Changes in pharmaceutical industry payments to physicians after New Jersey's 2018 restriction

Abstract

The federal government and several states have implemented measures to restrict, ban, and increase transparency of promotional payments from pharmaceutical companies to clinicians who prescribe medications. In 2018, New Jersey adopted a novel rule that included a $10 000 restriction on aggregate annual prescriber compensation for promotional speaking, advisory board participation, and consulting arrangements. In this study, we estimated changes associated with the restriction by comparing payments made to physicians in New Jersey to those in a comparator state, Pennsylvania, where no such rule exists. We found that the New Jersey restriction was associated with no significant difference in the proportion of physicians receiving aggregate honoraria and consulting payments above $10 000 annually as compared to physicians in Pennsylvania. Further research is needed to better understand the effect of state policies restricting pharmaceutical industry payments to prescribers.

Introduction

Pharmaceutical companies commonly make promotional payments to physicians through direct payments (eg, honoraria and consulting fees) and non-cash equivalents (eg, meals) as part of marketing efforts. Over half of US physicians received at least one payment from 2013 to 2022, and most payments are highly concentrated among few physicians.¹

To address concerns that industry payments create conflicts of interest and inappropriately influence prescribing,² the federal government and several states have implemented measures to restrict, ban, and increase transparency of payments. Effective January 15, 2018, New Jersey (NJ) adopted a novel rule that included a $10 000 restriction on aggregate annual prescriber compensation for promotional speaking, advisory board participation, and consulting arrangements.³ Physician compliance with this restriction and its impact on the percentage of physicians receiving high payment amounts is unclear. We estimated whether the restriction was associated with a change in the percentage of NJ physicians receiving high annual payments (>$10 000) as compared to the percentage among Pennsylvania (PA) physicians.

Methods

Open Payments is a federally mandated program,⁴ also known as the Physician Payments Sunshine Act, that requires certain drug, device, and biological manufacturers to report payments and other “transfers of value” to physicians, other clinicians, and teaching hospitals to the Centers of Medicare and Medicaid Services (CMS). Payments include research funding, consulting fees (ie, payments made for advice and expertise about a treatment) and honoraria (ie, payments for brief, one-time provisions of advice or expertise). We used Open Payments to identify allopathic and osteopathic physicians from NJ and PA who received non-research payments for each year from 2015 to 2023 and extracted biannual state-level counts of active physicians for 2016, 2018, 2020, 2022, and 2023 using estimates published by AAMC.⁵ We used ordinary least squares regression to estimate active physician counts for remaining study years (2015, 2017, 2019, 2021). PA physicians were chosen as a control due to proximity to NJ, similarities in physicians per capita and other demographics, and precedence as a comparator for NJ in policy analysis.

Among active physicians in both states, we calculated the annual percentage who received consulting and honoraria payments exceeding $10 000 in aggregate and the median annual payment for these services. While the NJ restriction applied to promotional speaking, advisory board participation, and consulting arrangements, our analysis was limited to consulting and honoraria payments since Open Payments does not distinguish payment for non-educational promotional speaking and advisory board participation. We used a difference-in-differences approach with two-way fixed effects linear regression to estimate the association between NJ's 2018 restriction and subsequent changes in this percentage. We assessed strength of the parallel trend assumption by visual inspection of the outcome variable plotted against pre-treatment years. We used heteroscedasticity-robust standard errors, and significant changes in the difference-in-difference estimator were defined as a two-sided P < 0.05.

Data analysis was conducted using R Studio (version 4.4.2). This study followed the STROBE reporting guideline, and in accordance with the Common Rule was exempt from ethics review because it used publicly available information.

Results

The percentage of NJ and PA physicians receiving payments > $10 000 in aggregate annually was stable over time (Table 1), 0.73% and 1.01% in 2015 and 0.78% and 1.10% in 2023, respectively. The median payment for these services, among those receiving at least one consulting or honoraria payment, increased from $1650 (IQR: 280-4630) and $2500 (IQR: 395-6821) in 2015 to $3675 (IQR: 1165–11 064) and $4225 (IQR: 1500–11 875) in 2023, respectively.

Table 1.

Number and percentage of physicians in New Jersey and Pennsylvania who received consulting and honoraria payments in excess of $10 000 annually and the median sum of all consulting and honoraria payments annually, 2015-2023.

		NJ		PA
	Year	No.	Value	No.	Value
Percentage of physicians receiving > $10 000 in aggregate consulting and honoraria payments, among active physicians in the statea	2015	191	0.73%	396	1.01%
	2016	192	0.73%	411	1.03%
	2017	208	0.77%	464	1.15%
	2018	201	0.74%	474	1.15%
	2019	202	0.73%	502	1.20%
	2020	172	0.62%	425	1.01%
	2021	199	0.71%	453	1.05%
	2022	212	0.75%	472	1.08%
	2023	227	0.78%	490	1.10%
Median sum of aggregate consulting and honoraria payments, among those with at least one consulting or honoraria payment (IQR), in dollars	2015	1399	$1650 (280-4630)	2511	$2500 (395-6821)
	2016	1065	$2250 (350-6860)	2115	$3301 (1000-8944)
	2017	1072	$2800 (500-7306)	2120	$3575 (1000-9832)
	2018	948	$3000 (580-8102)	2124	$3908 (1290-10 325)
	2019	983	$2574 (350-7200)	2171	$4300 (1100-10 057)
	2020	782	$2800 (1000-7975)	1744	$3662 (1500-10 438)
	2021	886	$2563 (1000-8556)	1858	$3575 (1384-9402)
	2022	805	$3760 (1275-10 600)	1810	$3905 (1500-10 762)
	2023	860	$3675 (1165-11 064)	1741	$4225 (1500-11 875)

^aTotal active physician counts for 2016, 2018, 2020, 2022, and 2023 were obtained from AAMC data reports, and physician counts for 2015, 2017, 2019, and 2021 were estimated using ordinary least squares regression.

Mean annual percentage of NJ and PA physicians receiving greater than $10 000 in aggregate changed from 0.74% (SD: 0.03%) and 1.06% (SD: 0.07%) in the pre-intervention period to 0.72% (SD: 0.06%) and 1.10% (SD: 0.07%) in the intervention period, respectively (Figure 1), a non-significant differential reduction of 0.06 (95% CI, −0.18-0.06; P = 0.32) percentage points among NJ relative to PA physicians.

Figure 1.

Trend-over-time and difference-in-differences in annual percentage of active physicians in New Jersey and Pennsylvania who received consulting and honoraria payments in excess of $10 000 annually, 2015-2023. Source: Authors' analysis of Open Payments data and AAMC active physician count estimates. (A) Shows the annual percentage of active physicians in NJ and PA who received aggregate consulting and honoraria payments above $10 000 for each year. The vertical line represents implementation, in January 2018, of a NJ restriction on aggregate annual prescriber compensation for promotional speaking, advisory board participation, and consulting arrangements. (B) shows the mean annual percentage of active physicians in NJ and PA who received aggregate consulting and honoraria payments above $10 000 annually, averaged across the pre-intervention years (2015-2017) and the post-intervention years (2018-2023). The difference-in-differences estimate was calculated using two-way fixed effects linear regression and heteroskedasticity-robust standard errors were used.

Discussion

In this cross-sectional study using difference-in-differences analysis, a 2018 NJ restriction on payments from pharmaceutical companies to prescribers was associated with no significant decrease in the proportion of physicians receiving aggregate consulting and honoraria payments above $10 000 annually. However, only 1% of physicians in NJ and PA received aggregate payments exceeding this amount, suggesting the restriction was likely to have limited impact at the outset. Other limitations include potential underestimation of payments without information on advisory board compensation and non-educational promotional speaking, the possibility for other confounding events that disproportionally affected NJ compared with PA physician payments, the exclusion of non-physician prescribers from our analysis, and the analysis's two-state design which may reduce external validity; future studies could evaluate the impact of the 2018 NJ restriction using other regional states as controls. Finally, since active physician counts for four study years were estimated using regression, our analysis assumed no unexpected year-over-year changes.

While several states have implemented regulations on pharmaceutical industry payments to physicians, the NJ restriction was unique in its inclusion of an aggregate cap focusing on consulting fees, advisory board compensation, and noneducation promotional speaking. One working paper evaluated the impact of NJ's prohibition of meals with a market value > $15 and the prohibition on payments for entertainment or recreational items, finding reductions in food-related payments, compensation outside of consulting, and travel-related renumeration.⁶ In contrast, our evaluation of NJ's imposition of a $10 000 aggregate limit may not have found an association with payment amounts both because of the limited number of highly paid physicians and because enforcement relied on prescribers' licensing boards. In addition, the restriction was put in place after Open Payments was launched, potentially further mitigating any impact. Although one prior study found that the 2013 federal disclosure requirement was associated with an increase in the number but a decline in the value of industry payments to non-orthopedic surgeons,⁷ further research is needed to better understand the effect of state and federal government efforts to restrict, ban, and increase transparency of payments. Greater refinement of payment categories in Open Payments (eg, distinguishing educational payments from non-educational payments) may aid regulators and researchers seeking to assess compliance with state policies.

Author contributions

Study concept and design: All authors. Data acquisition and statistical analyses: N.G.P. Interpretation of data: All authors. Drafting of manuscript: N.G.P. Critical revision of manuscript for important intellectual content: All authors. Supervision: R.S. and J.S.R.

Funding

Mr. N.G.P. received support from the Yale School of Medicine Fellowship for Medical Student Research. The funder had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.

Data availability

The payment data analyzed in this study can be accessed from Open Payments at https://openpaymentsdata.cms.gov/datasets. Annual active physician counts for years 2022 and 2023 are available at: https://www.aamc.org/data-reports/report/us-physician-workforce-data-dashboard. Annual active physician counts for years 2016, 2018, and 2020 were obtained from AAMC State Physician Workforce Data Reports via data grant from the AAMC, which can be made available by the authors upon reasonable request and with permission from the AAMC.

Ethics

Institutional review board approval was not required because the study was based on publicly available information and involved no patient records, in accordance with 45 CFR §46. The Institutional Review Board at Yale University School of Medicine (FWA00002571) exempted the study from review.

Consent to participate declarations

Informed consent was not required because the study was based on publicly available information and involved no patient records, in accordance with 45 CFR §46.