An Investigation of Marketing Compensation in Medicine: The Impact of the Information Disclosure Regulations

Pharmaceutical scandals frequently occupy national media headlines, and these controversial practices exacerbate the healthcare expenditure burden and cause ethical concerns. Big Pharma’s marketing strategies involve making various types and sizes of payments to healthcare providers to induce favorable prescribing behaviors for their drugs. Enacted in 2013, the Physician Payments Sunshine Act (PPSA) mandates company disclosures of payments to physicians. Its effectiveness has been explored in various settings, but there have been few rigorous academic studies, and a unified conclusion has not been reached. In this paper, we utilized unique datasets, including pre- and post-PPSA payment data from six major pharmaceutical companies, to examine the impact of state-level disclosure policies and the federal PPSA on pharmaceutical companies’ payments to physicians. Difference-in-difference analysis was adopted to study the dynamics of company payments to physicians before and after the PPSA. We found significant interactions for the state policies and the PPSA on all studied payment types for the six companies. The companies generally decreased their total payments to physicians and the number of paid physicians. However, the policy impacts differed across the payment types and companies