It is rare when the mainstream media reports on the healthcare industry with anything more than either cheap shots (healthcare costs too much, doctors just want to get rich) or waving pom-poms (see how this hospital saves lives, meet this doctor for the poor).

Imagine my surprise when a story from my old hometown–Madras, Oregon–captures the debate and the challenge physician practices and clinics face every day over whether or not to allow pharmaceutical company representatives in the door. The issue is especially timely as this month the Sunshine Act of the Patient Protection and Affordable Care Act kicks into effect, requiring pharmaceutical companies to report payments and gifts to physicians.

Congratulations to reporter Markian Hawryluk and the editors at her newspaper, the Bend Bulletin, for devoting the space to tell this story.

Madras (population 6,000) is a sleepy, rural community in the Oregon high desert. The recent recession resulted in some of the highest unemployment rates in the nation. The patient mix at the Madras Medical Group tells the story: Medicare, 30 percent; Medicaid, 25 percent; self-pay, 15 percent.

There was a concern by several of the doctors at the clinic that banning pharma reps would mean there would no longer be free samples available for needy patients. But when they actually studied the question, they found the “free samples for the poor” argument was a myth, because most free samples went to patients who reasonably could afford the medications. Furthermore, many of the samples offered to the clinic were for medicines that were not on the state Medicaid list.

After taking a hard look at the pharmaceutical rep question, the clinic staff identified two benefits that were hard to give up: Free pens and free lunches.

“The staff liked the pens and mugs they got for free from the reps,” writes Hawryluk. “There were toys they could give their children or the odd collectibles their families would covet. The Viagra pens were particularly popular. But what the staff would really miss were the lunches. Each month when drug reps brought in food, the staff had a chance to sit down in the middle of a hectic day and catch up on their lives and families.”

Madras stopped seeing pharmaceutical representatives in 2006. The doctors believe it has been a change for the good, that they have become better physicians and have taken responsibility for educating themselves about the latest research and trends in prescribing pharmaceuticals. The clinic staff now put together their own lunches, and no longer have the disruption from the constant stream of drug company reps and patients calling for free samples.

But as the article points out, The Madras Medical Group is part of a minority as only 23 percent of physicians practices decline to see pharmaceutical representatives. That number may grow, courtesy of the Sunshine Act, which took effect Aug. 1. The American Medical Association has put together an informative web page that explains the act (and has tools for meeting the act’s reporting requirements). According the AMA, the following financial transfers between pharmaceutical companies and healthcare providers must be reported:

  • Direct. Manufacturers of a drug, device, biological, or medical supplies participating in federal health care programs will have to report to CMS any direct payments or transfers of value to physicians and/or teaching hospitals of $10 or more. However, there are 12 exceptions where a direct payment or transfer of value is not subject to reporting. These include product samples and educational materials that directly benefit patients.
  • Indirect. Transfers that are not made directly to physicians. These are categorized as third party transfers and other types of indirect transfers.
    • Third party transfers are those where a physician does not receive the payment or transfer. For example, a physician (or someone acting on his or her behalf) may specify that a transfer of value should be given to another person or entity, such as a preferred charity.
    • Other types of indirect transfers occur when an entity transfers value to a physician indirectly by way of a third party or intermediary. A good example would be when a pharmaceutical company makes a payment to a physician organization and then requires, instructs, or directs the payment or transfer of value to be provided to a specific physician or intended for physicians (in the latter case without regard to whether specific physicians are identified in advance).

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