Calls for Greater Transparency

The movement within the states to require pharmaceutical companies to disclose their payments to physicians has resulted in a much-wider transparency debate. While no industry executive interviewed believed that the disclosure laws had affected their thought leader compensation strategies, the average hourly rate paid to physicians has consistently decreased each year since 2006 across companies of all sizes.

Some industry leaders proactively responded to obvious calls for more transparency around KOL relationships. Eli Lilly and Merck both announced plans to begin proactively disclosing payments to physician speakers and consultants. The announcements commenced a now growing trend toward transparency of physician payments. Although many pharmaceutical companies may not follow Lilly and Merck's examples, thought leader development executives recognize the side-by-side announcements as a potential leading indicator of the industry's future approach to thought leader relationships. Since Lilly and Merck's announcements in September 2008, Pfizer, Medtronic, and GlaxoSmithKline made similar promises to begin disclosing physician payments.

Although companies must begin cooperating with increased transparency demands, many KOLs adamantly oppose companies disclosing their income. Will increased transparency therefore lead to fewer physician relationships? None of the executives Cutting Edge Information interviewed indicated that that had begun to happen due to payment disclosures. But the fact is that increased transparency already has begun at the state level, and most companies have started developing strategies to work within those new changes.

The pharmaceutical industry recognizes the need for some level of regulation and transparency. Thought leader advocacy rests upon a physician's credibility. Physicians deriving large percentages of their incomes from industry-related activities will inevitably damage their credibility. Relationships with these physicians benefit neither the pharmaceutical industry nor the patients.

Unintended Consequences

Concern is growing in the industry that the full extent of these changes will irreparably damage relationships with key opinion leaders. Data suggests that the industry already has been significantly cut off from many within the thought leader pool. According to an annual survey conducted by Cutting Edge Information, large pharmaceutical companies saw a 26 percent decrease in the number of thought leader relationships over a two-year period. And according to participant responses, large pharmaceutical companies maintained an average 2,029 thought leader relationships in 2007 and only 1,502 in 2008.

Most of the legislative action is directed at curbing abuses in industry-physician relationships and improving long-term patient care. But as more and more regulations and policy changes erode the relationships between physicians and drug makers, it only figures that new research and development will take a hit.

Elio Evangelista is a research team leader at Cutting Edge Information. He can be reached at elio_evangelista@cuttingedgeinfo.com