Litigation, Risk to Reputation May Come From Scrutiny of Doctors' Payment Data

BNA’s Health Care Daily Report™ sets the standard for reliable, high-intensity coverage of breaking health care news, covering all major legal, policy, industry, and consumer developments in a...

By James Swann

Sept. 30 — Open Payments data, which were made public Sept. 30, may have wide-ranging effects on both physicians and drug and device manufacturers that make the payments to doctors, including an increase in qui tam filings, as well as the potential for reputational risks to physicians, attorneys told Bloomberg BNA on Sept. 30.

Elizabeth B. Carder-Thompson, an attorney with Reed Smith, told Bloomberg BNA that she's concerned the public release of Open Payments data will be mined for qui tam lawsuits under the False Claims Act.

“I'm concerned the profit incentive, coupled with data with no context, will lead to more frivolous lawsuits,” Carder-Thompson said.

She also said she is worried that the general public won't understand the nature of the financial interactions between physicians and drug and device manufacturers and that physicians will be reluctant to participate in future interactions. Physician interactions with drug and device manufacturers can play key roles in drug development and education, she said.

Moving forward, Carder-Thompson said all drug and device manufacturers should include a clause in their contracts with physicians that says the payment data will be published. She also said manufacturers should be in contact throughout the year with physicians regarding reportable payment data, rather than waiting until the physician review and dispute period.

Public Release

The  Open Payments data, which contained 4.4 million payments totalling roughly $3.5 billion, covered financial transactions between drug and device manufacturers and physicians and teaching hospitals that took place in the last five months of 2013  (see related article).

Future releases of Open Payments data will cover an entire year, and the next release is scheduled for June 2015.

Shantanu Agrawal, deputy administrator of the Centers for Medicare & Medicaid Services and director of the agency's Center for Program Integrity, said 60 percent of the records that have been released are fully identifiable, and 40 percent were de-identified due to technical issues.

Agrawal, who spoke on a press call, said the CMS will roll out a simplified Open Payments site for consumers within two months.

The Open Payments program, which was created by the Affordable Care Act, requires manufacturers of drugs, devices and other medical supplies and group purchasing organizations to report certain payments to physicians or teaching hospitals.

Payment Transparency

Although the program has the benefit of promoting transparency, the likelihood that patients will pay attention is small, Jeremy Sternberg, an attorney with Holland & Knight, Boston, told Bloomberg BNA.

However, he said, the database is likely to be used by whistle-blowers' attorneys, who will use the data to generate potential qui tam filings.

Overall, Sternberg said he expected the Open Payments database to have little effect on financial relationships between drug and device manufacturers and physicians and teaching hospitals. “A huge percentage of physicians take money from manufacturers, and I can't see this [Open Payments] tamping down on those relationships,” Sternberg said.

Compliance and Transparency

Glenn Engelmann, an attorney with McDermott Will & Emery LLP, Washington, told Bloomberg BNA that the health-care industry needs to approach the Open Payments database as part of an overall compliance and transparency trend.

“You need to build the mindset of transparency into day-to-day operations,” Engelmann said.

He also recommended that companies ensure that their compliance teams are able to answer questions they might receive on Open Payments data from either the media or consumers.

However, Engelmann said, he thinks the Open Payments database will be viewed infrequently by consumers. It will be used more often by the media, government enforcement agencies and payers, Engelmann said, as well as by whistle-blowers' attorneys.

Their expected interest in Open Payments data has already had a chilling affect on financial relationships between drug and device manufacturers and physicians and teaching hospitals, Engelmann said.

Jennifer Geetter, an attorney with McDermott Will & Emery LLP, Washington, told Bloomberg BNA that “some physicians feel uncomfortable with their private financial relationships being made public,” and they feel they're being held to a higher standard than other industries.

Geetter said she expects the public release of the Open Payments data to result in an initial bout of scrutiny, followed by a normalizing period as the industry grows more comfortable and familiar with the process.

Industry Reactions

Industry groups and associations representing drug and device manufacturers said they support more transparency over payments but remain concerned over a lack of context within the CMS data.

John Murphy, associate general counsel of the Pharmaceutical Research and Manufacturers of America (PhRMA), said although PhRMA supports transparency, it is worried that the Open Payments program might deter important work.

“Collaborations between biopharmaceutical manufacturers and physicians, including clinician researchers and physician scientists, play an important role in advancing innovation and science,” Murphy said in a statement, and the CMS needs to include appropriate context for the Open Payments data “so patients have a clear understanding regarding the important physician and manufacturer collaborations that occur and to help patients make accurate and informed health care decisions.”

Proper context was also a concern of Partners for Healthy Dialogues, a coalition of health-care provider groups and biopharmaceutical and medical technology organizations.

“Collaborations between physicians and biopharmaceutical and medical technology organizations improve patient care and contribute significantly to scientific innovation,” Robert Harbaugh, president of the American Association of Neurological Surgeons and a member of the coalition, said in a statement.

“Patients deserve to have accurate information regarding these interactions and we hope the data released includes sufficient context,” he said.

To contact the reporter on this story: James Swann in Washington at  jswann1@bna.com

To contact the editor responsible for this story: Ward Pimley at  wpimley@bna.com