Drug, device companies paid $3.5B to doctors, hospitals

Over protests from doctors and industry, the federal government for the first time Tuesday began to detail the billions of dollars that physicians and teaching hospitals receive from companies that sell medical equipment and drugs.

The newly public data cover 4.4 million payments during the last five months of 2013 that totaled $3.5 billion. Fridley's Medtronic Inc. appeared to be the biggest payer in Minnesota, with more than $10 million in spending just from its spinal and vascular divisions. St. Jude Medical in Little Canada spent just over $3 million.

Such payments are controversial, in that paying doctors to attend conferences or give speeches can be seen as a way to incentivize them to promote a certain company's products. Many of the biggest medical device companies have run into trouble over the practice, and Tuesday's disclosure is seen as an important step in increasing transparency.

"This is a significant accomplishment," said Allan Coukell, senior director of drugs and medical devices at the Pew Charitable Trusts, which has long supported such a disclosure. "While not all individual payment information has yet been published, this nevertheless represents a new level of transparency that will help inform patients and the public."

The data release was mandated by the Affordable Care Act. All told, at least 546,000 doctors and 1,360 teaching hospitals across the United States received payments from companies that sell medical devices and drugs, according to the Centers for Medicare and Medicaid Services (CMS).

Hundreds of thousands of additional payments are still sealed for various reasons. Future annual releases of data will include the information now held under wraps.

While doctors complained that the data would mislead the public and discourage legitimate collaborations with companies, CMS officials urged consumers not to assume that any payments in the database necessarily compromised physicians' medical judgment.

"This publicly available website is designed to increase access to, and knowledge about, these relationships and provide the public with information to enable them to make informed decisions," federal officials wrote in a guide to the data at www.cms.gov/OpenPayments.

The publication by CMS follows the first-ever releases on data on Medicare payments and charges by doctors and hospitals. Unlike those past data dumps, though, the physician-industry relationship data includes several large swaths of concealed information because the numbers were in dispute, couldn't be confirmed, or were given to doctors with too little time to review.

The data cover 16 types of "transfers of value," including fees for consulting, public speaking and research, reimbursed travel for training sessions, free lunches with salespeople, and gifts such as free textbooks, flash drives or tickets to sports events.

Separate data tables list doctors' ownership stakes in device companies, and payments for large research projects. The recipients in all categories are listed as either individuals or teaching hospitals.

The payments were reported by drug companies and medical devicemakers, as well as health care group-purchasing organizations.

According to the data published Tuesday, at least two-dozen Minnesota doctors each received more than $100,000 in payments of various kinds from device and drug companies — not including research grants. Physicians in the state got financial support for travel to events in more than two dozen countries, including Australia, Thailand, Armenia and Spain. Danish health care firm Novo Nordisk spent more than $14,000 to send one endocrinologist to Barcelona, Spain.

Many of the largest payments went to doctors who got royalties and licensing agreements for inventing new products or innovations on existing products. One doctor in Minneapolis received $203,740 in royalties from three different orthopedics companies during the five-month span.

"Without these interactions and this close collaboration, these innovative technologies wouldn't exist," said Andrew Van Haute, associate general counsel for Washington trade group AdvaMed. "The existence of a payment doesn't presume some sort of impropriety."

Nor does a payment in the database necessarily go into a doctor's pocket. Royalties of $586,000 and $858,000 to Mayo Clinic doctors Shawn O'Driscoll and Daniel Berry, respectively, were passed along to Mayo's research foundation.

The disclosures cover any payment worth more than $10, but that's a cumulative annual limit, so some payments are much smaller. Novartis Pharmaceuticals in New Jersey reported paying one Minneapolis doctor $1.26 for food one day last September. However, that doctor's total for the five-month period came out to $181,057.

The huge volume of data may have contributed to system breakdowns and missed deadlines before Tuesday's release. In a conference call with reporters, CMS officials acknowledged that the next data release in June would have much cleaner data and more tools to make it accessible to the public.

"They got stuck with this $10 threshold, which is too low. I think they got a lot more data than they counted on," said Minneapolis attorney Mark Gardner, associate attorney with DuVal & Associates, which represents medical device and biotechnology companies. "They're saying, let's get the ball moved as far forward as we can this year … and get the systems in place so that 2015 can be better."

The national movement toward publicizing this information had its origins in Minnesota, where the state Board of Pharmacy has been collecting information on drug company payments to doctors for nearly a decade. The data had been collecting dust in boxes until the watchdog group Public Citizen tallied it up and published the results in 2007.

Tuesday's national release covers most of the payments from August 2013 through December 2013. However, 40 percent of the 4.4 million payments reported Tuesday are "de-identified" because CMS could not verify the accuracy of the reports before deadline.

In addition, 190,000 transactions will not be published until the next round of data in 2015 because the payments concerned ongoing research that qualified for an exemption.

Finally, 9,000 payments were not published Tuesday after doctors or hospitals disputed the information, and federal officials couldn't resolve the disputes in time for Tuesday's release.

The Physician Payment Sunshine Act, which was rolled into the 2010 health care reform law, came about after a series of scandals in which medical specialists were accused of having conflicts of interest that influenced their medical judgment.

All three of the big devicemakers in Minnesota — Boston Scientific, Medtronic and St. Jude Medical — have paid multimillion-dollar settlements with the Justice Department in recent years to resolve allegations that they paid money to doctors to try to steer them to certain products.

But the majority of payments to doctors, when they are revealed, are expected to be aboveboard.

"Overwhelmingly, the interaction between industry and physicians is positive," said Dr. Robert Harbaugh, chairman of neurosurgery at Penn State and president of the American Association of Neurological Surgeons. "Like any system, it can be abused. And I think people did abuse it. And when those abuses came to light, steps were taken, and certainly the Sunshine Act was one of those steps."

Joe Carlson • 612-673-4779

Twitter: @_JoeCarlson