Maker of Costly Drug Spent Heavily on Hospitality for Doctors

Posted July 10, 2015 at 2:30pm

Gilead Sciences Inc., the maker of the costly Sovaldi hepatitis C pill that has attracted congressional scrutiny, bought doctors about $3.6 million worth of food and drink last year, according to a CQ Roll Call analysis of a federal database that tracks how much drug and medical device companies spend on physicians and hospitals.

The Centers for Medicare and Medicaid Services data from 2014 covers about 11.4 million financial transactions attributed to more than 600,000 physicians and more than 1,100 teaching hospitals. Company payments, including consulting fees and gifts, total $6.5 billion, the CMS said in a release.

Known as the Open Payments database, the information is designed to let consumers know more about their doctors’ relationships with companies whose products they prescribe. Spearheaded by Sen. Charles E. Grassley, R-Iowa, the program is a reaction to past criticism of cozy relationships between some health providers and manufacturers.

The database allows users to drill into how much an individual doctor received in consulting payments, or even food and drink, on a certain day. For Foster City, Calif.-based Gilead, among the biggest “food and beverage” expenses for last year was $600.68 for a Phoenix doctor who is a noted activist in treating HIV, a field in which the company sells several products. This payment covered meals consumed over several days, said Michele Rest, a Gilead spokeswoman said in an email.

The Pharmaceutical Research and Manufacturers of America in 2002 put voluntary limits on what kinds of meals drugmakers can offer doctors, after the industry drew criticism for providing hospitality with little focus on teaching physicians about medicines.

“Gilead abides by internal meal and other hospitality limits adopted along with generally accepted industry practices,” Rest wrote in the email. “These hospitality limits are revisited on a regular basis to ensure they are within acceptable bounds and are adherent to the overall goal of offering modest hospitality that is secondary to a legitimate business interaction.”

The database shows about two-thirds of Gilead’s more than 130,000 reported “food and beverage” transactions costing less than $20.

Of these, Gilead reported more than 1,600 transactions listed as costing less than $1.25, with some showing for as little as six cents. These entries reflect the accounting rules for the CMS database, Rest said. Companies are required to report individual expenses of more than $10 to CMS. If multiple individual $10 expenses add up to more than $100 over a year, then all payments under $10 must be reported, including expenses less than $1, such as cups of coffee, Rest said.

Grassley welcomed the release of a new set of payment data.

“There’s a strong public interest in knowing where this money goes and why,” Grassley said in a statement, without identifying specific companies. “Consumers, researchers and other members of the public benefit from disclosure.“

Separately, Grassley and Ron Wyden, D-Ore., as senior members of the Senate Finance Committee, are taking a close look at Gilead’s pricing of Sovaldi, which reached the market with an eye-catching initial price of $1,000 a pill.

The original developer of Sovaldi, which Gilead acquired in 2012, expected to profitably sell the drug in the United States for $36,000, according to Securities and Exchange Commission documents cited by Wyden and Grassley.

But Gilead set the price at about $84,000 per treatment regimen, and the two senators noted that some patients will need longer treatments that would cost twice that amount.

In regulatory filings, Gilead has warned its investors of its potential consequences of the Finance investigation.

“It is both costly and time-consuming for us to comply with these inquiries” from Finance, Gilead said. “We cannot predict the outcome. It is possible that the inquiries could result in negative publicity or other negative actions that could harm our reputation, reduce demand for” some products.

Hepatitis pills such as Sovaldi and Johnson & Johnson’s Olysio helped drive a 13 percent increase in drug spending last year among insurer-managed plans in the United States, a rate not seen in more than a decade, according to a report from the pharmacy benefit manager Express Scripts.

Express Scripts noted that industry research suggests the newer hepatitis pills will raise costs for Medicare’s Part D drug program by $2.9 billion to $5.8 billion in 2015.

The federal Bureau of Prisons also is facing a spike in its costs for caring for prisoners who have hepatitis C, with the average cost to treat an inmate now seen at about $100,000, according to a Justice Department budget document.

Gilead has said purchasers already are pushing for deep discounts for its drugs for hepatitis C.

“Any change in the formulary coverage, reimbursement levels or discounts or rebates offered on our HCV products to payers may impact our anticipated revenues,” the company said in an annual report filed in February with the Securities and Exchange Commission. “We also expect pricing pressure in the HCV market to continue.”