Senate Guts Bill to Regulate Industry Gifts to DoctorsMay 14, 2008 | Parker Waichman LLP
A Senate bill under revision would require drug makers and medical device makers to publicly report gifts over $500 annually to doctors; the previous bill was more stringent and required all gifts valued over $25 be reported. Penalties for drug and device makers were reduced to fines of between $1,000 and $50,000 per violation, a change from the earlier proposal released last year with higher penalties from $10,000 to $100,000 per violation. The new version pushes back when the bill would go into effect, from 2008 to 2011 and also includes several changes sought by industry, including having the federal law preempt state laws requiring gift disclosure.
The bill would require drug and device makers to submit an annual report to the federal government, which would post it on the Internet. It is unclear if similar legislation would be introduced in the House.
Extravagant gifts given to doctors by industry, such as golf vacations and expensive dinners, have long been criticized as influencing doctors' prescribing habits. Industry says such gestures are part physician education; however, critics say these practices sully independent decision-making. "Transparency brings about accountability and benefits everyone, consumers most of all," said Senator Chuck Grassley, an Iowa Republican. Grassley is sponsoring the bill with Democrat Senator Herb Kohl of Wisconsin.
Some consumer groups disagree. “It is absolutely unacceptable. The whole idea of the registry is it provides a gift-by-gift annotation," said Peter Lurie, deputy director of Public Citizen's health research unit, who testified at an earlier hearing on the topic. "Penalties need to be significant otherwise these companies will treat it as a cost of doing business," Lurie said.
The Pharmaceutical Research and Manufacturers of America, a trade group for big drugmakers, had not taken a position when the first bill was announced, but now says it hopes any legislation not "inadvertently imply that these transactions are inappropriate" and is concerned about the burden placed on doctors and companies to report.
Last year, five medical device makers settled a U.S. Justice Department investigation over gifts and payment practices. Four of them—Zimmer Holdings Inc,, Johnson & Johnson's DuPuy Orthopedics, Smith & Nephew, and Biomet Inc.—agreed to pay a combined $311 million as part of the settlement. The fifth company, Stryker Corporation agreed to change its practices and was not fined.
Meanwhile, there is a growing movement underway among healthcare facilities to ban gifts to doctors by drug companies in an attempt to remove conflicts of interest during the prescription-writing process. SMDC Health System, the Duluth-based operator of four hospitals and 17 clinics across northeastern Minnesota and northwestern Wisconsin purged its facilities of all promotional trinkets with logos from drug companies. It took 20 shopping carts to remove all the products and SMDC plans on shipping the 18,718 items to the West African nation of Cameroon to the health system of the Evangelical Lutheran Church of Cameroon, which has three hospitals and several rural health centers where the advertised drugs are not available. Also, Kaiser Permanente, the country’s largest HMO, Veterans Affairs hospitals, and medical centers at several universities have recently adopted strict conflict-of-interest policies, such as gift bans.