Conflicts of Interest and Professional Misconduct in Health Care

Session Submission Type: Panel

Abstract

Although expert knowledge is essential in health care, the resulting asymmetry of information gives rise to conflicts of interest, self-dealing, and agency problems – situations where the interests of experts diverge from those of the people they are meant to serve. This session examines different aspects of agency problems in health care and avenues for regulation.

The first paper concerns itself with the influence of pharmaceutical industry payments to physicians and the potential ability of medical professionalism to limit industry influence. The authors examine heterogeneity in altruism, a key component of professionalism. Linking experimental measures of altruism to administrative data, the authors find that non-altruistic physicians receive significantly more industry payments and are more responsive to them in their prescribing behavior. In contrast, altruistic physicians appear less susceptible to industry influence, suggesting professionalism can play a meaningful role in moderating physician-industry relationships.

The second paper analyzes the relationship between industry funding for research and bias in reported effectiveness and economic value of new drugs. Using a novel dataset of cancer drug trials and cost-effectiveness analyses, the author shows that studies sponsored by pharmaceutical  companies are significantly more likely to report favorable outcomes. The findings point to strong evidence of publication and modeling bias, with study design choices playing a major role in inflating perceived drug value. This paper underscores how financial interests can distort evidence generation, with implications for both clinical decision-making and drug pricing policy.

The third paper explores conflicts of interest and industry influence in government advisory committees. It investigates whether financial ties between FDA advisory committee members and pharmaceutical companies influence voting behavior on these committees. Analyzing 21 years of meeting data and leveraging quasi-random variation in members’ industry ties, the author finds that members with financial ties to a drug sponsor are significantly more likely to vote in favor of that sponsor. This effect is concentrated in votes on non-approval questions rather than drug approval questions. In contrast, ties to competitor firms do not affect voting, suggesting that conflicts of interest can be managed and expertise preserved by targeting restrictions on sponsor ties rather than prohibiting all industry relationships.

The fourth paper examines the effect of medical board disciplinary actions on physicians found to have engaged in misconduct. Using a large dataset of state medical board activity, this study analyzes the impact of these disciplinary actions on the financial and professional trajectory of physicians. Disciplinary actions are followed by substantial declines in physicians’ Medicare billings, loss of hospital affiliations, and shifts to smaller practice settings—effects that are more pronounced for severe sanctions. This study finds that while most disciplined physicians remain in practice, state medical board actions may serve as a meaningful form of accountability, even in the absence of formal exclusion from public programs.

These papers examine how financial and institutional incentives shape the behavior of experts in health care. Together, they highlight the tensions between expertise, accountability, and influence in systems where professionals hold informational advantage but face varying degrees of external scrutiny and regulation.

Policy Area

• Health Policy

Secondary Policy Area

• Public and Nonprofit Management and Finance

Chair

• Mireille Jacobson, University of Southern California

Discussants

• Alice Chen, University of Southern California

• Risha Gidwani, University of Colorado Denver

Organizer

• Genevieve P Kanter, University of Southern California

Individual Presentations

• The Role of Physician Altruism in the Physician-Industry Relationship: Evidence from Linking Experimental and Observational Data - Presenting Author: Jing Li, University of Washington; Non-Presenting Co-Author: Anirban Basu, University of Washington; Non-Presenting Co-Author: Shan Huang, Stockholm School of Economics

• Sponsorship Effect and Publication Bias - Presenting Author: Matthew Chenoweth, University of California - Los Angeles

• Managing Conflicts of Interest and Industry Influence in Government Advisory Committees: The Case of the FDA - Presenting Author: Genevieve P Kanter, University of Southern California

• First Do No Harm: The Labor Market Consequences of a Physician Disciplinary Record - Presenting Author: Gabrielle Sorresso, Cornell University; Non-Presenting Co-Author: Amanda Yvonne Agan, Cornell University; Non-Presenting Co-Author: Colleen M Carey, Cornell University