posted by AHIP
on November 18, 2019
We have an affordability crisis in health care, and everyone should be working to bring down costs for patients. But as a new report outlines, many doctors and drugmakers have developed the coziest of relationships to keep drug costs high for their benefit.
For decades, we’ve known that pharmaceutical companies have provided gifts, meals, high-end trips, and other items of value to physicians. But drugmakers also make direct cash payments to physicians for various services provided on the drugmaker’s behalf. Now, we know the scale of the operation, and it’s breathtaking.
A new investigation by ProPublica found that drugmakers and medical-device manufacturers paid doctors to the tune of more than $10 billion over five years. From 2014 to 2018, at least 700 doctors were paid more than $1 million each. Another 2,500 were paid more than $500,000 each during that time. About 600,000 physicians receive payments in any given year, and about 1 million doctors in total received payments over the last five years. (The United States has about 1.1 million physicians.)
Here’s how it works. Drugmakers and medical device companies put doctors on their payroll by having them perform “consulting services,” giving a speech at a conference, or providing “educational” (i.e., promotional) talks during “lunch and learns” or “dine and dashes” at nicer local restaurants. It’s a great side gig for the doctors who can get it.
What’s in it for the drug companies? The payoff comes when those doctors turn around and prescribe high-cost drugs developed by those same companies to their patients. Basically, it’s a pharma “investment” to ensure patients are prescribed the newest high-priced drugs rather than older competitors or less costly generic alternatives.
And the data shows big returns for that investment. According to ProPublica, there is a direct link between these payments and the prescribing patterns of physicians. Financial arrangements, rather than patient safety or affordability, are impacting medical decisions.
Many practices are employed by big pharma to keep drug costs high, but this one goes beyond simple marketing and underscores the broken incentives driving costs ever higher. Voters agree. In polls conducted by America’s Health Insurance Plans in December 2017, voters said that of all the waste and unnecessary costs in the health care system, they most want to eliminate financial incentives from drug companies that encourage doctors to prescribe a specific medicine.
In 2010, building on former Supreme Court Justice Louis Brandeis’s adage that “sunlight is said to be the best of disinfectants,” federal law was changed to require these payments to be made public. But that transparency has clearly done little to change the behavior of drugmakers and doctors. When virtually everyone is engaged in the practice, what’s the incentive to stop?
But when these suspect practices lead to more and pricier prescriptions of newer drugs, when other, less costly products, might work as well, it hurts patients. It also hurts taxpayers, employers, and anyone who pays health care premiums or branded drug copays.
With families everywhere struggling with high drug prices, the continued costs of this practice are plainly apparent. It’s time for a clear explanation and accounting from physicians and drugmakers of the benefits. We cannot just continue along, business as usual. This is a prime example of why affordability continues to rank as the biggest problem facing Americans, and one where bipartisan solutions would appear to be achievable.