Articles and Case Studies

Pecuniary Interest Duty of Disclosure

09 May 2013

In the modern world of commerce and medicine it is not unusual for medical practitioners to hold a financial interest in companies that manufacture medical products, prostheses or which provide diagnostic services or private facilities at which their patients may be treated.

In our experience, there is at times a misconception that medical practitioners are prohibited from using products from companies in which they have a financial interest, or in relation to which they have made a referral or recommendation. The Health Practitioner Regulation National Law Act 2009 (the National Law) does not prohibit the use of products from companies or referrals to companies in which a medical practitioner has a pecuniary interest. However, it does establish strict criteria for ensuring that all pecuniary interests are disclosed. Indeed, the National Law provides that a failure to disclose a pecuniary interest in giving a referral or recommendation is unsatisfactory professional conduct, which could lead to disciplinary action.

What is a pecuniary interest?

For the purposes of the National Law a "pecuniary interest" includes a medical practitioner who holds 5% or more of the issued share capital of a public company or has any interest in a private company. Such an interest would include a financial interest in a private hospital or day surgery facility.

Duty of disclosure

To ensure compliance with the National Law, medical practitioners are required to disclose their pecuniary interest to their patients prior to treating them, and to hospitals where they may operate and use products from the company in which they hold the interest.

Similarly, there are various professional Codes of Conduct, which specifically touch upon conflicts of interest and a medical practitioner's obligation to appropriately disclose a pecuniary or commercial interest.

Paragraph 8.11 of the Medical Board of Australia's Good Medical Practice: A Code of Conduct for Doctors in Australia¹states that:

A conflict of interest in medical practice arises when a doctor, entrusted with acting in the interests of a patient, also has financial, professional or personal interests, or relationships with third parties, which may affect their care of the patient…good medical practice [is]…recognising potential conflicts of interest in relation to medical devices and appropriately managing any conflict that arises in your practice…[and] not allowing any financial or commercial interest in a hospital, other health care organisation or company providing health care services or products to adversely affect the way in which you treat patients. When you or your immediate family have such an interest and that interest could be perceived to influence the care you provide, you must inform your patient.

Paragraph 8.12 deals specifically with financial and commercial dealings and provides that a practitioner must be:

…transparent in financial and commercial matters including…declaring to your patients your professional and financial interest in any product you might endorse or sell from your practice, and not making an unjustifiable profit from the sale or endorsement.

Professional associations or craft groups may also have a Code of Conduct which deals with pecuniary interests and/or conflict of interest and practitioners should be aware of Codes of Conduct for their particular specialty or craft group. For example, clause² of the Australian Orthopaedic Association Position Statement on Interaction with Medical Industry (2009) 2 states that:

…a member must disclose to colleagues, institutions, and other affected entities, any financial interest in a medical device… if the member or institution with which they are associated, has received or will receive any direct or indirect payment or a financial or other benefit from the inventor or manufacturer of the medical device…

Compliance with obligation of disclosure

Medical practitioners should ensure appropriate measures are in place to disclose any pecuniary interest to all patients, as well as to all hospitals where the medical practitioner may operate or provide clinical services.
In relation to patients, a medical practitioner should ensure that the disclosure of the pecuniary interest is part of the provision of informed consent. This can take the form of a direct discussion with the patient, but it is also recommended that the medical practitioner make disclosure of the pecuniary interest on relevant consent forms and/or by display of a notice in the practitioner's rooms. Disclosure of a pecuniary interest on the medical practitioner's website would, where relevant, also be recommended.

Scott Chapman, Partner, TressCox Lawyers.

1 Good Medical Practice: A Code of Conduct for Doctors in Australia. Available at: medicalboard.gov.au/Codes-Guidelines-Policies.aspx.
2 Australian Orthopaedic Association Position Statement on Interaction with Medical Industry. Available at: aoa.org.au/Resources/Standards_and_policies.aspx.

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