Pharma Payment Types Explained

Research Payments

Research payments are made under a formal research agreement, typically a clinical trial protocol or investigator-initiated study. These are widely documented as the largest payments by dollar value nationally, but CMS reports them through a separate track from the General Payments categories above, so they are not one of the bars in that chart. A phase III clinical trial might involve millions of dollars paid to a research institution, with the principal investigator listed as recipient.

Research payments are generally considered the most legitimate category. Clinical trials are essential to drug development, and physicians who run them provide a genuine scientific service. However, research relationships can still create bias: physicians who conduct trials for a company tend to be more favorable toward that company's products in subsequent publications and prescribing.

Research payments are broken into two sub-types in CMS data: payments associated with research agreements (the largest) and payments for non-research-based purposes. Research payments to institutions (teaching hospitals) appear separately from payments to individual physicians.

Consulting Fees

Consulting fees compensate physicians for their expertise and advisory services. Common consulting arrangements include:

• Advisory board participation: Physicians review a company's clinical strategy, provide feedback on trial design, or evaluate data.
• Market research: Paid interviews or surveys about prescribing practices and patient needs.
• Medical affairs consulting: Ongoing advisory relationships with a company's medical or clinical team.
• Product development input: Feedback on device design, drug formulation, or dosing regimens.

Consulting relationships are legal and often produce genuine value for both parties. However, critics note that the most heavily consulted physicians tend to be high-volume prescribers, which raises questions about whether consulting selection is driven by expertise or by potential marketing influence. Browse companies to see which pay the most in consulting fees.

Speaking and Honoraria Payments

Speaking payments, reported in CMS data as "Compensation for serving as faculty or as a speaker at a non-accredited and non-certified continuing education program" - are paid to physicians who present at company-sponsored promotional events. These are commonly called speaker bureau arrangements.

In a typical speaker bureau setup, a pharmaceutical company recruits a physician to present approved slide decks about a drug to other physicians at dinner or lunch events. The presenter is paid an honorarium, often $1,000 to $3,000 per event. The company selects the content, the venue, and the audience. Speaker bureau physicians may give dozens of such presentations per year.

Speaker bureau arrangements are the most controversial category in Open Payments data. Multiple studies have found that joining a speaker bureau is associated with substantially increased prescribing of the promoted drug. Critics argue these events are promotional, not educational, and that the payments are compensation for influence rather than expertise. Some academic medical centers have banned their physicians from participating in speaker bureaus. The data is searchable on our top recipients page.

Food and Beverage Payments

Food and beverage payments are the most numerous category in Open Payments, millions of individual transactions totaling hundreds of millions of dollars annually. These are the lunches and dinners that pharmaceutical sales representatives buy for physician office staff and the catered meals at promotional events.

Individual food payments are often small, under $20 per person. But because they occur at such high frequency (a busy sales rep might visit dozens of offices per month), they add up. And despite their modest size, research has found measurable effects on prescribing. A landmark 2016 study in JAMA Internal Medicine found that physicians who received a single industry meal were significantly more likely to prescribe the promoted brand-name drug over a generic equivalent.

The mechanism is believed to be social reciprocity, a universal human tendency to feel obligated to return a favor. Marketing research supports this: the pharmaceutical industry spends an estimated $1-2 billion annually on food and beverage transfers precisely because they are effective at building relationships and influencing prescribing.

Travel and Lodging

Travel and lodging payments cover transportation, hotels, and associated expenses paid by companies for physicians attending company-sponsored events, advisory boards, speaker training, national meetings, and international conferences. These are distinct from travel costs reimbursed as part of a consulting agreement, which are typically rolled into consulting fee reporting.

High-dollar travel payments often involve international destinations. Some companies have faced enforcement actions for using luxury travel as a de facto kickback to high-prescribing physicians. After the Sunshine Act, many companies tightened their travel policies to avoid appearances of impropriety.

Royalties and Licenses

Royalty payments are made to physician-inventors whose intellectual property, a drug compound, a device design, a surgical technique, is commercialized by a pharmaceutical or device company. These payments can be very large, because they are typically a percentage of product revenue. A physician who co-invented a blockbuster orthopedic implant might receive millions of dollars annually in royalties.

Royalty relationships create a different kind of conflict of interest than consulting or speaking arrangements. A physician who profits from a product's commercial success has a financial incentive to recommend that product, even when equally effective alternatives exist. Medical device royalties in particular have attracted regulatory scrutiny, as the royalty recipient is often also the physician recommending the implant to patients.

View payment type breakdowns across all companies and state-level data on PlainPharmaWatch.

Frequently Asked Questions