The Problem

The Problem: Undermining Quality and Increasing the Cost of Health Care
 

The Pharmaceutical industry spent at least $20.5 billion on promotional activities in 2008^.1 Detailing to physicians and physicians' assistants cost $12 billion, accounting for more than half of that promotional spending. In addition drug companies spent another $3.4 billion sponsoring professional meetings and events and about $.4 billion placing advertisements in professional journals.¹

The industry employs over 90 thousand sales representatives who try to influence what medicines doctors prescribe by offering free drug samples, catered lunches, “medical education” sponsorships, and other gifts. A recent survey indicates that 94% of doctors have received such incentives from the industry.² Studies indicate that even small gifts create an unconscious demand for reciprocity.³

This intense marketing is widely believed to undermine quality of care and increase costs because new and expensive drugs are promoted more heavily than lower cost drugs that are equally or more effective. While the annual increase in prescription drug spending has slowed in recent years, the enduring increase in prices of prescription drugs is directly related to marketing by pharmaceutical companies.

Of the drugs responsible for the nearly 19% rise in spending on pharmaceuticals in 2001, the four top sellers were among the top ten most heavily marketed drugs. The negative impact of pharmaceutical marketing is wide-spread and enduring.

Examples include:

• Avoidable deaths due to Vioxx®. Vioxx, the heavily marketed Merck pain killer, may have caused tens of thousands of avoidable heart attacks and strokes before it was removed from the market. This occurred even though the drug was no better for the vast majority of patients than older, less expensive drugs.⁴
• llegal promotion of Neurontin®. The pharmaceutical company Warner Lambert promoted the epilepsy medication Neurontin for unapproved uses. The Massachusetts Attorney General joined with the Department of Veterans Affairs and the federal Department of Justice to successfully sue the company for a total of $430 million in damages for losses the Medicaid programs suffered as a result of Warner-Lambert’s fraudulent drug promotion and marketing misconduct.⁵
• Profiting from inappropriate use of Epogen® and Procrit®. Recent studies have shown that physicians, dialysis clinics and the pharmaceutical industry profited from the over prescribing of the anemia drugs, Epogen and Procrit, compromising patient safety and driving up costs.⁶

State policymakers and public purchasers can have difficulty obtaining objective, unbiased information comparing the clinical and cost effectiveness of prescription drugs.

Pharmaceutical companies are for-profit companies whose purpose is to promote the sales of their products, so they strictly control what information is publicly available about their products. Information about new drugs often emphasizes their benefits, while obscuring costs and long-term consequences. One particular concern for Medicaid programs is that their beneficiaries are often sicker and older than the patients enrolled in the clinical trials, presenting a greater risk for adverse events and reactions to drugs.

State administrators can encourage the use of cost-effective medicines in public programs by establishing formularies and preferred drug lists, but pharmaceutical marketing often undermines evidence-based guidelines through direct advertising to consumers, free drug samples, and gifts for physicians. Clinical guidelines may be biased because of financial relationships between the pharmaceutical industry and professional medical associations and academic medical centers.

New drugs and medical devices are revolutionizing the practice of health care, curing disease, and improving quality of life. Today, however, aggressive marketing to physicians by pharmaceutical and device industries is creating real and perceived conflicts of interest in the medical profession and raising questions about the appropriateness of treatment choices. These practices can compromise patient care, increase health care costs, and erode public confidence in the medical profession.

All of this has led to:
1. Pervasive and Out of Control industry marketing

• Undue industry influence in government
• Undue Industry influence on physicians and patients

2. Increased concerns about the safety and efficacy of the pharmaceuticals

3. Quality of care being compromised

4. Spiraling prescription drug costs that undermine access to care and affordability

5. A constant stream of articles about Conflict of Interest Issues

6. Court cases challenged the actions of drug companies and regulators

The Institute of Medicine 2009 Report:
the nation’s most influential medical advisory group, released a report in April of 2009 recommending:

• An end to physician receipt of gifts, and
• Creation of a public physician payments disclosure website.⁷

MEDPAC, the Medicare Payment Advisory Commission 2009 Report:
the independent Congressional agency established to advise Congress on Medicare issues, released a report in March 2009 that:

• Recommended manufacturers and distributors of drugs, biologicals, medical devices be required to publicly report their financial relationships with health care practitioners and organization
• Articulated that such a policy could discourage physicians from accepting gifts or payments that violate professional guidelines.⁸

How much does the pharmaceutical industry spend to market its drugs?

Reports of pharmaceutical and medical device industry marketing expenditures vary.
The following are some recent estimates:
• $20.4 billion in 2007 (Verispan)⁹
• $29.8 billion in 2005 (IMS)¹⁰
• $57.5 billion in 2004 (Gagnon 2008 - CAM and IMS data combined)¹¹

Some of the variance above is due to differences in the types of activities captured. For example, the Verispan estimate does not include expenditures on pharmaceutical samples, while the cost of sponsored meetings and talks are not included in IMS data.¹²
Although reports solicited from industry may be conservative in their definition of marketing,¹² they also bear less risk of overstatement. The Prescription Project references IMS data.

What do these totals include?

Estimates of pharmaceutical marketing normally include detailing, journal advertising, pharmaceutical samples and direct-to-consumer advertising. Detailing is the largest industry marketing segment after expenditures on pharmaceutical samples. It is the industry term for face-to-face sales and promotional activities directed toward office- and hospital-based physicians and directors of pharmacies. It includes pay for sales representatives and the meals and gifts they provide. IMS data includes expenditures to “field the rep” but not the cost of managers and training¹²
 

Is there more?
Almost certainly. Most estimates of pharmaceutical marketing do not capture payments made to physicians for consulting and speaking relationships, although these often involve a marketing purpose^.13,14 Close to 1 in 5 physicians are paid by industry as consultants.¹⁵

Continuing Medical Education (CME) should also be examined. In 2007, total income for the CME industry was $2.54 billion, with $1.21 billion of funding coming from pharmaceutical and medical device companies.¹⁶ This represents a 4-fold increase over 1998 levels of industry support. Almost two thirds of the cost of CME in medical schools and teaching hospitals is paid for by the pharmaceutical and medical device industries.¹⁷

What are the most heavily promoted drugs?
In 2005, the most heavily promoted drugs were antidepressant SSRIs or SNRIs, resourced with $1 billion in promotional funds. Proton-pump inhibitors for acid reflux and statins for cholesterol reduction came next, at $884 and $859 million respectively.
These three therapeutic classes were also the top three in U.S. sales revenue that year (all greater than $12 billion).¹⁸

Does it work?
Published studies clearly establish that detailing, samples, direct to consumer advertising and journal advertising all influence prescribing.^19-25

How many pharmaceutical sales reps are there in the United States?
In 2007, there were slightly less than 95,000 reps, up from 88,000 in 2001.1 To put it another way, this is about 1 rep for every 7 physicians (based on 95,000/663,000)²⁶
However, many physicians are in non-clinical roles, in rarely visited rural practices, or refuse to see reps. Some sources estimate a more realistic ratio of 1 rep for every 4-5 doctors.^27,28 Pharmaceutical Executive magazine estimates about 250,000 doctors are targeted by sales reps, putting the ratio closer to 1:2.5.^29,30 According to the health strategies group, primary care physicians deemed as "heavy prescribers" were called on by an average of 29 reps a week in 2005 and 2006.³¹

How much does the industry spend on lobbying?
PhRMA, the pharmaceutical industry's main trade group spent more than $22 million lobbying the federal government in 2007, a 25 percent boost from the year before.
PhRMA reported lobbying on how prices are set for seniors' medications, rules governing drug imports and other issues.

In addition, individual companies spent at least another $225 million on federal lobbying.^{32, 33} This does not include state-level lobbying by PhRMA and individual companies.

What can be done to protect patients, control health care costs, and bolster professionalism among physicians?
The Minnesota Prescription Coalition and the PEW Prescription Project promotes a range of solutions for consumers, physicians, state and federal policy makers, and public and private payers. For more, visit their website. www.prescriptionproject.org

 
REFERENCES
¹ Budget Brief prepared by the Congressional Budget Office, December 2, 2009, http://www.minnesotaprescriptioncoalition.org/sites/default/files/CBO_Rx...
² Campbell E. G., Gruen R. L., Mountford J., Miller L. G., Cleary P. D.; Blumenthal D. A National Survey of Physician–Industry Relationships. New England Journal of Medicine. 2007. 356:1742-1750.
³ Dana J. and Loewenstein G. A Social Science Perspective on Gifts to Physicians from Industry. JAMA.2003;290(2):252-255.
⁴ Topol EJ. Failing the public health--Rofecoxib, Merck, and the FDA. N Engl J Med. 2004;351:1707-1709.
⁵ Department of Justice. Warner Lambert to pay $430 million to resolve criminal & civil health care liability relating to off-label promotion. Available at: http://www.usdoj.gov/opa/pr/2004/May/04_civ_322.htm. Accessed July 25, 2007.
⁶ Zwillich T. FDA panel wants anemia drug warnings. WebMD. Available at:
http://www.webmd.com/news/20070510/fda-panel-wants-anemia-drug-warnings Accessed May 10 2007.
⁷ Conflict of Interest in Medical Research, Education, and Practice, National Academies Press, 500 Fifth Street, N.W., Lockbox 285, Washington, DC 20055; Internet, www.nap.edu.
⁸ Public Reporting of physicians’ financial relationships, Medpac, March 2009; http://www.medpac.gov/chapters/Mar09_Ch05.pdf
⁹ Verispan. Verispan year in review - 2007. 2008. Available from:
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¹⁰ Donohue JM, Cevasco M, Rosenthal MB. A decade of direct-to-consumer advertising of
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¹¹ Gagnon MA, Lexchin J. The cost of pushing pills: A new estimate of pharmaceutical promotionexpenditures in the united states. PLoS Med. 2008;5:e1.

Integrated Medical Systems (IMS) and Verispan are marketing research companies that collect data directly from industry, while CAM collects industry marketing information from physicians via survey. Marcia Angell’s estimate of $54 billion is based on the annual reports of Novartis which distinguish “marketing” from “administration” (a distinction not commonly made in industry annual reports.)Available from:
file:///G:/PEW%20Project/References Lexchin_2008_PLOS_Cost%20of%20pushing%20pills.pdf.
¹² Gagnon MA, Lexchin J. The cost of pushing pills: A new estimate of pharmaceutical promotion expenditures in the united states. PLoS Med. 2008;5:e1. Available from: file:///G:/PEW%20Project/References/Lexchin_2008_PLOS_Cost%20of%20pushin....
¹³ Moynihan R. Who pays for the pizza? redefining the relationships between doctors and drug companies. 2: Disentanglement. BMJ. 2003;326:1193-1196.
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¹⁶ Accreditation Council for Continuing Medical Education. Annual report data 2007. 2007.
¹⁷ Elizabeth Williamson and Christopher Lee. Conflict alleged in drug firms' education role. The Washington Post. June 27 2007 Accessed December 5, 2007.
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file:///G:/PEW%20Project/References/DTC/Donohue_2007_NEJM_A%20Decade%20o... 20of%20Rx%20Drugs.pdf.
¹⁹ Chren MM, Landefeld CS. Physicians' behavior and their interactions with drug companies. Acontrolled study of physicians who requested additions to a hospital drug formulary. JAMA. 1994;271:684-689.
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²⁶ Bureau of Labor Statistics. Occupational outlook handbook, 2008-09 edition - physicians and surgeons. Available at: http://www.bls.gov/oco/ocos074.htm. Accessed 11/14, 2008.
²⁷ Chin T. Drug firms score by paying doctors for time. AM Medl News. May 6 2002.
²⁸ Consumers Union. Requiring drug companies to disclose marketing expenditures to
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