Life Science Compliance Update

July 02, 2015

Inside the Open Payments Data: Two-Thirds of Transactions Worth $20 or Less; Research and Royalties Account for Majority of Total Value


Yesterday, the Centers for Medicare and Medicaid Services published the second year of Open Payments data, detailing the transfers of value made from pharmaceutical and device manufacturers to physicians and teaching hospitals in 2014. The top line total has received most of the headlines—“docs get $6.5 billion from drug and device companies.” 
Here, with data courtesy of Open Payments Analytics, we break down some of those payments in detail, with more to follow in subsequent articles.

Small Payments Fill the General Database:

Overall, there were 11.41 million records published, covering 607,000 physicians and 1,121 teaching hospitals. Small “in-kind” transfers of value—mostly meals, some educational materials, and occasional travel—dominated the number of transactions in the Open Payments records, and were often the most cumbersome for companies to track at the individual physician level. As found in the graph below, the majority of the payments in the general database (66 percent) were for transfers of value of $20 and below. Eighty-seven percent of payments were for transfers of $100 or less. We also found that almost 150,000 transactions were under a dollar; 591 were for one penny. 

  General Payments by size


Research and Royalties Make Up Majority Of Total Pay

Of the $6.49 billion in transfers of value during 2014, more than $4 billion was attributed to research grants or payments associated with royalties or licenses. For example, the Modern Healthcare article discussing “Which companies disclosed the most to Open Payments,” noted that the vast majority of Genentech’s payment total reflected royalty payments to City of Hope, “the California comprehensive cancer center that holds the patents on research underlying Genentech's biggest drugs, Avastin, Rituxan and Herceptin.”  Royalties are also paid to, for example, orthopedic surgeons who invent surgical products.  

On the research side, manufacturers spent a total of $3.23 billion on research payments and associated funding. This included $705 million to teaching hospitals and $2.52 billion listed under a specific physician’s name. CMS notes that this physician research payment total includes: “payments where the company making the payment has named a physician as the primary recipient, and payments to a research institution or entity where the [ ] physician is named as a principal investigator on the research project.”

Research payments can be especially prone to misinterpretation given that an entire institutional research grant—covering practice overhead, salaries for research staff, and a host of other expenses—can be attributed to one principal investigator physician who receives a salary. As academics from Johns Hopkins pointed out last year, the cost of donated drugs to clinical trials are also attributed as “research payments.”

Top Five Nature of Payments Categories By Value

Nature of Payments

Total Transactions

Value of Payments

Average Payment

Research

 585,079

 $3,225,148,909

 $5,512

Royalties

 14,291

 $803,485,046

 $56,223

Compensation for services other than consulting, including serving as faculty or as a speaker at a venue other than a continuing education program (this was a catch-all category for certain payments, including large acquisition payments)

 231,456

 $632,444,040

 $2,732

 

Consulting Fee

 126,276

 $369,443,088

 $2,926

Food and Beverage

 9,865,494

 $224,542,921

 $22.76


Year Over Year Changes

While the first year of Open Payments covered only five months of data (payments from August 2013 - December 2013), and included notable data discrepancies, the year over year fluctuation is interesting. We averaged out the monthly payments for general and research payments for a more easily discernible yearly change. Broadly, it looks like general payments went up about 10 percent (which may be due to the fact that almost 100 more companies are reporting in 2014 over 2013), and research payments went down by about 13 percent. As we noted yesterday, investment holdings by physicians look to have taken a hit in 2013 v. 2014, perhaps as a result of the Open Payments scrutiny. 

Avg monthly payment

 

Type of Payments

2013 – 5 months
(8/2013-12/2013)

2014 – 12 months  
(1/2014 – 12/2014)

General

$972 million

$194 million/month

$2.56 billon

$213 million/month

Research

$1.55 billion

$310 million/month

$3.23 billion

$269 million/month

Ownership

$908 million

$703 million

Total

$3.43 billion

$6.49 billion

  ----

We will be offering research payment related analysis in our next article. A full detailed analysis of the open payment data will be available in the August issue of Life Science Compliance Update.  Thanks to Open Payments Analytics for providing the data for this timely analysis.  

 

 

June 30, 2015

Physician Payments Sunshine Act: CMS posts 2014 Open Payments Data Totaling $6.49 Billion

Open Payments

The Centers for Medicare & Medicaid Services (CMS) today published 2014 Open Payments data about transfers of value by drug and medical device makers to health care providers. The data includes information about 11.4 million financial transactions attributed to over 600,000 physicians and more than 1,100 teaching hospitals, totaling $6.49 billion. This is compared to 4.3 million records attributed to 470,000 physicians and 1,019 teaching hospitals covering $3.43 billion dollars, according to CMS’s summary data.

Like last year, the datasets are available in three separate spreadsheets—general payments, research payments, and ownership interests. Interestingly, it appears ownership interests in life science companies by physicians have dropped around 23 percent.  

Type of Payments

2013 – 5 months
(8/2013-12/2013)

2014 – 12 months  
(1/2014 – 12/2014)

General

$972 million

$2.56 billon

Research

$1.55 billion

$3.23 billion

Ownership

$908 million

$703 million

Total

$3.43 billion

$6.49 billion

Acting CMS Administrator Andy Slavitt said, “Consumer access to information is a key component of delivery system reform and making the health care system perform better. In year 2, Open Payments is now a highly searchable resource to provide transparency to over 1 1/2 years’ worth of financial transactions between drug and device companies and physicians and teaching hospitals. This is part of our larger effort to open up the health care system to consumers by providing more information to help in their decision making.”

Increased Validation Rates from the Rocky 2013 Roll-Out

For all 2014 and 2013 data, CMS was able to validate that 98.8% of all records submitted in the Open Payments system contained accurate identifying information about the associated covered recipient. Records that could not be verified to align to an individual covered recipient were rejected and were not processed by the system. CMS will continue to update the Open Payments website annually with data collected from the previous year.

Today’s data posting also includes a group of 2013 submissions that could not be verified before the first data publication last September, 2014, CMS states.

Dr. Shantanu Agrawal, CMS deputy administrator and director of the agency’s Center for Program Integrity, said the agency has improved the Open Payments’ user interface to highlight valuable information for people who want to view payments and other financial transactions involving doctors, hospitals, and drug and medical device makers. Other consumer website upgrades are expected in late summer.

“CMS’ role is to facilitate discussion and analysis of the data by making it publicly available for consumers and researchers,” Agrawal said. “CMS has improved our interfaces for both collecting and reporting this data about compensation and other payments between drug and medical device manufacturers and physicians and teaching hospitals.” 

“We expended a tremendous level of effort to resolve inconsistencies in the reporting of these 2013 transactions and are very pleased to be able to align them with the rest of the payments,” Agrawal stated. 

Review and Dispute Activity

The press release indicated that registered physicians and teaching hospitals reviewed nearly 30% of the total value of the reported data. “We are pleased that so many providers participated this year, but will continue to work with doctors and hospitals to increase their review rate,” Agrawal said.

An analysis of the physicians and teaching hospitals included in reported data reveals that there are distinct differences between those that have registered and those that have not. For example, the median value of total payments made to registered physicians is $3,644, compared to $747 made to non-registered covered recipient physicians. View our article on some difficulties that remain in the review and dispute process. 

"CMS will update the Open Payments data at least annually to include updates to data disputes and other data corrections made since the initial publication," the press release states. 

---

We will provide continued coverage of Open Payments in the coming days as we delve into the database, though we will leave you with our favorite stat so far. The general database lists 590 payments of less than a penny and a whopping 158,402 payments of $1 or less. 

Detailed analysis of the Open Payments data, including useful trends and comparisons from 2013 to 2014 will be available in August's issue of Life Science Compliance Update

Newsletter


Preview | Powered by FeedBlitz

Search


 
Sponsors
July 2015
Sun Mon Tue Wed Thu Fri Sat
1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30 31