One of my many pet peeves is drug marketing. Even though Big Phama likes to tout how much it spends on R&D as a justification for high drug prices, it spends more on marketing as a percentage of revenues than it does on R&D. Think about it: in what other industry are the margins high enough to support in person selling to small businessmen? And I read once (in the FT? I have been notably unsuccessful in finding the source, despite multiple efforts) that over 88% of the so-called “new drug applications:” in the last 10 year have not been for new drugs, but new uses for existing drugs, and to extend the patent on existing drugs.
Drug companies are masters of this art. At Pfizer, which sets the gold standard for drug selling methods, each salesman markets only three drugs in his territory. So if a doctor is a candidate for more than three, he has more than one salesman calling on him. The scripts are highly refined, with a 15 second pitch that rolls into a one minute pitch that rolls into a longer chat if the drug detailman can get the time. All drug companies keep current records on how much each doctor is buying of each drug. Another tactic is “You aren’t prescribing as much of XXX as your peers are….”
They also give lots of little goodies (pens, notepads, desk toys). There is ample research that shows that giving even minor gifts is effective (doubters please read Robert Cialdini’s classic, Influence: The Art of Persuasion). And drug companies do all kinds of small scale research on existing drugs (as in this has no medical benefit, it’s just a sales tool, but those studies no doubt get lumped in the R&D total) to give the salesmen something fresh to talk about with existing drugs.
Salesmen must also adhere very strictly to their sales pitches (unlike most other types of sales, where the reps have latitude and develop their own approaches) because the products are regulated (if a rep exaggerated the efficacy of a drug, that would be a regulatory violation). Many drug companies like to hire former military personnel, since they find they will comply with instructions but also be persistent.
And that’s before we get to TV ads, something I particularly despise….
So why the strict controls? Salesmen are permitted to pitch drugs ONLY for uses approved by the FDA. But doctors can prescribe drugs any way they fit. If some doctor had a theory that Viagra would treat schizophrenia, he’s free to give it to a patient for that reason. That sort of prescription is called an “off label use.” The biggest buyers of cannulas (plastic tubes, basically, to provide or remove fluids during surgery) is plastic surgeons for liposuction, and that is off label.
Now there are legit off label uses. For instance, many autoimmune diseases are pretty obscure. Most of the research is done on the most common one, rheumatoid arthritis, so a doctor might look and see if there were any new developments or treatments for RA and might use them on a patient that had scleroderma. But that still means it is absolutely not kosher to market them for unapproved uses.
So why is prosecutor Michael Loucks up in arms? Pfizer has in the past pled guilty to criminal charges for just this sort of behavior, paid substantial fines, and engage in the very same conduct on other products right on the heels of the 2004 settlement. Moreover, Pfizer has a new instance of alleged illegal drug sales practices. And as a Bloomberg story discusses, Pfizer has plenty of company.
It seems pretty clear, given its recidivist behavior, that even multi-hundred million dollar fines are no deterrent. In other words, it still must pay, even after the big fines, for Pfizer to flout the law. I bet they even have a financial analysis worked up on the tradeoff.
Maybe it’s time for the prosecutors to haul out RICO charges….
Prosecutor Michael Loucks remembers clearly when lawyers for Pfizer Inc., the world’s largest drug company, looked across the table and promised it wouldn’t break the law again…Loucks was head of the health-care fraud unit of the U.S. Attorney’s Office. One of Pfizer’s units had been pushing doctors to prescribe an epilepsy drug called Neurontin for uses the Food and Drug Administration had never approved…
New York-based Pfizer agreed to pay $430 million in criminal fines and civil penalties, and the company’s lawyers assured Loucks and three other prosecutors that Pfizer and its units would stop promoting drugs for unauthorized purposes.
What Loucks, who’s now acting U.S. attorney in Boston, didn’t know until years later was that Pfizer managers were breaking that pledge not to practice so-called off-label marketing even before the ink was dry on their plea.
On the morning of Sept. 2, 2009, another Pfizer unit, Pharmacia & Upjohn, agreed to plead guilty to the same crime. This time, Pfizer executives had been instructing more than 100 salespeople to promote Bextra, a drug approved only for the relief of arthritis and menstrual discomfort, for treatment of acute pains of all kinds.
For this new felony, Pfizer paid the largest criminal fine in U.S. history: $1.19 billion. On the same day, it paid $1 billion to settle civil cases involving the off-label promotion of Bextra and three other drugs with the U.S. and 49 states.
“At the very same time Pfizer was in our office negotiating and resolving the allegations of criminal conduct in 2004, Pfizer was itself in its other operations violating those very same laws,” Loucks, 54, says. “They’ve repeatedly marketed drugs for things they knew they couldn’t demonstrate efficacy for. That’s clearly criminal.”
The penalties Pfizer paid this year for promoting Bextra off-label were the latest chapter in the drug’s benighted history. The FDA found Bextra to be so dangerous that Pfizer took it off the market for all uses in 2005…
Since May 2004, Pfizer, Eli Lilly & Co., Bristol-Myers Squibb Co. and four other drug companies have paid a total of $7 billion in fines and penalties. Six of the companies admitted in court that they marketed medicines for unapproved uses…
In January 2009, Indianapolis-based Lilly, the largest U.S. psychiatric drug maker, pleaded guilty and paid $1.42 billion in fines and penalties to settle charges that it had for at least four years illegally marketed Zyprexa, a drug approved for the treatment of schizophrenia, as a remedy for dementia in elderly patients.
In five company-sponsored clinical trials, 31 people out of 1,184 participants died after taking the drug for dementia — twice the death rate for those taking a placebo…
“Marketing departments of many drug companies don’t respect any boundaries of professionalism or the law,” says Jerry Avorn, a professor at Harvard Medical School in Boston… “The Pfizer and Lilly cases involved the illegal promotion of drugs that have been shown to cause substantial harm and death to patients.”…
“It’s an unbearable cost to a system that’s going broke,” says Avorn, who heads the pharmacology economics unit of Brigham and Women’s Hospital in Boston. “We can’t even afford to pay for effective, safe therapies.”
About 15 percent of all drug sales in the U.S. are for unapproved uses without adequate evidence the medicines work, according to a study by Randall Stafford, a medical professor at Stanford University in Palo Alto, California….
In pushing off-label use of drugs, companies find ready and willing partners in physicians. Under the fragmented system of medical regulation in the U.S., it’s legal for doctors to prescribe FDA-approved drugs for any use.
The FDA has no authority over doctors, only over drug companies, regarding off-label practices. It’s up to the 50 states to oversee physicians.
“I think the physician community has to take some ownership responsibility and do their own due diligence beyond the sales and marketing person,” says Boston’s former U.S. Attorney Michael Sullivan….
Pharmaceutical companies have showered doctors with cash to persuade them to use drugs off-label, according to their guilty pleas.
Pfizer’s marketing program offered doctors up to $1,000 a day to allow a Pfizer salesperson to spend time with the physician and his patients, according to a whistle-blower lawsuit filed by John Kopchinski, who worked as a salesman at Pfizer from 1992 to 2003.
“By ‘pairing up’ with a physician, the sales representative was able to promote over a period of many hours, without the usual problems of gaining access to prescribing physicians,” Kopchinski says. “In essence, this amounted to Pfizer buying access to physicians.”
This is an excellent article, and the examples above are only the tip of the iceberg of the conduct it describes.