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Pharmaceutical company marketing practices

By Jeffrey B. Miller, Esq.

As long as manufacturers have been producing medicines their sales representatives have been seeking ways to reach physicians through building relationships. This dynamic is not necessarily untoward. Quality working relationships between manufacturers and physicians benefit both the manufacturers and the physicians, and patients as well. Manufacturers gain needed medical expertise to develop new medicines, refine current ones, and teach their sales representatives how they can best assist physicians in their care of patients. By assisting manufacturers, the physicians increase their knowledge of the manufacturers’ products, including product selection and efficacy, and help to develop new and more effective medicines for use in the care of their patients. In the end, patients and society benefit from this collaboration through much improved medical care.

In seeking to build these relationships, however, some manufacturers and physicians have gone beyond generally accepted, arms-length business arrangements and niceties. In some instances these relationships have even been thought to be detrimental to patient care, and to the medical profession in general, particularly where they involve personal financial benefits that do not appear to be directly related to patient care concerns. Frequently cited examples include manufacturers showering physicians with extravagant meals, expensive gifts, tickets to sporting events and theaters, and vacations to exotic locations – and not always just for the physicians, but sometimes for their families, and for their employees. As a result of these inappropriate activities, government regulators and prosecutors, as well as some leading physician and private interest groups, have called for a new prescription for quality patient care: the reform of inappropriate marketing practices.

Initiatives designed to instigate marketing reform in the health care arena are not new. In past years the federal government has loudly voiced its concerns that excessive meals, gifts, entertainment and other inappropriate financial benefits could be intended as payments to physicians to change their prescribing practices to the detriment of patients.

In 2004, after an extended investigation, Pfizer agreed to pay the federal government $430 million in fines and penalties to settle a prosecution alleging that, in addition to promoting its drug Neurotin for off-label uses, Pfizer provided lavish resort trips and hefty speaking fees to physicians who prescribed the drug. About a year later Lincare entered into a $10 million settlement with the federal government over allegations that it paid bribes to physicians in the form of tickets to sporting events, fishing trips and golf outings, gift certificates and office and medical equipment. Other prosecutions have also commenced and have settled for tens of millions of dollars, and even hundreds of millions of dollars, involving other well-known companies, such as Schering Plough and Serono, alleging that physicians received, or were paid for, improper preceptorships, positions on sham advisory boards, improper clinical trials and lavish gifts and entertainment. Not limited to the pharmaceutical industry, in 2006 medical device manufacturer Medtronic settled a prosecution with the federal government for $40 million that alleged that it provided physicians with sham consulting agreements, sham royalty agreements and lavish trips to desirable locations in exchange for patient referrals.

This disturbing trend of prosecution and settlement has not been overlooked by the medical community. Citing “a growing concern about certain gifts from industry to physicians,” the American Medical Association released Opinion 8.061 as part of its Code of Medical Ethics, addressing gifts to physicians from industry (a copy of this Opinion, and additional guidance from the AMA on accepting gifts from industry, can be obtained from the AMA on its website at http://www.ama-assn.org.). Emphasizing the ultimate responsibility of the individual physician to minimize conflicts of interest that may be at odds with the best interests of their patients, this Opinion provides physicians with guidance on accepting all forms of gifts from industry. Specific types of gifts addressed in the Opinion include meals, entertainment, pharmaceutical samples, funds for continuing medical education and professional meetings, textbooks, funds for physician travel, lodging and similar gifts. In seven separate guidelines the Opinion generally provides that any gifts accepted should primarily entail a benefit to patients, and should not be of substantial value. In any case, no gifts should be accepted if there are strings attached. More specific guidance, including specific gifts and suggested limits on financial value, are provided in later published clarifications to this Opinion (also available on the AMA’s website).

For their own part, the pharmaceutical and medical device industries have also issued guidance to their members on providing gifts to physicians. In the pharmaceutical industry, the Pharmaceutical Research and Manufacturers of America (PhRMA) issued its Code on Interactions with Healthcare Professionals (a copy of which can be obtained from PhRMA on its website at http://www.phrma.org/code_on_interactions_with_healthcare_professionals/). In the medical device industry, the Advanced Medical Technology Association (AdvaMed) issued its Code of Ethics on Interactions with Health Care Professionals (a copy of which can be obtained from AdvaMed on its website at http://www.advamed.org/MemberPortal/About/code/default.htm). Similar to the AMA’s Opinion, these ethical codes generally direct association members that any gifts provided to physicians should primarily benefit patients or the physicians’ professional practices, should not be of substantial value, and should not be provided with strings attached. Very specific scenarios for gifts, including specifically recommended financial limits, are provided in both of these codes.

Despite these efforts by the physician and industry communities, many physicians remain concerned that improper relationships between physicians and industry continue to persist. There is some reason supporting this concern. An article recently published in the New York Times asserted that the pharmaceutical industry continues to spend approximately $12 billion each year marketing to physicians/ An article in the Philadelphia Inquirer stated that studies show that an average of $13,000 per year is spent by pharmaceutical manufacturers on each U.S. physician.

Not insensitive to these assertions, some leading members of the medical community have taken action. In a collaboration between the Institute on Medicine as a Profession (at the Columbia University College of Physicians and Surgeons) and the American Board of Internal Medicine Foundation, a working group known as the “Managing Conflicts of Interest Project” recently urged physicians to end what they characterized as a pervasive gift-giving environment that has diminished the integrity of the medical profession. In a series of findings and recommendations published in the January 25, 2006 edition of the Journal of the American Medical Association entitled “Health Industry Practices that Create Conflicts of Interest,” these physicians asserted that even small gifts, such as pens, pads and meals can significantly influence physician prescribing practices. Further, they noted that physicians who request additions to standard hospital drug formularies are far more likely to have accepted entertainment, meals or gifts from manufacturers, and that the rate of drug prescriptions increases substantially where they have financial ties to manufacturers. Encouraging academic medical centers to take the lead in addressing these issues, the group’s specific recommendations include:

· Banning all gifts to physicians, including free meals, payments for physician travel and payments for participating in CME activities.

· Banning direct drug samples to physicians, replacing them with a system of vouchers or other indirect distribution systems to assist low income patients.

· Excluding physicians with financial ties to industry, including through the receipt of any gift, grant or contract, from participating in committees overseeing the purchase of products from industry.

· Barring faculty from participating in industry speaker bureaus, and from publishing articles that are ghostwritten by industry employees.

· Requiring funds for physician travel, physician consulting, and funds supporting CME activities to be paid directly to the institution where the physician is employed, rather than to the physician.

· Enhancing the transparency of consulting and clinical research arrangements through prohibiting open-ended grants to individual physicians, and by posting physician consulting and research contracts on publicly available websites.

In the end, the group appealed to physicians’ sense of professionalism and urged them to confront these “serious challenges to the principles of medical professionalism” by taking prompt action to eliminate these conflicts of interest that infringe upon the physician-patient relationship.

The issue of whether and to what extent physicians’ prescribing patterns, and resultant patient care, are affected by their financial relationships with industry is not one that will likely go away soon, or quietly. If anything, the issue is picking up steam. In the last year alone, government enforcement agencies have issued hundreds of subpoenas nationwide seeking information on improper financial relationships between physicians and industry. In addition, professional and private groups continue to focus on the issues. A new group known as the “The Prescription Project,” an initiative of the Boston-based nonprofit health care advocacy group Community Catalyst, recently took up the cause of physician-indu0stry conflicts of interest. The Prescription Project is conducted in partnership with the Institute on Medicine as a Profession, and is funded by a $6 million grant from The Pew Charitable Trusts. As a result, the intense scrutiny of the past few years is likely to continue.

As long as manufacturers have been producing medicines, their sales representatives have been seeking ways to reach physicians through building relationships. This dynamic can be of great benefit to manufacturers, to physicians, to patients and to society. However, these relationships must be maintained with professionalism and the best interests of the patients as the highest priorities. To ensure these priorities, government regulators and prosecutors, professional and industry associations, and private groups are striving for a new prescription for quality patient care through the reform of inappropriate marketing practices.

Jeffrey B. Miller, Esq., is Chief Compliance Officer of Synthes, Inc.

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