Drugmakers, Medical Device Makers Paid $6.49B to Providers in 2014
Providers received $6.49 billion in payments from drugmakers and medical device manufacturers in 2014, according to data unveiled Tuesday through CMS' Open Payments database, the Wall Street Journal reports (Loftus/Walker, Wall Street Journal, 6/30).
In September 2014, CMS launched its Open Payments System, which is required under the Affordable Care Act's Sunshine Act and aims to boost transparency by making public payments health care providers have received from drugmakers and medical device manufactures (California Healthline, 3/20).
The data, which include payments made to more than 600,000 physicians and 1,100 hospitals in 2014, encompass an entire year's worth of payments for the first time since CMS began releasing such information. CMS also published updated data on payments made in 2013. The data include provider payments for consulting, research and promotional engagements, meals and other expenses paid by drugmakers and medical device companies. CMS said it was able to verify 98.8% of the total records for both years had information correctly identifying recipients.
Further, CMS allowed providers to review the data before they were published. The department said providers reviewed around 30% of the total amount of data ahead of their release (Wall Street Journal, 6/30).
Overall, the data include information on 11.4 million payments made to providers by drugmakers and medical device companies in 2014 (Berkrot, Reuters, 6/30).
According to the data, about half of the total payments made last year were for research-related efforts. About 81% of such payments were made in cash or cash equivalents, the data note. Further, the data show many of the higher payments were made for activities related to drugs that have been available on the market for several years.
Meanwhile, the data show drugmakers and medical device companies paid providers:
- $803.49 million in licensing or royalty fees;
- $403.64 million for drinks, lodging, meals and travel; and
- $369.44 million in consulting fees.
Further, the data note payments made for miscellaneous "entertainment" for providers, such as:
- A $2,000 payment for a training seminar in the Cayman Islands;
- A $65 massage at an airport; and
- Tickets to Alcatraz (Wall Street Journal, 6/30).
The data also include information on provider ownership interests totaling $703 million (Chen/Tracer, Bloomberg Business, 6/30).
Genentech Makes Most Payments
According to the data, Roche Holding's Genentech made the largest amount of payments to providers in 2014, at $373.4 million. More than $250 million of Genentech's total payments were made to the California-based City of Hope medical center in royalties for sales of several products, including the company's blockbuster cancer drugs Avastin and Herceptin.
Other drugmakers with sizable payments were:
- Pfizer, at $287.4 million;
- GlaxoSmithKline, at $213.1 million (Wall Street Journal, 6/30);
- AstraZeneca, at $158.2 million; and
- Merck, at $125.2 million (Bloomberg Business, 6/30).
Among medical device makers, the data show:
- Boston Scientific made $26.3 million in general provider payments and $18.4 million in research-related payments; and
- Edwards Lifesciences made $44 million in research-related payments and $6.8 million in general provider payments (Reuters, 6/30).
According to Bloomberg Business, the data make it difficult to determine the exact amount of payments made by manufacturers because they payments might be listed under various subsidiaries. For example, Johnson & Johnson spokesperson Ernie Knewitz said the company has 32 subsidiaries that reported payment data (Bloomberg Business, 6/30).
Some Providers Receive Large Payments
In addition, the data show some teaching hospitals received large payments. For example:
- Cleveland Clinic received a $1.2 million payment from Siemens, as well as $941,311 from Biogen (Reuters, 6/30);
- Dana Farber Cancer Institute received a $16.9 million payment from E.R. Squibb and Sons; and
- MD Anderson Cancer Center received an $11.8 million payment from E.R. Squibb, as well as a $10 million payment from AstraZeneca (Powderly, Healthcare Finance, 6/30).
Meanwhile, Illinois-based pediatric geneticist John Diliberti received the largest payment made to one physician, collecting $447,000 in consulting fees from Pfizer (Reuters, 6/30).
Although CMS has allowed providers to review the data before they were published, the American Medical Association in a statement on Tuesday said "the vast majority of the data released ... ha[d] not been independently validated by physicians, which makes it less usable for the patients it's intended to benefit." Further, AMA said CMS' process for providers to review the payments is cumbersome, which limits participation (Wall Street Journal, 6/30).
Jason Dana, a professor at the Yale School of Management, said the data are needed to understand how money is used in the industry and "to develop policy." Dana added, "No pharma companies spend this kind of money in a disinterested way" (Bloomberg Business, 6/30).
CMS acting Administrator Andy Slavitt said, "Consumer access to information is a key component of delivery system reform and making the health care system perform better" (Golab/Sandler, Modern Healthcare, 6/30).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.