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Drug Makers
Battle Plan to Curb Rewards for Doctors
By ROBERT PEAR
NY Times, December 26, 2002
Drug companies and doctors
are fighting a Bush administration plan to restrict gifts and other
rewards that pharmaceutical manufacturers give doctors and insurers to
encourage the prescribing of particular drugs.
In October, the Department of Health and Human Services said many gifts
and gratuities were suspect because they looked like illegal kickbacks.
Since then, a few consumer groups, including AARP, have voiced support for
the restrictions. But they are outnumbered by the drug makers, doctors and
health maintenance organizations that have flooded the government with
letters criticizing the proposal.
In contending that the proposed federal code of conduct would require
radical changes, those opposing the change discuss their tactics with
unusual candor and describe marketing practices that have long been
shrouded in secrecy.
Drug makers acknowledged, for example, that they routinely made
payments to insurance plans to increase the use of their products, to
expand their market share, to be added to lists of recommended drugs or to
reward doctors and pharmacists for switching patients from one brand of
drug to another.
Insurers, doctors and drug makers said such payments were so embedded
in the structure of the health care industry that the Bush administration
plan would be profoundly disruptive.
Moreover, doctors said that drug companies were a major source of money
for their professional education programs, and that the administration
proposal could drastical
Doctors of all types echoed that concern.
The arguments were made in a public comment period. The administration
said it was considering those comments and expected to issue final
guidelines in a few months.
In its guidance to the industry, the government warned drug makers not
to offer financial incentives to doctors, pharmacists or other health care
professionals to prescribe or recommend particular drugs. The government
said the industry's aggressive marketing practices could improperly drive
up costs for Medicare and Medicaid, the federal health programs for 75
million people who are elderly, disabled or poor.
But a coalition of 19 pharmaceutical companies, including Pfizer, Eli
Lilly and Schering-Plough, said the Bush administration proposal was
"not grounded in an understanding of industry practices." The
payments and incentives to which the government objects are standard in
the drug industry, they said.
Merck & Company said it routinely gave discounts and payments to
health plans to reward "shifts in market share" favoring its
products. Merck complained that the administration proposal would
"criminalize a wide range of commercial conduct" that the
industry regards as normal and entirely proper.
The Pharmaceutical Research and Manufacturers of America, the chief
lobby for brand-name drug companies, acknowledged that these payments
created a strong incentive to prescribe certain drugs, or to shift
patients from one drug to another. But, it said, that did not make the
payments "illegal kickbacks."
Solvay Pharmaceuticals of Marietta, Ga., told the government: "We
understand that bribes and other hidden remuneration should be prohibited.
However, a policy statement that declares well-established commercial
practices potentially criminal creates a chilling effect on commerce and
ultimately harms all consumers."
The American Association of Health Plans, which represents most of the
nation's H.M.O.'s, said the proposed standards "cast doubt on the
propriety of many well-established practices undertaken by health plans to
develop and administer their drug benefits."
Drug manufacturers said they often encouraged the use of their products
by making payments or giving discounts to H.M.O.'s and to the specialized
companies that manage drug benefits for millions of Americans. Such
companies, known as pharmacy benefit managers, can exert immense influence
over what drugs are prescribed and dispensed.
H.M.O.'s and pharmacy benefit managers said they typically received
money from the manufacturer of a drug if sales of that drug reached a
certain level — say 40 percent of all the prescriptions for
cholesterol-lowering agents. The manufacturer may agree to a higher
payment if the drug achieves a larger share of the market.
While describing such arrangements, the drug companies, doctors and
insurers did not divulge who received how much for promoting a specific
drug, nor did they provide details of individual marketing campaigns.
The Bush administration proposal received support from one H.M.O., the
Great Lakes Health Plan, which serves more than 90,000 Medicaid recipients
in Michigan.
Eric J. Wexler, general counsel of the Great Lakes plan, said pharmacy
benefit managers sometimes sent letters to doctors recommending that they
shift Medicaid patients from generic drugs to brand-name medicines. In
many cases, Mr. Wexler said, the brand-name drugs cost more, but are less
effective.
For each letter sent to a doctor, Mr. Wexler said, "the pharmacy
benefit manager receives an administrative fee, and it may get additional
remuneration for converting patients from one drug to another."
AdvancePCS, a pharmacy benefit manager based in Irving, Tex., confirmed
that it received payments from drug companies for letters sent to doctors
and patients urging them to use particular drugs.
But it said the payments — typically a flat fee for each letter —
were for educational services that could help control drug spending.
Kaiser Permanente, a nonprofit H.M.O. based in Oakland, Calif., said
the administration plan would impair its ability to negotiate lower drug
prices for its 8.5 million members because it suggested that discounts and
rebate payments create "a prosecutorial risk" under the kickback
law.
The Blue Cross and Blue Shield Association said the proposal would
impede what it described as legitimate cost-control measures.
"Pharmaceutical companies may be less willing to offer large
discounts if those discounts cannot be tied to movements in market
share," said Alissa Fox, policy director for the association, whose
members insure more than 84 million people.
LaVarne A. Burton, president of the Pharmaceutical Care Management
Association, which represents pharmacy benefit managers like Express
Scripts and AdvancePCS, said that "manufacturers may cease offering
discounts," rather than run the risk of liability under the proposed
guidelines.
But the Food Marketing Institute, whose members operate 12,000
supermarket pharmacies, applauded the proposal. "Pharmacy benefit
managers routinely refuse to disclose their financial arrangements with
drug companies," said Tim Hammonds, president of the institute,
"and they do not wish to be subjected to any kind of accountability,
such as an annual audit."
As a result, Mr. Hammonds said, "it is not possible to know with
any certainty whether P.B.M.'s are helping to control drug costs for the
federal government or if these middlemen are contributing to skyrocketing
drug costs."
The administration proposal says that when drug executives discover
evidence of illegal conduct, they should report it to federal authorities
within 60 days. Also, it said, drug makers should consider offering
rewards to whistle-blowers and should prominently display the phone number
for reporting Medicare fraud to the government (1-800-447-8477).
The coalition of drug makers objected to these recommendations, saying
they would undercut the companies' efforts to police themselves.
The American Medical Association said drug companies should not be
forbidden to give doctors pens, notepads and other items of nominal value
that have "no correlation to any service provided by the physician to
the pharmaceutical company." Such "giveaway items" are
harmless, it said.
But the Massachusetts Medical Society suggested that "these items
would not be so readily produced if they were not an effective form of
advertising."
The society asked: "Is the physician who writes a prescription
with a company's logo on the pen more likely to write a prescription for
that advertiser? Are patients more likely to request a certain drug
because they see the notepad on the doctor's desk?"
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© 2002 Global Action on Aging
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