NOEL KING, HOST:
We have a story now about something called the preferred drug list. It's a powerful tool that states use to try to control spending on prescription drugs in their Medicaid programs. Now, the Center for Public Integrity and NPR conducted an investigation and found that these lists have become targets for intense lobbying and influence-peddling. We've found that across the country, 3 out of every 5 doctors who serve on the committees that decide which drugs make the preferred list get money or perks from drug makers. NPR's Alison Kodjak reports that sometimes those payments add up to hundreds of thousands of dollars.
ALISON KODJAK, BYLINE: When Lisa, who is a drug company sales rep, went to work as an informant for the FBI, they gave her the code name Pampers.
LISA: I was actually about eight months pregnant at the time, so it was quite the experience.
KODJAK: She was working for a drug company that, like many others, uses money, meals and travel to convince doctors to prescribe their medications.
LISA: You just go in there, and you buy the doctor a lobster dinner. And you fly him out to Tokyo for a conference for a week, and he takes his family.
KODJAK: She says getting doctors to prescribe the drug she was selling was only the first step. The second step was to make sure that insurance companies and the government programs Medicare and Medicaid would pay. And that's where her company got into trouble.
LISA: We were very brazen. And the company took it to the extreme.
KODJAK: Extreme to the point where a sales rep went into patient files and filled out the forms to make sure the company's expensive drugs got paid for.
LISA: They were taking the burden off the physician and taking the burden off the office staff.
KODJAK: Lisa asked that we not use her full name because she worries that news she earned a large legal settlement would create problems for her family. She wore a wire for the FBI and became a whistleblower against her former employer, Warner Chilcott. And she recorded company executives instructing their sales reps how to unlawfully complete those forms. Drug companies filling out those forms is particularly troubling to Medicaid, the health care program for the poor and disabled, because those forms are one of the only tool the program has to control drug costs.
CATHY TRAUGOTT: The amount of money spent on drugs is going up significantly year to year.
KODJAK: That's Cathy Traugott, who runs Colorado's Medicaid pharmacy program. Medicaid's run by the states, and by law it has to cover every drug that's approved by the FDA.
TRAUGOTT: We can't say no. We have to cover them. So we have to figure out a way to still balance our budget year to year knowing that these costs are consistently going up.
KODJAK: The only tool states have to control those costs is the preferred drug list. Companies will offer states big discounts to get on the list. And if doctors want to prescribe something that's not on the list, they have to fill out time-consuming paperwork to get Medicaid to pay. The investigation by the Center for Public Integrity and NPR shows that around the country, these preferred drug lists are the targets of high-pressure lobbying, and the whole system is mired in financial conflicts of interest. Companies, through sales reps like Lisa, woo doctors with money and perks to get them not only to prescribe the drugs but also to help them get their drugs on the list. And if they don't make the list, many companies move to the next step - filling out patient forms to convince Medicaid to pay for the drugs anyway.
ROBERT HOGUE: We're going to begin. I'm going to call the meeting to order.
KODJAK: Take this meeting of Texas's Drug Utilization Review Board.
HOGUE: The next topic is the antipsychotics.
KODJAK: The committee's chairman, Dr. Robert Hogue, starts things off with drugs that treat schizophrenia and severe depression. Millions of dollars are in play.
HOGUE: OK. And we have a hundred speakers.
HOGUE: Don't be shy. Ladies first. Somebody on the front row, come on.
KODJAK: Twelve people line up to speak. Five worked for drug companies, but many of the others have more subtle financial ties to the pharmaceutical industry. Like Matthew Brams, he's a private practice psychiatrist who tells the committee he's done research on antipsychotic drugs.
MATTHEW BRAMS: Long-acting injectables, I believe, are superior to orals in many ways.
KODJAK: Brams praises two medications by name, but he doesn't mention that the companies that make them paid him more than $180,000 in speaking fees over the previous two years, according to the government's Open Payments database. Taking such payments is not illegal, but it can have a big impact on doctors' behavior, says Ameet Sarpatwari, a professor at Harvard Medical School who studies the economics of pharmaceuticals.
AMEET SARPATWARI: There's been a wealth of studies showing an association between financial conflicts of interest and preferential prescribing practices. And that can be for as little as a $5 lunch.
KODJAK: And it's not just the people testifying who have financial relationships with drug companies. Eight of the doctors on Texas's drug list committee have gotten compensation according to our investigation. And across the country, 3 of every 5 doctors who vote on preferred drug lists get perks from drug companies. Some benefits are small, a dinner or lunch, but sometimes they're consulting jobs worth hundreds of thousands of dollars. None of it is illegal.
SARPATWARI: It is hard to conceive of any situation where, if a pharmaceutical company did not believe that these payments were somehow influencing prescribing, that they would not be making them.
KODJAK: Our investigation shows that the person who gets the most money is Dr. Mohamed Ramadan, who sits on Arizona's committee. He received more than $700,000 in consulting fees, meals and tripped over four and a half years, mostly from two companies that make medications to treat schizophrenia. We spoke to him over the phone from his clinic that sits in the middle of the desert on the border of Arizona, Nevada and California.
MOHAMED RAMADAN: I work with multiple companies, and I do research too. So I keep myself very objective.
KODJAK: He says his work with the companies keeps him up to date on the latest developments in his field. And he says he doesn't see any conflict of interest.
RAMADAN: My thought is that healthy interaction with pharmaceutical companies is important.
KODJAK: But according to whistleblower Lisa, the money can be very effective.
LISA: What the managers within the company would tell us is if they feel indebted to you, if they feel a relationship with you, they're more likely to write your product.
KODJAK: In 2015, Lisa's company, Warner Chilcott, which by then had been purchased by a competitor, pleaded guilty to health care fraud. But our investigation finds several whistleblower lawsuits that allege that drug companies or their subcontractors still routinely help doctors fill out paperwork to get their medications covered. And in the end, all that effort can undermine one of the few tools states have to keep their drug costs down.
Alison Kodjak, NPR News.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.