Effect of Physician Payment Disclosure Laws on Prescribing FREE

With the enactment of the Physician Payments Sunshine Provision of the Affordable Care Act, pharmaceutical manufacturers are now required to disclose certain payments made to physicians—for example, payments for consulting, honoraria, gifts, or travel.¹ This law is based on the premise that transparency in these transactions is of public importance and that disclosure acts as a deterrent against quid pro quo exchanges; physicians may be reluctant to accept large payments if these payments are publicly known and perceived as compensation for prescribing certain therapies.^2- 3

To predict deterrence effects of the federal sunshine law, we studied the experience of 2 states, Maine and West Virginia, that previously implemented sunshine laws. We examined the effect of these laws on the prescribing of HMG-CoA [(3-hydroxy-3-methylglutaryl)–Coenzyme A] reductase inhibitors (statins) and selective serotonin reuptake inhibitors (SSRIs), 2 therapeutic classes in which marketing plays an important role because the therapies within each class are pharmacologically and clinically highly substitutable. We hypothesized that, to the degree that physicians were influenced by industry payments to overprescribe branded therapies—and disclosure deterred physicians from accepting these payments—disclosure laws would lead physicians to decrease prescribing of branded statins and SSRIs.

To estimate the effect of the disclosure laws, we used a differences-in-differences or interrupted time-series with control approach, comparing prescribing in states that enacted these laws with states that did not.^4- 5 We compared the experience of Maine, which enacted its disclosure law in May 2004, with that of New Hampshire and Rhode Island, demographically similar states that did not enact these laws. We also compared the experience of West Virginia, which enacted its disclosure law in March 2004, with that of Kentucky and Delaware. In our analysis, we looked at the change in prescribing in the disclosure state, before and after the disclosure law, and compared it with the change in prescribing in comparison states over the same period. A difference in prescribing in the disclosure state relative to comparison states would potentially reflect the impact of the disclosure law.

We obtained information about state sunshine laws from the legal databases Westlaw and LexisNexis (I. Gorlach and G. Pham-Kanter, unpublished data, 2012). We used prescription drug claims from the Thomson Reuters Marketscan Claims and Encounters Database, one of the largest collections of claims of employer-insured individuals, for the period July 2003 to March 2009. We used state demographic information (eg, population, percentage of high school graduates, per capita personal income) from the US Census Bureau's 2002 American Community Survey⁶ to identify comparison states. In our analysis, we included, as controls, indicators of whether a brand had patent/market exclusivity, obtained from the US Food and Drug Administration (FDA) Orange book.

In Maine, the effect of the disclosure law on the use of branded statins was small (Table). Depending on the control state, the law was associated with a 0.8 percentage point reduction (New Hampshire) to a 5.3 percentage point reduction (Rhode Island) in the percentage of statin prescriptions that were for branded therapies. Thus, whereas the percentage of branded statins declined by 45.3% in the nondisclosure state of Rhode Island during this period, the decline in branded prescriptions in the disclosure state of Maine was 50.6% (45.3% + 5.3%). Overall, there were negligible to small effects of the disclosure laws in Maine and West Virginia for both statins and SSRIs.

In the Table, we also report the net effect of the disclosure law on out-of-pocket prescription costs for patients and on total prescription expenditures, including insurer payments. The changes we observed in switching from branded therapies to generics did not translate into statistically significant decreases in out-of-pocket prescription costs or overall prescription expenditures.

One reason we observed minimal switching from brands may be that the reporting that is required does not capture much of the marketing and promotional efforts that can influence physicians. Another reason may be that the reporting categories were too aggregated to distinguish between legitimate and questionable payments. Finally, although these payments were disclosed to state agencies, payment information was not disseminated to the public in an accessible way.

Our analysis has several limitations. First, there may have been other changes happening at the same time as the disclosure laws that could have led to similar net effects, although we are not aware of any such changes. Second, our results are based on whether the comparison states are good comparisons. Although we matched on demographic characteristics, control states may differ from disclosure states in nondemographic attributes that affect prescribing behavior. Third, the use of branded therapies may be proportionately greater in our sample of individuals, who are privately insured, than in the general population. Finally, our outcome measures may not be sufficiently sensitive to detect benefits of the disclosure laws.

Overall, our results suggest that the Physician Payments Sunshine Provision in the federal health care law may have a limited effect on prescribing and on expenditures.