In 2012, GlaxoSmithKline, the world’s fourth-largest pharmaceutical company, pleaded guilty to criminal charges in the single-largest case of health care fraud in American history. Accused of bribing doctors, promoting its medications for unapproved uses and failing to report safety data, the British firm agreed to pay $3 billion in fines, including $1.017 billion to the four whistleblowers who filed “qui tam” lawsuits against the company under the False Claims Act.
GSK was not alone in paying fines that year. Abbott Laboratories settled for $1.6 billion over the marketing of its drug Depakote, and Johnson & Johnson agreed to a fine of $2.2 billion for promoting unapproved uses of its psychiatric drugs to children, seniors and the disabled.
No one was charged in these cases.
At the time, former N.Y. Gov. Eliot Spitzer (D) argued, “What we’re learning is that money doesn’t deter corporate malfeasance. The only thing that will work in my view is C.E.O.’s and officials being forced to resign and individual culpability being enforced.”
Spitzer had previously brought a similar suit against GSK for its drug Paxil in 2004, when he was the state attorney general.
Doctors promoting drugs
The pharmaceutical companies are probably capable of learning from their mistakes. According to a ProPublica analysis, Eli Lilly and Co. dropped its payments to speakers by 55 percent in 2012. In the same period, Pfizer dropped its speaker payments by 62 percent, and Novartis — the United States’ biggest pharmaceutical company — spent 40 percent less. These speakers are practicing doctors who would speak to other doctors about a given drug, typically using a prepared script from the pharmaceutical companies.
This practice of paying doctors to use and recommend specific medications or procedures that require patented procedures and medical devices has been placed under heightened suspicion. The Physician Payment Sunshine Act of 2010 requires drug and medical device manufacturers to report almost all payments to doctors, professional groups and teaching hospitals. This information will be posted to a government-run public website scheduled to be launched in September.
It has been argued that the insistence of many hospitals and doctors to use promoted medications and medical devices, which tend to be the most costly, is a direct driver for the spiking cost of health care in the United States.
The upcoming public disclosure has led many to “clean house,” however. For example, in December, GSK announced an end to tying sale representatives’ compensation to the number of prescriptions for GSK medications doctors write.
Still, many others have chosen to “double down.” In 2012, Johnson & Johnson actually increased its speaker payments by 12 percent, while AstraZeneca saw no change in its speaker rates from 2011 to 2012.
Defending speaker fees
Some pharmaceutical companies argue that the Physician Payment Sunshine Act was the rationale for reducing their speaker payments.
“The value of educational programs tends to be higher when we’re launching a new medicine or we have new clinical data/new indication,” Eli Lilly spokesman J. Scott MacGregor told the Boston Globe. MacGregor also tied the drop in speaking payments to the increased use of Web conferencing.
“Like any other company, our business practices must adapt to the changing nature of our product portfolio, based in part on products going off patent and new products being introduced into the market,” said company spokesman Dean Mastrojohn.
Lipitor, one of Pfizer’s best-selling drugs, lost its patent protection in 2011. Three of Novartis’ drugs have also lost patent protections, meaning that they are now or will be available in generic form. Promoting the brand name drug at this point would actually be a secondhand advertisement for the generic version.
Most pharmaceutical companies defend the speaker system as a way to bring awareness to a drug most doctors would otherwise not learn about and, therefore, not prescribe. The fact that the incentives to speak about a specific drug range from office notepads and free drug samples to tickets to sporting events and millions of dollars in kickbacks has given the practice the pallor of bribery. According to ProPublica, since 2009, 15 drug companies have paid $2.5 billion in disclosed funding to American doctors for consulting, speaking, research, travel and meals. Of those doctors, 22 received $500,000 or more each.
While all of this is technically legal, the reality of the speaker system is that a doctor that has been influenced by it may recommend a costlier brand-name medication over a cheaper, but equally effective generic medication, or the doctor may recommend a medical procedure using a patented medical technique and expensive medical devices when more price-friendly alternative treatments are available.
By adding a financial motive to a physician’s recommendation, there’s no assurance that a prescription is written with only the patient’s best interest in mind.
In discussing his company’s decision to untie prescription rates to sales commissions, GSK’s CEO Andrew Witty said that the changes “are designed to bring greater clarity and confidence that whenever we talk to a doctor, nurse or other prescriber, it is patients’ interests that always come first. We recognize that we have an important role to play in providing doctors with information about our medicines, but this must be done clearly, transparently and without any perception of conflict of interest.”
This conflict of interest can start early. In a joint study between Harvard Medical School and Boston’s Brigham and Women’s Hospital, residents, medical trainees and medical students commonly receive meals, gifts and industry-sponsored educational materials, despite efforts by medical schools and academic medical centers to restrict pharmaceutical sales representatives’ access to the trainees.
Because these trainees are not prescription-writing physicians at this point in their career, the move represents an attempt by the pharmaceutical industry to create influence early in these professionals’ careers.
“In medical school and residency, as trainees are learning the fundamentals of their profession, there is a need to ensure the education they receive is as unbiased as possible,” said Aaron Kesselheim, who co-headed the research effort. “However, it is well known that promotional information and gifts from pharmaceutical companies can encourage non-evidence-based prescribing. Though many institutions have tried to insulate trainees from these effects, trainees’ exposure to industry promotion is still quite high.”