When Your Doctor is Selling Something: Curbing Corporate Influence in the Physician-Patient Relationship

By Tayyiaba Farooq

Tayyiaba Farooq, Public Citizen Access to Medicine intern

Patients put trust in their physician to make the best decision they can for their health. But what happens when your physician is influenced by commercial interests?   

Physicians are at risk of compromising their duty to serve their patient’s interests when they accept payments from the corporate healthcare industry. From the free ‘swag’ received throughout medical school to complimentary dinners, lodgings and gifts provided when becoming practicing physicians, it is clear the influence of corporate entities often begins at the start of a physician’s career and continues throughout. As a result, their clinical judgment can become crowded with outside actors, all pursuing their commercial agenda. Oftentimes such obtrusions leave the patient behind.

In order to expose, and perhaps dissuade such relationships, the federal government has imposed certain transparency requirements to ensure the public is aware of potential conflicts of interest when it comes to health care.  

The Physician Payments Sunshine Act, which took effect in 2013,  is intended to cast a spotlight on industry payments to physicians. This law requires manufacturers of drugs, medical devices and other medical supplies to report their financial relationships with physicians and teaching hospitals. This information is collected by the Center for Medicare and Medicaid Services (CMS) through a publicly available database called Open Payments.

Based on an analysis of the first set of data released in 2014, physicians who receive payments are two to three times more likely to prescribe specific brand name drugs than those who do not accept such payments. Even if a physician has received one sponsored meal from a pharmaceutical company, the likelihood of him or her prescribing the brand name drug over its generic version increases significantly. Such payments fuel a “cycle” in which the physician is incentivized to prescribe brand name drugs and then are further rewarded by the industry. The harm from these relationships translates to exorbitant healthcare costs and irresponsible prescribing practices, possibly prescribing medications and recommending procedures that don’t fit the patients’ exact needs. 

Currently, the Sunshine Act applies to Physician-Owned Distributorships (PODs).  PODs are groups where physicians both sell and use their own medical devices in the surgeries they perform, thus deriving a profit off their patient’s use of the said medical device. In other words, your doctor is also the salesperson making money off the medical devices she or he recommends to you.  

For example, consider spinal fusion surgery for back pain. Though such surgeries are typically reserved for severe back problems, if your surgeon advises you to receive a spinal implant, you may agree regardless of the severity of your condition. In this instance, if the same surgeon sits on the board of a company that is supplying the implants for your surgery, they will likely financially benefit from your procedure. Such an arrangement can lead to surgeons putting their own financial gain above the health of their patients by recommending surgeries that may be medically unnecessary. The structuring of these PODs allows surgeons to exploit these situations, using their own products within their practice. 

Such an arrangement is a cause for concern as it exhibits a clear conflict of interest; physicians have a strong incentive to purchase supplies from their own POD. 

A 2011 investigation by the Office of Inspector General (OIG) of the Department of Health and Human Services (DHHS) found that the number of spinal surgeries performed by hospitals purchasing medical devices from PODs were three times higher than those performed at hospitals overall. It is likely that some of these patients were subjected to unnecessary medical procedures or to procedures using more costly implants to increase the number of these transactions and therefore physicians’ personal profits. This could be one reason why healthcare costs are increasing and overburdening the current system. 

While PODs fall under the jurisdiction of the Sunshine Act, there is no enforcement of their reporting requirements, despite increasing suspicion of noncompliance by PODs.

In 2013, a Special Fraud Alert was issued by the DHHS, which reported that the POD model of physicians benefiting from their medical device sales of PODs may be in violation of the federal anti-kickback laws. In the alert, it was stated that PODs “produce substantial fraud and abuse risks and pose dangers to patient safety.”The anti-kickback statute from the Social Security Act maintains that medical referrals made to patients under the influence of a financial incentive are a criminal offense.

The concerns raised by this fraud alert were also brought up in an updated report from the Senate Finance Committee in 2016. The report drew attention to the fact that there is limited information on the financial dealings of PODs, and therefore much cannot be done to regulate their actions. Additionally, it appeared that these distributorships would restructure their organization and operations to bypass various laws; under the guise of employees rather than owners, physicians were able to slip under the radar of the Sunshine Act. The committee recommended that the DHHS pursue a deeper investigation into these entities in order to determine if their existence within the healthcare space is legitimate.

Most recently, these concerns were again raised by the Senate Finance Committee in March of 2019. Committee chairman Sen. Chuck Grassley (R-Iowa) and ranking member Sen. Ron Wyden (D-Ore.) sent a joint letter to the DHHS OIG and the administrator of the CMS asking them to investigate PODs’ compliance with the Sunshine Act. In the letter, they asked for the extent to which PODs abide by the regulations set forth by the Act and what measures are being taken to ensure the compliance of these entities. Though a deadline of April 15, 2019, was set by the committee, they received no response. Since then no further action has been taken by the federal government on this issue.

We echo Sens. Grassley and Wyden’s call. The U.S. government should hold PODs, and indeed other group purchasing organizations, accountable. When such transactions are left unmonitored, the physician owners of these distributorships can guarantee a massive income for themselves, profiting off of the suspect procedures they perform. Without sufficient oversight, the proliferation of these PODs will continue and the lives of patients will continue to be at risk. In order to maintain trust between patients and physicians, the government must step up to inspect and regulate the malicious business practices of these distributorships.