By Rebecca Adams and Adriel Bettelheim, CQ Roll Call
October 1, 2014 -- Over the last five months of 2013, the biotech firm Genentech Inc. paid more than $130 million in consulting fees, royalties, licenses, and other general disbursements to doctors and teaching hospitals across the United States, including $75.4 million to the City of Hope National Medical Center in Monrovia, Calif.
The medical device maker DePuy Synthes and pharmaceutical giant Pfizer Inc. similarly laid out more than $20 million over the same period while manufacturers including Zimmer Holding Inc., AstraZeneca Pharmaceuticals LP and Arthrex Inc. also gave large sums, according to a federal database of industry payments reviewed by CQ Roll Call.
The transactions are legal and, in many cases, may hasten medical research, But they also illustrate the pervasive financial ties between health industry manufacturers and providers that members of Congress such as Sen. Charles E. Grassley, R-Iowa, have long contended may unduly influence care decisions.
The Centers for Medicare and Medicaid Services on Tuesday offered the most detailed look at the financial arrangements to date, identifying $3.5 billion worth of transactions for the final five months of 2013. The agency detailed 4.4 million transactions involving 546,000 physicians and almost 1,360 teaching hospitals.
The disclosure stemmed from the 2010 health care law (PL 111-148, PL 111-152) and capped a nearly decade-long transparency push by Grassley and like-minded lawmakers, who included language in the law requiring manufacturers to report to the federal government any gifts or payments worth at least $10 that they give physicians.
CMS broke down the payments into general payments, including speaking and consulting fees, meals and travel; research grants; and investment or ownership stakes held by doctors and hospitals. The agency said it would issue annual updates and create a website that consumers can use to track providers.
Physicians’ groups that lobbied for months to delay the release questioned the accuracy of the information.
“While we appreciate the efforts of the Centers for Medicare and Medicaid Services to verify the identification of physicians in each report from industry and to de-identify reports where there were discrepancies, we remain very concerned about the accuracy of the data released today,” the American Medical Association said in a statement. The physician trade group said about 550,000 physicians were affected by the disclosure requirements.
Drug industry officials said their marketing practices are shifting away from direct payments to providers and suggested the health law was not the only driving factor.
“Industry practices have changed in general to meet the demands of the changing marketplace,” said Pharmaceutical Research and Manufacturers Association general counsel John Murphy in an interview.
The $130 million in payments from Genentech, a unit of Swiss health giant Roche Group, were more than three and a-half times more than those from DePuy, a subsidiary of Johnson & Johnson and the second-biggest giver among manufacturers, at $35.6 million, according to a CQ Roll call analysis of the five months of federal data. Pfizer was third at $20.5 million, followed by Zimmer Holding at $17.3 million.
City of Hope topped the list of health system recipients of general payments over that period, netting $122.7 million, according to the data. General Hospital Corp. took in $12.5 million over the same period while the Denver Health and Hospital Authority collected $5.35 million.
Genentech said the payments to City of Hope were royalties awarded through a patent licensing agreement based on sales of Genentech and Roche products, including the cancer drugs Herceptin, Avastin and Rituxan, which is also used to treat rheumatoid arthritis.
About 58 percent of the company's spending that was reported in the database was to City of Hope, said Genentech spokeswoman Nadine Pinell. Of the remainder, about 85 percent was for research and development costs.
"Our ability to engage with doctors, researchers and opinion leaders in robust dialogue on approved and investigational medicines is vital to our research," said Pinell.
Device manufacturer Zimmer Holdings paid more than $4 million to the Cleveland Clinic and more than $5 million to Massachusetts General Hospital, according to the data. Zimmer spokeswoman Monica Kendrick and Cleveland Clinic spokeswoman Eileen Sheil said the payments were licensing fees for a hip device but declined to elaborate. Massachusetts General officials said they needed more time to review the data.
Forty percent of the 4.4 million transactions were stripped of identifying details because CMS officials were uncertain the data could be connected to a single physician or teaching hospital after reviewing three different databases. Those payments are expected to be re-published in an identifiable way next year, CMS deputy administrator Shantanu Agrawal said on a call with reporters.
Details of another 190,000 payments were not released because manufacturers requested a delay of up to four years citing ongoing research or pending approval of a product by the Food and Drug Administration. Another 9,000 records were withheld because a physician or hospital disputed the accuracy of the data during a 45-day review period.
About 26,000 physicians and 400 teaching hospitals registered in a system to review payments.
Insurers used the data release to question the financial arrangements, specifically whether they are benefiting the drug industry.
"These payments, while not nefarious in every case, are a perfect symbol for the misaligned incentives in our health care system,” said America’s Health Insurance Plans spokesman Brendan Buck. “While most health care stakeholders are working together to find ways to lower costs, drugmakers remain focused on strategies to keep them inflated.”
The website CMS set up to review the data was unusable at times on Tuesday. The site also did not combine the contributions of some corporations' business units, complicating efforts to identify the highest spenders. CMS officials said they will create a second, more consumer-friendly website within a month so patients can have an easier time searching the records.
“This is just the first phase,” said Agrawal of CMS.