What does it mean when drug companies pay doctors?

Iowa doctors received more than $18.5 million in payments

Chelsea Keenan, The Gazette
July 26, 2015

CEDAR RAPIDS — If a pharmaceutical company paid for your doctor's $50 dinner tab, would you be uncomfortable if he or she then prescribed you a drug made by that company?

What if in addition to that dinner bill, that same company paid your doctor hundreds of thousands of dollars each year in consulting and speaking fees?

The relationship between doctors and pharmaceutical companies is long-standing. But thanks to a 2010 federal law, that arrangement is now more clear as pharmaceutical and medical-device companies must release details to the Centers for Medicare and Medicaid Services of the payments they make to doctors and teaching hospitals for services such as promotional talks, consulting, research and royalty agreements among others.

Data released by CMS on June 30 reveals that doctors in Iowa and across the country receive hundreds of payments each year — ranging from a $15 lunch to thousands in consulting fees.

Some doctors receive only a handful of small payments while others take in hundreds that each year can total millions of dollars.

About 683,000 doctors across the country received more than $9.92 billion in payments from medical manufacturers and pharmaceutical companies from August 2013 to December 2014, according CMS. Here in Iowa, doctors got about $18.5 million in payments, according to a ProPublica analysis. The not-for-profit journalism group has spent nearly five years investigating these relationships.

“Payments are not necessarily bad,” said Dr. Charles Rosen, co-founder of the Association for Medical Ethics. Rosen lobbied and testified before Congress in support of the Physicians Payment Sunshine Act.

“Getting paid for something that you invented is OK, that's the American way,” he said.

But relationships with these companies also can produce ethical dilemmas and conflicts of interest, he noted.

Pharmaceutical “companies are out there to sell products,” he added, “not to make health care better.”

In Iowa

A Gazette analysis of the data showed that pharmaceutical giants, including New Jersey-based Novartis Pharmaceuticals Corp. — the country's largest in sales of prescription medicine — and New York-based Pfizer Inc. — No. 2 — are among the top payers in the state. Novartis paid out more than $1.4 million to doctors, and Pfizer paid doctors more than $1.1 million. (See charts.)

The largest payer to Iowa doctors, however, was orthopedics manufacturer and designer DePuy Synthes Products, headquartered in Massachusetts and part of Johnson & Johnson, No. 6, which paid one Iowa doctor more than $5.6 million in royalties.

Iowa's medical doctors received the majority of payments — $15.7 million of the $18.5 million — while dentists were paid $898,997 and doctors of osteopathy were paid $642,116.

Hundreds of medical doctors from across the state obtained payments from drug or medical device manufacturers, but only 24 were paid more than $100,000. Two made in excess of $1 million.

The University of Iowa Hospitals and Clinics — the state's largest hospital — employs five of the six-top-earning doctors in the state. Dr. John Callaghan, an orthopedic surgeon at UIHC, is the highest paid — receiving $5.7 million in payments during the time period that data was available for review.

DePuy Synthes Products paid Callaghan more than $5.6 million in royalties or licensing. DePuy Orthopaedics, a related company, paid him about $78,500 in consulting fees, according to the data.

Callaghan declined to be interviewed for this story but provided a statement regarding his relationship with DePuy Synthes.

“We were probably one of the first state universities with (a disclosure) program, thanks to the strong leadership of President (Sally) Mason. In addition, all of the contracts of faculty who have consulted with industry are totally vetted by the University before they can be signed,” he said in an email. “In my case, the disclosed monies are related to intellectual property transfer and design of hip and knee implants over a 20 year period.”

Maryland-based United Therapeutics Corp. paid UIHC's Dr. Linda Cadaret $1.01 million in research payments. The biotechnology company said it is focused on developing and commercializing products to aid patients with chronic and life-threatening conditions.

Conflicts of interest?

Rosen, an orthopedic and spine surgeon based in Irvine, Calif., is a big proponent of more transparency in the medical industry. He believes if politicians must disclose who donated to campaigns and public companies have to detail earnings in annual reports, doctors should be held to similar standards.

That's because if a company pays a doctor to develop and research a new product, and that doctor then publishes a paper pushing the product, other doctors might use the product because they believe that research is unbiased and independent, he said — “when really that doctor is receiving royalties, and that's why they push it.”

A similar concern can arise on the patient end. For example, a patient should know if a doctor is a consultant for cholesterol medicine Crestor before he or she prescribes it.

“I'd say 90 percent of physicians want to do the right thing and take care of patients,” he said. Payments “aren't all bad. You just need transparency.”

Checks and balances

UIHC has setup a system of checks and balances to keep doctors from forming unethical relationships. A task force in 2009 looked at best practices across the country and helped create a hospital web portal that discloses doctor payments as well as developed a management plan that lays out what doctors can and cannot do, which was updated in 2013.

“Any time you are dealing with patient care, we don't want them to feel pressure,” said Debbie Thoman, UI's assistant vice president for compliance, accreditation and privacy officer. “We want them to understand the relationship. We present the information to the public so they can make their own determinations.”

UIHC's management plan includes policies such as:

  • Doctors must disclose to their patients if they have developed a device
  • If a medical device is used on a patient at the hospital, the doctor cannot collect royalties
  • Certain doctors involved with pharmaceutical companies can't be involved on drug purchasing committees
  • Doctors must inform trainees of industry relationships.

This isn't a foolproof plan, Thoman admitted.

Dr. Brian Adams, an orthopedic surgeon at UIHC, received more than $165,000 in royalties and consulting fees from several companies during the August 2013-to-December 2015 time period. Meanwhile, a state auditor's report found in July that Adams diverted nearly $1.9 million, in part by improperly billing insurance companies and law firms for services he performed and royalties and consulting fees he received for products he developed.

Adams resigned in Aug. 2014.

But UIHC does its due diligence, Thoman said. The hospital requires doctors to update their payment disclosures annually, and those who do not get regular email reminders and phone calls.

“Nothing about (doctors' industry relationships) makes me uncomfortable,” she said. “I'm proud that we disclose the relationships. A relationship with the industry is not a bad thing.”