Industry payments to doctors show impact of royalties

Otley Dr. Clark Mayo.jpg
Dr. Clark Otley
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Drug and device makers paid American doctors and hospitals $6.5 billion in 2014, according to 2014 figures released T uesday by the Centers for Medicare & Medicaid Services.

The agency reported that $3.23 billion of the total was given to support research, while $2.55 billion of the national total was given to doctors or teaching hospitals as payments for speaking fees, consulting fees, travel expenses and meals. Another $700 million was paid to doctors as part of ownership in a product. In all, the makers of the nation's pills, medical devices, biological drugs and medical supplies sent payments to more than 600,000 doctors during 2014, with 141 doctors receiving payments of more than $1 million.

Medical device royalties dominated the funds sent to Mayo Clinic doctors from private industry in 2014.

According to a Post-Bulletin analysis, Mayo Clinic in Rochester and its physicians received about $13 million in more than 4,000 transactions from private industry last year. More than 2,200 Rochester-based doctors received payments. While many of the payments are for small sums, Rochester doctors took part in more than 150 transactions exceeding $10,000 each. 

Orthopedics tops list


The largest Mayo Clinic recipients of industry funding were members of the department of orthopedics, with department chairman Dr. Daniel Berry earning $2.5 million for himself and his employer in 60 transactions, ranking him 217th of all recipients in terms of payments in the U.S. The payments came largely from one device maker, DePuy Synthes, a division of Johnson & Johnson. Since royalties are shared with the clinic, most of that money went to Mayo Clinic.

Another Mayo Clinic orthopedic surgeon, Dr. Shawn O'Driscoll, had the second-highest payment total among Mayo doctors, earning more than $2 million in royalties that he also shared with the clinic. With Mayo orthopedic clinicians adept at helping to develop new products, 42 of the top 50 payments within Rochester went to members of the department of orthopedics.

"We are very proud of our invention activity," said Dr. Clark Otley, Medical Director of Mayo Clinic Ventures. "We invent all different sorts of devices, tests, imaging technologies, drugs and information technologies. We feel we handle them very responsibly through a royalty sharing plan which brings a large portion of the revenue back to Mayo Clinic and our three shields."

Otley said that Berry's royalty revenue reflects the popularity of an uncemented hip replacement, calling it "one of the best designs over the past 10 years. … Our orthopedic surgeons are outstanding inventors," he added. "Many of the most successful implants in the world today are generated from Mayo Clinic research."

DePuy Synthes spent more than $58 million on royalties in 2014, making the Mayo clinicians' receipts a small portion of the funds the firm shared, often as royalties, with orthopedic surgeons nationwide. At $68 million in outlays, Medtronic's Memphis-based spine division outspent DePuy, however, including nearly $10 million for royalties that went to one Colorado-based surgeon.

Other specialties among the top earners within Mayo included clinicians employed by the departments of cardiology, anesthesia and hematology.

Payment transparency

The numbers were the second release of figures via the Open Payments website and the first release of data to cover an entire calendar year. Last September, CMS released data for the final five months of 2013, a figure totaling $3.4 billion in payments, though that data was heavily redacted. Open Payments figures for 2014 were far more comprehensive, releasing 99 percent of all payments reported to the agency.


Drug and device makers have been required since 2013 to submit records of all payments made to doctors and hospitals accepting Medicare and Medicaid. Doctors are given the opportunity to review the figures and challenge them if they believe they are erroneous. Drug and device makers still do not have to report funds given to a hospital to sponsor Continuing Medical Education services.

The Open Payments website was launched by CMS as required by the Physician Payments Sunshine Act, a provision passed in 2010 within the Affordable Care Act. It was created to enable greater transparency in the financial relationships linking doctors and hospitals with the drug and device industries, as well as to address concerns about the effects on clinical practice of revenue generated from entities with an interest in the use of particular product.

Medical societies tout relationships with industry as a pathway to innovation, and laws are in place that target kickbacks in medicine. The Sunshine Act was meant to draw attention to the subtle ways in which a financial relationship has the potential to cause unrecognized bias in clinical decision making, impacting safety and costs.

"One concern is the degree to which the institution has become dependent on this income, or that the individual gets incentives from the institution to earn this income," said Brown University clinician Dr. Roy Poses, president of the Foundation for Integrity and Responsibility in Medicine and co-founder of the Health Care Renewal blog. "So do these payments influence the direction of research at the institution, or the way the institution teaches which patients get orthopedic devices, or how doctors at the institution actually decide on the use of these devices."

"Mayo has a very strict commitment to honest and ethical research and clinical practices," Otley said. "Our conflict of interest review board has very clear policies of what clinicians can and cannot do, for the protection of our patients and our scientists."

Mayo policy

Mayo Clinic has a policy prohibiting the receipt by its doctors of gifts. Mayo does not allow drug or device-promotion activities either, including participation on so-called speakers' bureaus, among other restrictions. All research funds from industry go to the clinic and Mayo doctors face an unusual restriction within health care in that they cannot consult for companies whose products they are researching. Mayo doctors can receive consulting fees, however, as well as honoraria for legitimate activities and travel or lodging expenses from private industry if the relationship is approved by Mayo and meets a host of requirements.

The Clinic says that these constitute ones of the tighter conflict of interest policies in the country and that high returns in the service of new designs is a badge of honor.


"If you have an advance in technology that is extremely valuable or effective, that would be reflected in the royalties," said Dr. Richard Ehman, vice-chairman of the conflict of interest committee at Mayo Clinic. "The royalties just reflect the value of the innovation to patient care."

One little known detail is that the Open Payments site owes its creation to early efforts at transparency within Minnesota, as well as their impression upon a senate staffer named Paul Thacker . A former army specialist and aide to Iowa republican Sen. Charles Grassley, Thacker worked under the then-chairman of the Senate Finance Committee as he investigated NIH-supported researchers receiving funding they had failed to report to the agency.

Thacker had persuaded the committee to look into the question after seeing a 2007 article in the New York Times referring to a Minnesota Pharmacy Board report on drug industry payments to psychiatrists in the state. The article had found psychiatrists led all specialties in drug industry funding in Minnesota at the time, and that those who received the most funding from drug companies were also most likely to prescribe the controversial use of antipsychotic medications off label to children.

According to an investigation last year in the Los Angeles Daily News, those medications are now prescribed to one in four adolescent foster children in the California foster system. The 2007 article, however, singled out Mayo Clinic for having taken a child profiled in the piece off the drugs in question, and for not allowing its clinicians to give drug promotion talks.

Related Topics: MAYO CLINIC
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