Pharma payments to doctors stay behind closed doors … for now

By Ken Harvey, La Trobe University

Patients will remain in the dark about whether their treating doctors receive payments from pharmaceutical companies that could influence prescribing habits, after a bill aimed at increasing transparency ground to a halt on Monday. The payments may be indirect (though conference sponsorship or funds to travel to or attend conferences) or direct (though consultation fees).

The Senate Finance and Public Administration Legislation Committee rejected the bill, agreeing with government, industry and the Australian Medical Association (AMA) that self-regulation is the preferred approach.

The rejection of legislative approach means that achieving transparency across the therapeutics goods industry will require up to nine industry associations to reform their disparate codes of conduct. Currently, only one (Medicines Australia) has commenced work in this area and at best, it will be 2016 before it reports to the public.

What did the bill propose?

Greens Senator (and medical doctor) Richard Di Natale sponsored the bill – an amendment of the Therapeutic Goods Act 1989 – to restrict the interaction between pharmaceutical companies and medical practitioners. Payments made by pharmaceutical companies to individual doctors would also have to be reported. The aim was to minimise industry inducements that could unduly influence prescribing behaviour.

There is increasing concern that industry-practitioner interaction can result in uncritical uptake of newer, expensive and less-well-evaluated products and the underutilisation of more cost-effective drugs and medical devices. The cost and safety implications of these influences can be significant.

Industry inducements can influence prescribing behaviour. Image from


The bill was referred to the committee for review on March 21, 2013. The committee received 25 submissions, held a public meeting in Melbourne and tabled its report on Monday.

Submissions to the committee by the Department of Health and Ageing (DoHA), pharmaceutical companies, industry and health professional bodies generally opposed the bill and supported self-regulation.

But a number of submissions argued that the current self-regulation model could be strengthened by co-regulation – by requiring companies to adhere to an industry code as a condition of product registration, for instance.

Government reviews

Improving the transparency of financial relationships between pharmaceutical companies and clinicians has been on the government’s agenda for a number of years.

A 2010 government position paper supported industry self-regulation but acknowledged inconsistency among various codes within the therapeutic goods sector. It also noted the inapplicability of codes to non-members of industry associations, such as the Indian generic company Ranbaxy. A Working Group on the Promotion of Therapeutic Products was set up.

A 2011 report of the working group produced a set of high-level principles to assist strengthening and aligning industry codes (and those of health professionals). The working group recommended that, as a condition of product registration, all applicants, including those not a member of an industry association, be required to nominate the relevant code of practice to which it will subscribe.

The government rejected this recommendation, stating its preferred position was to maintain the self-regulatory framework. However, it did concede that legislative measures might be required if voluntary participation failed to deliver the outcomes desired.

In 2013, the government set up a Therapeutic Goods (Codes of Conduct) Advisory Group to assess the uptake of the Working Group’s recommendations and provide an independent evaluation of the effectiveness of the self-regulatory framework.

Government, industry and AMA prefer self-regulatory approach to disclosing financial relationships between doctors and pharmaceutical companies. Image from

Industry reforms

Alongside these government reviews, other influences have been at work.

In 2012, the Australian Competition and Consumer Commission (ACCC) urged Medicines Australia to include the disclosure of payments made by pharmaceutical companies to individual health-care professionals in its next code of conduct revision.

In response, Medicines Australia established a Transparency Working Group. The group has developed transparency principles applicable to all therapeutic goods companies and all health professions and is currently finalising a draft reporting model for consultation. This consultative document is expected to be published in the next few days and then be open for debate until mid 2014.

The final model agreed by Medicines Australia members will be added to the 18th code revision to be put to the ACCC in late 2014. If authorised, data collection would start in 2015 with public reporting in 2016.

International examples

The Senate committee reviewed overseas experience. The US Physician Payment Sunshine Act requires pharmaceutical and device companies to report to the Centers for Medicare and Medicaid Services (CMS) all payments, or other transfers of value, made to individual doctors and teaching hospitals that total more than US$100 per year.

The committee didn’t take the lead of the US or the Netherlands. Image from


Data is to be collected by therapeutic goods manufacturers from August 2013, with reporting to CMS in March 2014 and reporting to the public in September 2014.

The Dutch are already reporting financial arrangements exceeding €500 per year.

Why the bill failed

Many submissions argued that the timing of the bill was inappropriate, given that Medicines Australia’s Transparency Working Group and the government’s Codes of Conduct Advisory Group are currently underway.

The limited application of the bill was also noted: it only addressed pharmaceutical companies and registered medical practitioners, not all therapeutic goods companies and all health professionals.

There was concern that the bill proposed the publication of reports on individual company websites, whereas a single public repository was preferred by consumers and others.

The AMA, industry and others argued the bill would preclude valuable interactions between companies and medical practitioners such as medical education and the conduct of research. Given support for self-regulation by government, industry and the AMA, there was never a doubt the bill would be rejected.

Regardless, numerous questions remain. While Medicines Australia members may vote to include additional transparency in the 18th edition of their code (with public reporting in 2016) there is no compulsion on other industry associations to do so, let alone non-members.

And it remains to be seen what persuasive impact the latest government Codes of Conduct Advisory Group can have. In addition, the question of who will house and pay for a transparency register that is applicable to all therapeutic goods companies and all health practitioners is not yet on anyone’s agenda.

Ken Harvey has received reimbursement for some travel costs associated with his representation of CHOICE (Australian Consumers Association) on Medicines Australia Transparency Working Group. He also represented CHOICE at the Melbourne public hearing of the Senate inquiry into the Therapeutic Goods Amendment (Pharmaceutical Transparency) Bill 2013.

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