The study, which appears in the March 21 issue of the Journal of the American Medical Association, found that major pharmaceutical companies, such as Pfizer, Merck and GlaxoSmithKline, made payments and gifts amounting to millions of dollars to physicians in Vermont and Minnesota, but often failed to disclose the details about them as the states' laws require.
The companies circumvented the laws by classifying the payments as trade secrets, not providing the identity of the recipient or failing to file an annual report.
In addition, pharmaceutical companies often made payments to physicians that exceeded the $100 limit recommended by both the American Medical Association and the Pharmaceutical Research and Manufacturers of America.
"The laws of these states have not secured the ends they've sought," Peter Lurie, deputy director of Public Citizen's Health Research Group and co-author of the article, told United Press International.
"They're riddled with holes in terms of trade secret exemptions, lack of standardization of reporting requirements, failure of companies to report as required, and failure of states to enforce the laws," he added.
Lurie noted that despite the underreporting, "we still find large sums of money changing hands including significant amounts that violate rules of both AMA and the pharmaceutical industry."
That revelation "combined with growing evidence that such gifts can influence prescribing raises real concerns about the independence of American physicians," he said.
Lurie called for both tighter laws to shore up the loopholes and intensified enforcement.
PhRMA did not respond to UPI's questions, but issued a statement asserting patients are better served when the pharmaceutical industry collaborates with physicians.
PhRMA, which did not directly refute any of the findings, claimed the study and the Vermont and Minnesota laws were flawed because they lump the activities of pharma sales reps together with research that physicians at academic medical centers are conducting on behalf of pharmaceutical companies.
However, Lurie said the Vermont law does not require the reporting of payments related to research activities and his study gave a breakdown of the payments related to research in Minnesota, which accounted for less than 15 percent of the total money and gifts.
"The authors of the JAMA article have compounded the problem by offering a more sophisticated analysis than is justified by the mish-mash of data they had to work with," PhRMA's Senior Vice President Ken Johnson said in a statement. "The writers themselves note that the two different state laws require reporting of inconsistent data and yet they still used the information in their evaluation."
Johnson acknowledged PhRMA's own guidelines call for a $100 limit on payments to physicians.
In the study, the researchers examined data about pharmaceutical company payments and gifts in Vermont and Minnesota from 2002 to 2004.
In Vermont, pharmaceutical companies publicly disclosed more than 12,000 payments amounting to $2.18 million.
However, 61 percent of payments were designated as trade secrets, which meant the details were not made available to the public. Approximately 75 percent of the publicly disclosed payments did not contain enough information to identify the recipient.
Of the 12,227 payments publicly disclosed, 2,416 were for $100 or more.
In Minnesota, companies publicly disclosed nearly 7,000 payments totaling $30.96 million. But only 25 percent of companies reported in each of the three years the study examined. Of the 6,946 payments disclosed, 6,238 were for $100 or more.
In an accompanying editorial, Troyen Brennan, of Aetna, and Michelle Mello, of the Harvard School of Public Health, argue that pharma's failure to police itself may come back to haunt the industry by damaging their credibility.
Noting that pharmaceutical companies' primary interest is creating shareholder value, Brennan and Mello state that "at some point, the leadership of the pharmaceutical industry and their boards of directors must begin to recognize that growing public and professional mistrust could substantially detract from that value."