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Healthcare reformers seek greater transparency in drug prices, marketing, and research


A prominent theme in health-reform efforts is the need for more transparent information about healthcare cost and quality upon which providers and patients can base their treatment decisions. Many federal agencies and state governments are expanding their requirements for pharmaceutical companies to report payments made to researchers and physicians, and for health plans to give beneficiaries more information on drug costs and coverage.

Key Points

A prominent theme in health-reform efforts is the need for more transparent information about healthcare cost and quality upon which providers and patients can base their treatment decisions. Many federal agencies and state governments are expanding their requirements for pharmaceutical companies to report payments made to researchers and physicians, and for health plans to give beneficiaries more information on drug costs and coverage. Many enforcement officials and prosecutors are including disclosure requirements in corporate integrity agreements negotiated with drug and medical-product companies to resolve allegations of fraudulent promotional and pricing practices. Expanded general use of health information technology is likely to reveal information on provider quality and costs and will likely allow for more effective communication of this information to the public. And objective comparisons of treatment results can provide opportunities for consumers to supplement basic safety and efficacy data developed by sponsors seeking FDA market approval of new drugs.


Disclosure is a prominent theme in the FDA Amendments Act of 2007 (FDAAA), which expanded manufacturer disclosure of clinical research activity, research study results, and potential drug safety risks and adverse events. In response, FDA has developed an online system for posting quarterly lists of drugs with potential signals of serious risks. Recent notices cite concerns about the schizophrenia drug aripiprazole (Abilify; Bristol-Myers Squibb/Otsuka), the contraceptive levonorgestrel (Plan B; Duramed), the antifungal treatment terbinafine (Lamisil; Novartis) and the blood pressure drug valsartan (Diovan; Novartis).


A prominent transparency theme is the need for expanded disclosure of gifts and payments given by manufacturers of pharmaceuticals and medical products to healthcare professionals. Such requirements are being enacted by several states, including Minnesota, Vermont, West Virginia, Maine, and Massachusetts. Similar statutes are under consideration in California, Texas, Illinois, and New York, among other states. These laws generally seek information on fees, gifts, and educational grants given to healthcare providers and research organizations, but policies vary considerably as to which expenditures have to be disclosed and when.

Several state governments also seek data on listed drug prices to ensure that their Medicaid programs get the lowest rates. California, Maine, New Mexico, Texas, and Vermont have adopted laws that require companies to submit information on drugs sold in the state to facilitate comparison between average manufacturer prices (AMPs) and Medicaid rates. Information about drug prices and rebates is also being posted at the Medicare website to help beneficiaries understand differences in plan coverage and out-of-pocket costs.

A related trend involves broader disclosure of the financial interests of investigators involved in clinical research. Here the aim is to diminish the role of money in shaping drug development and use and to ensure that potential financial rewards do not bias research results or medical opinions. FDA and the National Institutes of Health (NIH) have broadened financial disclosure requirements for clinical investigators, but some reformers continue to call for stiffer reporting policies and more vigorous enforcement of the rules.

To emphasize the importance of financial reporting by researchers involved in FDA-regulated trials, in January the Health and Human Services (HHS) Office of the Inspector General (OIG) issued a report recommending that trial sponsors disclose investigators' financial information to FDA before studies begin instead of at the time the company files an NDA or BLA. Sen. Charles Grassley (R–Iowa) similarly seeks expanded financial disclosure of industry payments made to scientists receiving NIH grants. Grassley has uncovered information about a number of prominent academics who failed to report millions of dollars in industry payments, particularly several leading psychiatrists involved in testing and promoting widely used antidepressants.


The proliferation of diverse reporting requirements has generated support in some quarters for federal legislation that would expand public disclosure of financial relationships between physicians and medical product manufacturers. In January, Grassley and Sen. Herb Kohl (D–Wisc) introduced an updated version of the Physician Payments Sunshine Act. The bill calls for manufacturers to report payments to physicians that exceed $100 per year (decreased from the previous $500 threshold), as well as any substantial investment interests held by physicians.

The Medicare Payment Advisory Committee (MedPAC) supports such reporting in its March 2009 report to Congress. MedPAC regards such data collection as important for better assessment of whether industry-provider financial relationships have an effect on Medicare prescribing, drug use, and expenditures. MedPAC also wants data on drug samples that are distributed to physicians so that the committee can determine whether the billions of dollars represented by free medications have an identifiable effect on prescribing decisions. To guard against illegal diversion, FDA currently requires companies to keep records of samples handed out by sales representatives but does not routinely collect that information.

Under the Sunshine bill, all of this payment information would be placed into a national database of physician-industry relations. Public and private payors thus would be able to assess ties between industry payments and patterns of physician practice. Many manufacturers are supporting the legislation as a way to gain federal pre-emption of a variety of state disclosure laws that require differing information on payments to physicians.

In anticipation of more diverse and detailed tracking and disclosure requirements, pharmaceutical companies are establishing their own transparency policies and programs. An updated marketing code from the Pharmaceutical Research and Manufacturers of America (PhRMA) advises companies to disclose consulting arrangements with physicians who also serve on formulary committees. Pfizer recently joined Eli Lilly, Merck, and GlaxoSmithKline in announcing plans to post data about financial relationships with healthcare professionals. Some companies are setting total annual caps on payments to individual physicians to reduce possibilities for excessive influence.

Healthcare systems and academic research centers similarly are promoting transparency in researcher-industry relationships. Officials at Harvard Medical School recently said that they were reviewing the school's policy on limiting stock holdings and income from drug and medical product companies for physicians and researchers. Cleveland Clinic announced in December that it would publicly report business relationships of its 1,800 staff physicians and scientists with makers of pharmaceuticals and medical devices. Stanford University, the University of Pennsylvania, and branches of the University of California in Los Angeles and San Francisco have adopted stricter conflict-of-interest policies. Medical societies are moving in the same direction. The North American Spine Society announced in January that the 5,000 spine surgeons in the organization will disclose all financial ties with makers of medical products, and the American Psychiatric Association is under pressure to do the same.

Many physicians, though, are concerned about public access to their prescribing records and practice patterns. Recently they won an appeals court ruling that disclosure of physician-level Medicare claims data violated doctors' right to privacy. Employers and insurers sided with the consumer group that had sued for access to the data and had planned to post it online, arguing that transparency in healthcare quality and cost information can help to identify high-quality and efficient care.

Such legal conflicts reflect the difficulties involved in establishing disclosure and reporting requirements across the nation's healthcare system. Although it may be realistic for physicians to fear misinterpretation of practice data, transparency in healthcare costs, research practices, and medical product performance is considered critical to driving down healthcare expenditures and expanding access to affordable care.

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