Sunshine Act exemption is a missed opportunity to fund/include patients at medical conferences.

Doctors Face New Scrutiny Over Gifts

New Health Law Calls for Increased Disclosures

            By PETER LOFTUS CONNECT  Wall Street Journal

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U.S. doctors are bracing for increased public scrutiny of the payments and gifts they receive from pharmaceutical and medical-device companies as a result of the new health law.

Starting this month, companies must record nearly every transaction with doctors—from sales reps bearing pizza to compensation for expert advice on research—to comply with the so-called Sunshine Act provision of the U.S. health-care overhaul. The companies must report data on individual doctors and how much they received to a federal health agency, which will post it on a searchable, public website beginning September 2014.

Many doctors say the increased disclosures are making them rethink their relationships with industry, citing concerns about privacy and accuracy, and worry that the public will misinterpret the information. Some fear patients will view the payments as tainting their medical decisions, and will lump together compensation for research-related services with payments of a more promotional nature.

Drug companies collectively pay hundreds of millions of dollars in fees and gifts to doctors every year. In 2012, Pfizer Inc., PFE +0.64% the biggest drug maker by sales, paid $173.2 million to U.S. health-care professionals. Some companies including Pfizer have decreased these payments in recent years; Pfizer's total was $195.4 million for 2011.

Consulting and speaking fees are an important source of income for some physicians, who can be paid tens of thousands of dollars a year for such services. But now physicians say they will be much more selective about the work they do and what they will accept from industry representatives. Some are even restricting access to their offices by sales reps, or requiring forms that document the value of anything brought to the office, according to medical societies.

John Mandrola, a cardiologist in Louisville, Ky., said he has been paid a total of $1,500 to $2,000 this year by medical-device makers for speaking engagements. Knowing that such transactions will become public has caused him to be more cautious about what fees to accept, he said. He avoids industry reps visiting his office, believing he can get information on new drugs elsewhere.

"I'll continue to weigh the benefits and the negatives, and I think the Sunshine Act and the public reporting of all this stuff makes us think about that," said Dr. Mandrola. "And I think that's a good thing."

A benefit of transparency, Dr. Mandrola said, is that it will help doctors evaluate medical research from peers if they know whether the researchers receive payments from certain companies. Still, he worries that the disclosures could squelch legitimate interactions—for example, when doctors receive consulting fees to help companies develop drugs and determine their best use.

"I don't think all physician-industry interaction is bad," he said.

The push for greater transparency was driven by concerns that doctors' prescribing decisions are tainted by the payments and gifts, as well as allegations that drug companies have used payments to induce doctors to prescribe drugs for unapproved, "off-label" uses. Several drug companies have paid large penalties to settle government allegations of off-label marketing, and were required to disclose physician-payment data as conditions of the settlements.

"The idea is that transparency will encourage doctors to evaluate whether these are appropriate relationships with companies or not," said Daniel Carlat, a psychiatrist and director of the prescription project at the Pew Charitable Trusts, which supported the Sunshine Act. He expects patients won't have much of a problem if their doctors receive $200 worth of company-provided lunches, but may question doctors who receive tens or hundreds of thousands of dollars from the industry annually.

Several drug and device makers—including Pfizer and Eli Lilly LLY +0.30% & Co.—have been posting physician-payment data online for the past few years. Some U.S. states already require companies to report such information. But the Sunshine Act will significantly widen the scope because it applies to most companies—any company whose products are covered by Medicare—and the government's launch of the database could draw greater public attention.

Richard B. Aguilar, a diabetes-care specialist, received a total of $42,339 from Lilly for the first three months of 2013, according to Lilly's online payment database. Dr. Aguilar, who has a private practice in Downey, Calif., said he speaks about Lilly drugs at programs to teach other doctors, and the information is consistent with the FDA-approved prescribing labels. He says the payments are fair compensation for his expertise and travel.

Dr. Aguilar plans to continue serving as a paid speaker, but he says other doctors are increasingly opting out of attending or speaking at such programs for fear of what the public will think about the payment disclosures.

Dr. Aguilar said he hopes the public would see the value of physicians learning new information about drugs from an expert at speaker programs, rather than having to rely upon their own educational resources to keep current. "This, in essence, is reducing the number of valuable expert educational speakers who might otherwise have provided teaching and experience to many health-care providers," he said.

Some doctors fear the payment data will be inaccurate and could mislead the public about the nature of their relationships with the industry. Gary M. Cowan, an ophthalmologist in Fort Worth, Texas, said he has occasionally attended company-sponsored dinners to hear a lecture from an expert in his field. He plans to monitor the payments that companies report in his name.

"I think it behooves every physician to look and see what's said about him," he said.

Drug makers said they've been preparing for the new reporting requirements and have implemented technology systems to collect the data, but they will continue to work with physicians because the interactions improve science and medicine.

The Centers for Medicare & Medicaid Services, which is implementing the Sunshine Act, is advising doctors to keep records of all payments and transfers of value received from industry. Once the agency receives payment data from manufacturers, it will give doctors about two months to review the data and work with companies to make any corrections before it is made public.

CMS also will break down the payment data into more than a dozen categories—such as meals, travel, research or speaking fees—to give a clearer idea of the nature of a doctor's relationship with industry.

One key exemption: Companies won't have to report compensation to doctors who speak at certain accredited events where physicians receive continuing medical education—as long the sponsoring company doesn't select or directly pay the speaker, but rather delegates those duties to a third-party organization. CMS initially proposed to require that such payments be reported, but granted the exemption in its final rule issued earlier this year, saying industry support for accredited or certified continuing medical education is a "unique relationship." Continuing-medical education providers pushed for the exemption, arguing that industry support would dwindle if the payments had to be reported.

Stefanie A. Doebler, an attorney with Covington & Burling LLP who represents health-care companies, said the exemption for indirect payments to speakers at continuing-medical education events could help sustain industry support for such programs. However, companies will be required to report certain other expenses for these programs, such as meals provided to physician attendees if the cost of each meal is separately identifiable. Some companies have decided not to fund such meals, she said, which could cause program providers to charge attendees for the meals.

To ensure accuracy, CMS is required to conduct audits of the data submitted and levy civil monetary penalties against companies for failing to submit data, or for submitting inaccurate data. Companies that fail to report information in a timely, accurate or complete manner face penalties of at least $1,000 per transaction, with a total maximum annual penalty of up to $1.15 million per company, according to CMS.

CMS plans to publish the data each year on a public website starting in the fall of 2014. CMS says patients will be able to look up their doctors and see if they have any financial relationships with companies, which types of payments they receive and how much.

Some companies are taking steps to prepare the doctors with whom they do business. Later this year, Roche AG's RHHBY -0.06% Genentech unit, which sells the cancer drug Avastin, will launch an online portal called "Sunshine Track," which will allow doctors to review payment data before it is reported to CMS. "We have implemented extensive processes to validate all payment information we collect," said a spokeswoman.

Genentech also allows physicians to opt out of receiving meals from the company at speaker programs or during office visits by sales reps. Doctors opting out of meals at speaker programs must certify this on a sign-in sheet and can either pay for the meal themselves or not partake, the spokeswoman said.

Write to Peter Loftus at peter.loftus@dowjones.com

Joleen Chambers comment:

More empty talk about being patient-centered:  with the exemption allowing industry to support medical education through a third party, the legislation FAILS to include a % of the funding to go to consumer organization scholarships making participation in the conferences possible.  Treatment decision makers and healthcare system designers are notorious for ignoring the patient stakeholder!   Engaged patient advocates are otherwise unfunded and pay a big price to compete for conference slots competing with those with professional credentials and a sponsoring organization.