ACOG Committee Opinion
Number 359, January 2007
(Reaffirmed 2011)


Committee on Ethics
PDF Format

Commercial Enterprises in Medical Practice*

ABSTRACT: Increasing numbers of physicians sell and promote both medical and nonmedical products as part of their practices. Physicians always have rendered advice and treatment for a fee, and this practice is appropriate. It is unethical under most circumstances, however, for physicians to sell or promote medical or nonmedical products or services for their financial benefit. The following activities are considered unethical: sale of prescription drugs to be used at home, sale or promotion of nonprescription medicine, sale or promotion of presumptively therapeutic agents that generally are not accepted as part of standard medical practice, sale or promotion of non–health-related items, recruitment of patients or other health care professionals into multilevel marketing arrangements, and sale or promotion of any product in whose sale the physician has a significant financial interest. It is ethical and appropriate, however, to sell products to patients as follows: sale of devices or drugs that require professional administration in the office setting; sale of therapeutic agents, when no other facilities can provide them at reasonable convenience and at reasonable cost; sale of products that clearly are external to the patient–physician relationship, when such a sale would be considered appropriate in an external relationship; and sale of low-cost products for the benefit of community organizations. A rationale is provided for both the prohibited activities and exceptions.

*Update of "Commercial Enterprises in Medical Practice," in Ethics in Obstetrics and Gynecology, Second Edition, 2004.

Increasing financial pressures and the pervasiveness of entrepreneurial values in our society have led to an increase in the scope of activities for which physicians have sought reimbursement. As a result, increasing numbers of physicians sell and promote both medical and nonmedical products as part of their practices. Physicians always have rendered advice and treatment for a fee, and this practice is appropriate; however, the sale and promotion of products for financial benefit is qualitatively different from these traditional activities. It is unethical under most circumstances for physicians to sell or promote medical or nonmedical products or services for their financial benefit. In this Committee Opinion, the American College of Obstetricians and Gynecologists' Committee on Ethics examines the following issues:

  • The scope of the inappropriate activities
  • The reasons for their unacceptability
  • The limited circumstances under which they may be acceptable

Recommendations

Sale or promotion of products by physicians to their patients is unethical, with some exceptions, in either clinical sites or other places. This is true whether the sale is conducted in person, by telephone, or by written solicitation. The following activities are considered unethical, subject to the exceptions outlined later in the discussion:

  • Sale of prescription drugs to be used at home (For example, some commercial drug repackagers prepare these medicines in standard doses and provide them to physicians, who then resell them to patients [1].)
  • Sale or promotion of nonprescription medicine
  • Sale or promotion of presumptively therapeutic agents that generally are not accepted as part of standard medical practice
  • Sale or promotion of non–health-related items, such as household supplies (2)
  • Recruitment of patients or other health care professionals into multilevel marketing arrangements (These are enterprises in which individuals recruit other individuals to sell products and receive a commission on sales by their recruits. These recruits, in turn, can recruit a third generation of marketers, whose commissions are shared with participants of earlier generations.)
  • Sale or promotion of any product in whose sale the physician has a significant financial interest, even if the sale would otherwise be appropriate (Such financial interest includes, among other things, sale for a direct profit or sale of a product when the physician holds a substantial equity interest in the product's manufacturer or wholesaler [3].)

Exceptions

It is ethical and appropriate for physicians to sell products to patients in the following circumstances:

  • Sale of devices or drugs that require professional administration in the office setting (Under these circumstances, the charge for the product should not exceed the costs, which may include both the direct cost of the product and the overhead incurred in obtaining, storing, and administering it.)
  • Sale of therapeutic agents, when no other facilities can provide them at reasonable convenience and at reasonable cost (This circumstance might occur in a thinly populated area or in a locality in which certain forms of reproductive control are unpopular. If physicians sell such products, the price charged should not exceed the cost of the product, including both direct and overhead costs.)
  • Sale of products that clearly are external to the patient–physician relationship, when such a sale ordinarily would be considered appropriate in the context of an external relationship (An example of such a transaction is a brokered house sale at a fair market price.)
  • Sale of low-cost products for the benefit of community organizations (An example of such a product is Girl Scout cookies. These products must be sold without pressure, and the physician must not derive a profit from such sales.)

Rationale

There have been arguments given to support the sale in physicians' offices of drugs and other products related to the treatment of patients (1). One is convenience—a busy patient need not go to a pharmacy. Another, although not borne out by empirical studies, is that increasing the number of dispensers of drugs reduces the cost of drugs (1). Finally, it is possible that adherence to treatment is improved if the patient purchases the drug from the physician.

Under most circumstances, however, the sale of products by physicians violates several generally accepted principles of medical ethics. First, and most important, the practice of physician sales to patients creates a potential conflict of interest with the physician's fiduciary responsibility to provide "a right and good healing action taken in the interests of a particular patient" (4). This principle of fidelity is defined as the obligation of physicians to put the interests of patients above their own.

Physicians must not engage in actions that violate or call into question their fiduciary relationship with patients. The term conflict of interest refers to circumstances in which this commitment to the fiduciary relationship is compromised. Conflict of interest contains two elements: "1) an individual with an obligation, fiduciary or otherwise, and 2) the presence of conflicting interests that may undermine fulfillment of the obligation" (5).

The American Medical Association and other professional societies have long opposed practices that result in conflicts of interest. The association's Council on Ethical and Judicial Affairs (CEJA) states that "as professionals, physicians are expected to devote their energy, attention and loyalty fully to the service of their patients" (6). Many statements issued by CEJA and other American Medical Association bodies have condemned various practices resulting in conflict of interest. These related improper commercial practices include fee splitting (payment by or to a physician solely for the referral of a patient), physician self-referral, physician ownership of pharmacies, and selling medical products (7). They have condemned physician ownership of stock in laboratories that pay physicians in proportion to the amount of work they refer and have disapproved of rebates from optical or medical instrumentation companies (5, 8).

Referral by physicians to health care facilities, such as laboratories, in which they do not engage in professional activities but in which they have a financial interest is called self-referral. This practice is analogous to product sales in that physicians are deriving a profit from goods (eg, laboratory tests or drugs) that they did not produce. Both of these practices create a clear conflict of interest because referring physicians accept money from vendors to direct patients to use their products or services instead of alternative products or services (including the option of no treatment at all). The conflict, therefore, is between the financial advantage that accrues from physicians' sales or referrals and physicians' obligation to arrange the best possible ancillary and consultative services for their patients. For example, CEJA states that self-referral to outside facilities is ethical only "if there is a demonstrated need in the community for the facility and alternative financing is not available" (6). In these circumstances, the practice is considered ethical only if referring physicians meet certain requirements designed to ensure that they receive no more financial consideration than would an ordinary investor and that certain safeguards are taken to avoid exploitation of patients.

Several other cardinal principles are violated by the practice of sales by physicians. The principle of truthfulness is violated if a conflict of interest related to the sale exists and is not communicated to the patient.

The principle of nonmaleficence is violated when there is a potential for injury to patients, which could occur in several ways. Physicians may be tempted to sell to patients items that they do not need. Even if its use is appropriate, the product in question may not be the most suitable for given patients. For example, joint ventures in radiation oncology (ie, those in which referring physicians had a financial interest) were found to provide more frequent and more intense use of radiation therapy than did freestanding facilities, without increased benefit (9).

Another principle that may be violated by this practice is that of respect for autonomy. A patient might prefer comparing various alternatives when purchasing products. If the product is offered by the physician on whom she depends for advice and treatment, she could feel constrained to accept the physician's product. She may feel coercion to comply with treatments with which she does not agree. If the product is not health related, patients might feel constrained to purchase goods they do not want (8).

Finally, this practice violates the principles of professionalism and professional solidarity by weakening public trust in the profession. As CEJA has stated, "The medical profession's ability to preserve autonomy and the nature of the physician—patient relationship during periods of transformation have succeeded in large part due to the profession's lack of tolerance for 'commercialism' in medicine" (6).

Conclusion

The sale or promotion of products by physicians to their patients rarely is ethical. Exceptions have been described in this Committee Opinion. Practitioners of obstetrics and gynecology should not engage in commercial arrangements that result in real, apparent, or potential conflicts of interest.

References

  1. James DN. Selling drugs in the physician's office: a problem of medical ethics. Bus Prof Ethics J 1992;11:73–88.
  2. Rice B. What's a doctor doing selling Amway? Med Econ 1997;74(13):79–82, 85–6, 88.
  3. Responsibility of applicants for promoting objectivity in research for which PHS funding is sought. 42 C.F.R. §50 Subpart F (2005).
  4. Pellegrino ED, Thomasma DC. A philosophical reconstruction of medical morality. In: A philosophical basis of medical practice: toward a philosophy and ethic of the healing professions. New York (NY): Oxford University Press; 1981. p. 192–220.
  5. Rodwin MA. The organized American medical profession's response to financial conflicts of interest: 1890–1992. Milbank Q 1992;70:703–41.
  6. Conflicts of interest. Physician ownership of medical facilities. Council on Ethical and Judicial Affairs, American Medical Association. JAMA 1992;267:2366–9.
  7. American Medical Association. Sale of health-related products from physicians' offices. In: Code of medical ethics of the American Medical Association: current opinions with annotations. Chicago (IL): AMA; 2006. p. 225–6.
  8. Sale of non-health-related goods from physicians' offices. Council on Ethical and Judicial Affairs, American Medical Association. JAMA 1998;280:563.
  9. Mitchell JM, Sunshine JH. Consequences of physicians' ownership of health care facilities—joint ventures in radiation therapy. N Engl J Med 1992;327:1497–501. 

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Commercial enterprises in medical practice. ACOG Committee Opinion No. 359. American College of Obstetricians and Gynecologists. Obstet Gynecol 2007;109:243–5.