Health Policy$ense

Shining a Light on Relationships between Industry and Patient Advocacy Groups

McCoy and Kanter on extending the Sunshine Act

Financial conflicts of interest between the drug and device industry and physicians have long been recognized, but the frequency and scope of such conflicts between industry and patient advocacy organizations (PAOs) are less understood. A recent investigation by Kaiser Health News found that 14 drug and device manufacturers donated more than $116 million to PAOs in 2015, exceeding payments for lobbying activities by over $50 million.


Matthew McCoy, PhD, Assistant Professor of Medical Ethics & Health Policy, and Genevieve Kanter, PhD, Research Assistant Professor of Medicine and Assistant Professor of Medical Ethics & Health Policy

Under the federal Sunshine Act, drug and device companies must disclose payments to doctors and teaching hospitals, but do not have to report payments to PAOs. In a recent commentary in the American Journal of Public Health, LDI Senior Fellow Matthew McCoy points out that this lack of disclosure raises serious ethical concerns, and argues that relationships between industry and PAOs demand greater transparency and accountability. McCoy calls for the extension of the Sunshine Act to require public reporting of industry payments to PAOs. In a responding editorial in AJPH, LDI Senior Fellow Genevieve Kanter notes that expanding the scope of the Sunshine Act to industry-PAO relationships may be more complicated than McCoy suggests. Kanter outlines practical challenges to extending the law and considerations for next steps.

McCoy identifies ethical concerns raised by financial ties between industry and PAOs. Each entity has different objectives: drug and device companies’ primary objective is to generate profits, while PAOs’ primary objective is to advance the interests of patients and caregivers. PAOs that accept funding from industry could be put in a position that pits funders’ interests against those of their constituents. These conflicts of interest are concerning because they have the potential to bias PAO decision-making. For PAOs that interact directly with patients, biased advice from industry ties can lead patients to make suboptimal decisions for their own care. More concerning, however, is the aggregate effects of bias across PAOs. Since PAOs carry significant political influence, the subtle, systematic shift of health policy goals toward industry interests and away from patient interests has far-reaching consequences.

McCoy highlights multiple benefits of extending the Sunshine Act. Requiring industry to report payments to PAOs in a centralized, open database would enable policymakers, journalists, and others to quickly determine PAOs’ financial ties (and by extension, potential biases), thus strengthening the transparency of ongoing policy debates. Mandating greater transparency would also allow PAOs that receive little or no industry support to differentiate themselves from those with significant financial ties to industry. An open database would also relieve resource-limited PAOs from maintaining current donor information on their websites.

McCoy also counters possible objections to extending the Act. Some have noted that PAOs are already moving towards voluntary disclosure. However, McCoy points out that because PAOs that receive a high proportion of their revenue from industry have greater incentives to avoid disclosure, voluntary disclosure may lead PAOs that receive modest amounts of industry money to disclose more, thus appearing more conflicted than organizations heavily backed by industry. Similarly, some suggest that federally mandated reporting is unnecessary because states can enact their own laws, but McCoy notes that inconsistencies across state laws and databases would be overly burdensome and complicate comparisons between PAOs. Finally, opponents have argued that transparency alone is insufficient, but McCoy explains that transparency benefits policymakers, patients, and the broader public, who can use the information to make informed decisions about whether and how they choose to engage PAOs. Transparency can also influence PAO behavior and their decisions to enter into financial relationships with industry. McCoy ultimately argues that the benefits outweigh the objections, and the Act should be extended to include PAO-industry relationships.

In Kanter’s response, she acknowledges that broadening the Sunshine Act to PAOs is a natural extension, and that McCoy makes a well-reasoned case. However, she stresses that simply amending the existing law to include PAOs is “not as straightforward as one might hope.”

Kanter points out that the Sunshine Act did not result from a desire for transparency, but rather the federal government’s concern about the drug costs borne by the Medicare and Medicaid programs. The Centers for Medicare and Medicaid Services (CMS) tracks industry payments to physicians because marketing and promotional efforts can lead to excessive and inappropriate prescribing, which increase CMS’s drug bill. It follows, Kanter argues, that expansion of the Sunshine Act to PAOs would likely have to be justified based on its effect on CMS’s bottom line. However, making this connection is more difficult. Unlike physicians’ prescribing powers, which have a direct link to CMS drug spending, PAO activities have a distant tie: PAOs can lobby for the use or approval of certain drugs, but they do not typically affect CMS spending directly.

Kanter also highlights another difficulty: PAOs are all different. While the activities of certain PAOs have a very clear connection to CMS’s drug expenditures, others do not. For instance, pain-focused PAOs may lobby for greater access to pain medications and against measures to restrain overprescribing of opioids, which hurts CMS’s bottom line. On the other hand, cancer-focused PAOs engage in a variety of lobbying activities, such as drug development and approval, which fall outside CMS’s purview. These examples demonstrate that the solution of extending the Sunshine Act is more complicated than simply inserting “patient advocacy organizations” into the existing legislative text. The next step, Kanter concludes, is to consolidate the case that concealing industry-PAO payments is costly for the government.