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Shining a Light on Conflicts of Interest in the Medical Industry

How Much Are Medical Device Companies Paying Your Doctor?

When a doctor prescribes a new drug or medical device, most patients presume that the recommendation is based on their best interests. However, the data collected by the Centers for Medicare and Medicaid Services (CMS) about the financial ties between physicians and the medical industry suggests that this is not always the case.

Thanks to technology, consumers can search the Open Payments database to find information about whether and how much their doctors are getting paid by medical device companies. For many patients, what they find can be alarming. In 2016, drug and medical device companies made a total of $8.18 billion in payments to physicians and teaching hospitals. Also concerning, payments from pharmaceutical companies and device makers increased by $90 million from 2015 to 2016.

What Is the Open Payments Database?

Open Payments is a federal program that collects information about the payments drug and device companies make to physicians and teaching hospitals for things like travel, entertainment, research, gifts, speaking fees, and meals. It also provides information about the ownership interests that physicians or their immediate family members have in these companies.

According to CMS data for 2016, the payments were made by 1,481 companies to 631,000 doctors and 1,146 teaching hospitals. They include $2.8 billion in general payments and $4.36 billion in research payments. In addition, there was $1 billion in ownership and investment interests held by doctors and teaching hospitals in the drug and device companies.

How Does Open Payments Work?

Under the Physician Payment Sunshine Act,drug and medical device makers must disclose any transfer of value to a physician that exceeds $10. Companies must also report whether a physician or his or her family members have an ownership stake in the company outside of publicly traded stock.

Every year, manufacturers and applicable group purchasing organizations (GPOs) must report the following information to CMS:

  • Payments and other transfers of value from manufacturers of covered drugs, devices, biologicals, or medical supplies to physicians and teaching hospitals.
  • Payments and other transfers of value from applicable GPOs to physician owners/ investors.
  • Ownerships or investments held by physicians or their immediate family in manufacturers and GPOs.

CMS then collects, aggregates, and publishes the data on its public website. Reports are published every year (usually in June) and include a full 12 months of payment data. Users can search by physician, hospital, or company making the payments.

First launched in 2014, the Open Payments database also continues to evolve and become more user friendly. Last year, CMS updated its website to allow users to compare specific physicians to a national average and peers within their specialty. Additionally, consumers can view payments received by physicians in each state.

The Open Payments database is also useful to consumer protection and advocacy groups, as well as media organizations. Last year, ProPublica published a study analyzing all payments received between August 2013 to December 2015. It found that California led the nation in total payments provided by pharmaceutical companies and medical device manufacturers to doctors, with $1.44 billion in payments.

For each state, ProRepublica also identified the highest-earning doctors and teaching hospitals. A San Diego doctor, Dr. Sanjiv Narayan, actually led the country. He and his wife received $54.8 million when Abbott Laboratories bought their medical device company in December 2014.

With regard to California teaching hospitals, the UCSD Medical Center took in $2.45 million in payments, ranking number seven in the state.

Conflict of Interest Concerns

Studies have confirmed that financial incentives and other perks can influence the drugs and medical devices that physicians recommend. For instance, one recent study found that doctors are more likely to prescribe cheaper, generic medications when hospitals implement policies that limit the access given to pharmaceutical representatives. Conversely, researchers have also found that that just one free meal from a pharmaceutical company can influence a doctor's prescribing habits.

While the Open Payments program does not identify which payments may result in conflicts of interest, it does provide valuable insight into the extensive financial relationships between doctors and the health care industry. For patients, the database provides the information necessary to start a dialogue with their health care providers about why they accepted certain payments and how it may affect their medical device or medication recommendations.

If you or a loved one has been harmed due to the actions or irresponsibility of a medical professional, the Law Offices of Robert Vaage is ready to assist. Our award-winning San Diego personal injury attorney has recovered millions of dollars for injury victims, including those who have suffered harm due to medical malpractice .