NEW YORK – Pharmaceutical companies routinely receive attention from regulators for their outsized influence on physicians and their choices for patient care. However, comparatively little research explores the impact of medical device companies, which also maintain close relationships with physicians to encourage the use of their products. 

New research from Columbia Business School Assistant Professor of Economics Ashley Swanson is the first to quantify this relationship, finding that while the pharma industry on a whole is more than six times the size of the medical device sector, the latter pays physicians 10 percent more than pharma companies in the form of cash, meals, and more. 

The numbers bring into focus the extent of the relationships between medical device companies and physicians, and raise questions about the potential for this relationship to influence patient care.    

“Medical device reps work closely with physicians – often accompanying them into their offices and operating rooms to provide education, ensure products are used correctly, and solicit feedback on how well products work and suggestions for future innovations,” said Professor Swanson. “These relationships are commonplace, and the payments are typically small in relation to physicians’ salaries, but many experts have voiced valid concerns that they might impact physicians’ treatment decisions.” 

The study, co-authored with University of Pennsylvania post-doctoral researcher Alon Bergman and Assistant Professor Matthew Grennan, looked specifically at the implantable device industry and payments to practicing physicians. Using Open Payments data from 2014-2017, the researchers found that device vendors paid physicians $3.62 billion over the course of this four-year period – about ten percent more than what pharmaceutical companies paid physicians over the same period. 

Other findings include: Payments concentrated among largest device companies – Payments from medical device companies are concentrated amongst the top firms in the industry, with ten firms accounting for about two-thirds of all medical device firm payments and 44-92 percent of products in the highest-revenue product categories, according to FDA data. Relative payment size greater in device industry – Relative to drug companies, payments from device companies, as a percentage of industry revenue, were seven times as large; device firm payments were also more often related to product development and training and were more strongly correlated with physicians’ Medicare billing amounts. 

Data transparency needed to determine welfare effects – Greater data transparency is essential for future research estimating the causal relationships between payments and device use, pricing, and innovation to inform policy makers. Including device identifiers in medical claims is one way to start. 

“Our research presents a set of facts that helps us understand how medical device firms interact with physicians. However, we can’t say yet what the results mean for patients. There is an urgent need for future research into how the relationships between medical device firms and physicians impact market competition and innovation, product prices and - most importantly - safety and efficacy for patients,” said Professor Swanson. “At best, these relationships are furthering physician education and quality of care. At worst, they cement physician brand preferences and increase costs while yielding patient outcomes that are no better, or perhaps even worse.”  

The study Medical Device Firm Payments To Physicians Exceed What Drug Companies Pay Physicians, Target Surgical Specialists can be found online here. To learn more about the cutting-edge research being conducted at Columbia Business School, please visit www.gsb.columbia.edu. 

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