Taming the Gift Culture

As Paul Ricci noted here last week, one point about which we agree with conservative critics of the Affordable Care Act (ACA) is that it doesn't do enough to contain costs. That's where the agreement stops. We disagree about the major reasons that health care costs so much more in the U.S. than other industrialized countries; hence, we disagree about how to reduce costs. Advocates of single payer note that costs are certain to be higher when both medical care and health insurance are provided by corporations that are motivated to maximize profits.

To be fair, however, the ACA does contain some provisions to reign in costs, but without altering the basic economic structure of the system. One of these reforms was announced the other day. Manufacturers of drugs, medical devices and medical supplies used by Medicare and Medicaid patients will soon be required to report all payments and gifts they make to doctors or teaching hospitals. The data will be posted on a government-run website that will be searchable by the name of the doctor.

The New York Times reports that 25% of doctors report receiving cash payments and two-thirds report receiving gifts from drug and medical device manufacturers. This includes research and consulting fees; food, travel and entertainment; free samples (“the first bag of heroin is free”); plus all those incidentals such as pens and tote bags with the manufacturer's name on the side. (One doctor's son said that it wasn't until he was eight years old that he realized not all frisbees had the word “Merck” printed on them.) These gifts can result in doctors prescribing expensive new drugs that are no more effective than generics, or requiring tests and procedures that have no real benefit to the patient.

Doctors are embedded in what anthropologists call a gift culture, a network of reciprocal favors in which there is no explicit agreement as to when and how the favor will be repaid. These favors create feelings of obligation to the benefactor, obligations that may be repaid many times over, but the lack of an explicit quid pro quo reduces awareness of the corruption that is actually taking place.

Many years ago, social psychologist Bob Cialdini reported how a little gift can go a long way. Hare Krishna disciples who handed out paper flowers at airports, for example, were paid back many times over by voluntary contributions from recipients. There are several studies showing that this works in a medical context. For example, Orlowsky and Wateska (1992) examined the effects on doctors of free trips to seminars in sunbelt locations sponsored by the manufacturers of two relatively new prescription drugs. Their data showed significant increases in prescriptions of the two drugs in comparison to other hospitals, and in comparison to other drugs having the same effects. Interestingly, 17 out 20 doctors in the study stated unequivocally that the free trip would not influence their behavior.

This disclosure requirement is certainly a step in the right direction. My question is whether it goes far enough. Lawrence Lessig, in his new book about political corruption, Republic Lost, calls transparency a “reform that doesn't reform.” Have you ever looked at one of those lists of contributors to a political campaign? Did it help you? Most of them are people and organizations you've never heard of. The list provides little information about what these contributors wanted or how they were repaid after the election.

Similar lists of medical company gifts and payments may not be very useful to consumers. How many of them will consult the website in advance of a visit to the doctor? Even if they do, the fact that General Electric is on a doctor's list of contributors only helps if you know that GE manufactures the device that will be used to scan your internal organs. The fact that a drug company is on the list is useless unless you have memorized which drugs that company markets. In some cases, the absence of a corporation from the list may be more meaningful than its presence.

This website may be useful to researchers and investigative reporters, and this could benefit consumers indirectly if their studies are reported by the media. The existence of the list could also embarrass some doctors into refusing gifts, although I wouldn't count on that, since almost all doctors erroneously believe that gifts have no effect on their decisions.

But the real problem is that this is only a half-baked reform. Since we know the unfortunate effects payments and gifts have, they should be banned, not reported on some obscure government website.