All eyes are once again on health care reform. Amidst the present uncertainty, one law seems likely here to stay—the Physician Payments Sunshine Act (“Sunshine Act”). Part of the Patient Protection and Affordable Care Act, the Sunshine Act is the first comprehensive federal legislation mandating public reporting of payments between drug companies, device manufacturers, and medicine. As the law has moved beyond the implementation phase, with about three and one-half years of data accrued, it is an opportune time to evaluate its progress. In this post, we highlight what the Sunshine Act has revealed and its downstream effects.
Of particular interest to the health law bar, counsel in civil litigation are recognizing that the Sunshine Act serves as an important information resource.
Sunshine Act Basics: What the Law Requires
The Sunshine Act builds upon and amplifies trends already favoring increased transparency of industry-medicine financial relationships, such as fraud and abuse settlements requiring certain drug companies to disclose their payments to physicians. But the Sunshine Act goes far beyond previous disclosure programs. It dictates that drug and device manufacturers of products covered by Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP) report annually to the Centers for Medicare and Medicaid Services (CMS) all transfers of value to physicians and teaching hospitals of greater than $10 per instance or $100 per year. Reports must characterize each transfer as a research payment or general payment, and place each general payment in a limited number of categories, such as consulting fees, travel and lodging, and royalty and license fees. This data is then published on a publicly available, searchable website, known as the Open Payments Database. Industry-medicine financial transactions currently posted to the Open Payments Database cover the latter part of 2013 and all of 2014-2016.
Effect (Or Lack Thereof) on Patients & Physicians
Whether due to lack of knowledge of its existence or disinterest due to informational fatigue, few patients are actually accessing the Open Payments Database. Early Sunshine Act data indicates that from September 30, 2014 to August 1, 2015, the Open Payments Database received 1.1 million page views, and data within the database was searched approximately 6.5 million times. These numbers are relatively small considering that there are upwards of 57 million Medicare patients, and the Open Payments Database is intended not just for Medicare but also Medicaid and CHIP.
Worse, patients likely do not know what to make of the disclosed financial ties. The Open Payments Database lacks important contextual and comparative information necessary for patients to make sense of the data. While payment reports include the applicable payment category of the transaction, end-users do not necessarily understand the fuller context just from the category descriptor, such as what a “consulting” transaction really was about.
Furthermore, research suggests that financial ties disclosures have limited sway over patient and research subject decision-making. While investigations suggest that the majority of patients and subjects say they wish to know about financial ties, only smaller numbers indicate that this information would actually affect their decision-making.
While physicians would seem a better audience—faced with public disclosure, they may decline certain transactions and reevaluate their own prescribing patterns—it remains to be seen whether increased transparency really impacts physician behavior in this manner. Many physicians have had only limited interactions with the Open Payments Database and report having distrust and skepticism about the utility of Sunshine Act disclosures. Further, there is no indication of major changes year-to-year in terms of number of physicians reported or overall general payments spending, suggesting that any such blanket deterrence more likely had stronger impact in the run-up to the Sunshine Act data going public than afterward.
Experience with the few state sunshine laws casts additional doubts. For instance, one study looked at prescribing rates of particular brand name drugs in Maine and West Virginia. The researchers found almost no difference in prescribing rates before and after each state’s sunshine law went into effect. It is, however, unclear how generalizable these state disclosure programs are to the Sunshine Act.
What’s Been Learned
Despite the Sunshine Act’s many challenges, interesting trends have emerged from the reporting data.
First and foremost, the Sunshine Act has confirmed that financial relationships with industry pervade medicine. Nearly half of all physicians receiving some form of industry payment in 2015. However, the financial ties vary considerably, in both frequency and size, across clinical specialties. In some fields, like orthopedic surgery, a large number of physicians have some form of financial relationship with industry (60% in 2013) and the mean amount of general payments received by each physician is relatively high ($7114), while in other fields, like pediatrics, only a smaller relative number of physicians have reportable ties to industry (23%) and the average dollar amounts involved are also relatively low ($358). Likewise, payments also vary by gender. A greater number of male physicians (50.8%) receive industry payments than female physicians (42.6%), and on average these payments are substantially larger ($5031 compared to $1390). Additionally, Sunshine Act data indicates that within many medical specialties large dollar amounts flow to a few top earners. For example, within obstetrics-gynecology, ten percent of practitioners attracted 92% of the total value of general payments in 2014.
Promising Applications of the Data
Promising applications of Sunshine Act data by secondary audiences are already occurring. Two of the most notable include the Sunshine Act’s use as a tool for regulatory enforcement and as a resource for litigation counsel.
The Sunshine Act has helped regulators enforce health care fraud and abuse laws by revealing previously unknown financial ties or outliers that warrant further scrutiny. A dramatic example is the ongoing saga of Insys Therapeutics. Insys markets Subsys, a schedule II opioid painkiller intended for cancer patients already taking other painkillers but still in distressing pain. Given Subsys’ serious risks of addiction, indiscriminate prescribing of Subsys for a much wider range of patients raised serious concerns. Various regulatory investigations gained momentum after the first batch of Sunshine Act data revealed that Insys had been paying speaker fees, travel, meals, and making other payments to the nation’s top prescribers of Subsys, several of whom had previously been disciplined by state medical boards. So far, enforcement actions have included Insys’ $1.1 million settlement of charges regarding the conveyance of improper financial incentives to physician-prescribers, a guilty plea by Dr. Gavin Awerbuch, a top prescriber of Subsys with extensive financial ties to Insys, for Medicare fraud, and the filing of racketeering charges against former Insys executives.
Savvy lawyers are already recognizing that Open Payments Database information provides powerful evidence in civil litigation. In 2014, Insys’ investors filed a class action alleging that the company violated federal securities laws by making misleading statements about and failing to disclose its marketing practices for Subsys and the risk of regulatory scrutiny. The complaint expressly referenced Open Payments information. (See Amended Complaint at ¶58-59, Larson v. Insys Therapeutics, Inc., No 2:14-cv-01043-GMS (D. Ariz. Oct. 27, 2014).). This action resulted in a settlement of over $6 million.
Sunshine Act data seems particularly ripe for use in personal injury litigation. Industry-medicine financial relationships, presented with the inference of biased decision-making, can be explosive evidence in support of malpractice and products liability claims. For example, in a recent tort suit against Bristol-Myers Squibb Co. the plaintiff alleges that Bristol-Myers failed to sufficiently warn of the risk of gambling and other compulsive behaviors associated with use of the company’s psychiatric drug, Abilify. To further buttress allegations that Bristol-Myers’ improperly promoted the drug while downplaying its risks, the complaint referenced Open Payments Database records showing that the company made $10 million in payments related to Abilify to over 21,000 physicians. (Complaint at ¶ 76, Sears v. Bristol-Myers Squibb Co., No. 1:16-cv-00065-CJO-BAM (E.D. Cal. Jan. 15, 2016).). In October 2016, the suit was consolidated with over twenty similar actions into a pending multi-district proceeding.
Open Payments data also seems ripe for False Claims Act and related health care fraud litigation. These lawsuits often involve allegations that manufacturers encouraged ordering of drugs and devices for unapproved uses. Sunshine Act data calls into question how manufacturers in fact promote the products and for which uses. Indeed, pending complaints, relying on Open Payments Database information, suggest that manufacturers used financial ties with physicians for improper promotion of spinal devices not approved for clinical use by the FDA and of testosterone replacement therapy drugs for off-label uses. (First Amended Complaint at ¶136, United States v. Medtronic, No. 2:15-cv-01212 (C.D. Cal. 2015); Third Amended Complaint at ¶ 747, 999, 1036, Medical Mutual of Ohio v. AbbVie Inc., No. 1:14CV08857 (N.D. Ill. 2014)).
While much of this litigation is still pending, these cases nonetheless make clear that the Sunshine Act is already affecting litigation strategy. These lawsuits are likely just the beginning, and litigation will likely continue to subject disclosed financial ties to exacting scrutiny and increase pressures on manufacturers and providers to defend certain transactions.
Richard S. Saver is Arch T. Allen Distinguished Professor of Law at UNC School of Law and Professor (Secondary Appointment) at UNC School of Medicine. MacKenzie Dickerman is a rising second year student at UNC School of Law and a member of the North Carolina Law Review.