxoSmithKline announced that it “fully accept[ed] the facts and evidence of the investigation, and the verdict of the Chinese judicial authorities.”