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Prescription Drug Marketing and Safety Policy Guide

Policy Overview: To reap its record profits and drive up costs for families, businesses, and government health programs, the pharmaceutical industry markets the most expensive “celebrity” drugs over other medications that are equally or more effective and less costly. They do this through the usual channels of television and internet advertising, but achieve the greatest bang for their buck by developing personal relationships with physicians through gifts, expensive dinners, and by providing biased information on a drug’s efficacy.  States can intercede by providing physicians with unbiased clinical information on drugs and eliminating the “quid pro quo” created by the exchange of gifts that are the hallmark of the industry’s sales strategy.

Background — As the New York Times reported in 2007, "doctors who have close relationships with drug makers tend to prescribe more, newer and pricier drugs" regardless of a drug’s value compared to less expensive medications.  In 2007, the industry spent $6.7 billion on direct-to-physician marketing, which accounts for more than 60% of the industry’s total marketing expenditures for the year, according to a new report from Prescription Policy Choices (PPC) and the Maine Center for Economic Policy (MECEP).  On average, $8,800 in marketing is spent on each physician in the US.  The industry sends out 90,000 sales reps, or detailers, and fellow physicians paid by the industry to pitch the newest “celebrity” drugs in doctor’s offices and hospitals and armed with an expensive meal, office supplies with the company logo, and drug samples.  This is called “detailing.”  As the Prescription Project reports, "94% of doctors have received such incentives" and studies show that even small gifts create an unconscious "demand for reciprocity."  As PPC and MECEP report, “$58 million may be wasted due to the inappropriate use (over-use and under-use) of prescription drugs each year”¦For many drugs, the chasm between the appropriate, evidence-based usage of a drug and the actual usage is immense.  Aggressive marketing of the newst, most profitable, patent-protected drugs, while sager, effective and less expensive alternatives are available, goes a long way to explaining this chasm.”

Public Support — A June 2008 survey by the Prescription Project finds that Americans are wary of drug industry ties to physicians.  A majority believe that drug industry gifts influence how physicians make prescribing decisions.  Key findings include:

  • 68% support requirements on the drug industry to disclose gifts to physicians.
  • 86% would ban free dinners and 80% support a ban on speaking fees
  • 71% support “provider education programs” that provide unbiased clinical non-commercial information about drugs to physicians.

Legislative Strategy: To effectively counter this marketing influence and to ensure that physicians are receiving evidence-based information requires a two-part strategy:

  1. Require the industry to disclose information about advertising and marketing spending, and prohibit gifts and payments to health care practitioners from pharmaceutical and medical device manufacturers.
  2. Establish a Prescriber Education Program, or “academic detailing” initiative, for the dissemination of scientific, clinical data about the effectiveness and costs of pharmaceuticals and medical devices.

Part 1: The Drug and Medical Device Marketing Restrictions and Disclosure Act — Compiled by the Prescription Project and the National Legislative Association on Prescription Drug Prices, this act builds on laws in Minnesota, Massachusetts, Vermont and elsewhere to (1) shine a light on the marketing practices of the drug and medical device industries through disclosure requirements and (2) prohibit gifts to prescribers, which drive-up costs and result in inappropriate use of medications. 

*** Model Legislative Language: The Drug and Medical Device Marketing Restrictions and Disclosure Act, compiled for the Prescription Project by Maine State Rep. Sharon Treat, Director of the  National Legislative Association on Prescription Drug Prices; Mr. Sean Flynn, Associate Director of the Program on Information Justice and Intellectual Property at American University, Washington College of Law; Prescription Policy Choices; and the Public Citizen Litigation Group.

o   Table of Contents:

§  Section 1. Purposes

  • The purposes of the Legislature in enacting this Act are to improve the public health and the quality of prescribing and medical decision making; promote consumer access to information relating to medical care, marketing and gifts; reduce the inappropriate influence of gifts and payments on provider medical decisions; limit annual increases in the cost of health care; and assist the State in its role as a purchaser of health care services and an administrator of health care programs by enabling the State to determine the scope of advertising and marketing costs and their effect on the cost, utilization and delivery of health care services.

ˆ™ Section 2. Definitions
ˆ™ Section 3. Gifts to practitioners prohibited
ˆ™ Section 4. Disclosure of exempted gifts
ˆ™ Section 5. Advertising and marketing expenditure reporting
ˆ™ Section 6. [Agency] reports
ˆ™ Section 7. Public records
ˆ™ Section 8. Enforcement
ˆ™ Section 9. Rulemaking
ˆ™ Section 10. Severability

History and Success: Minnesota, in 1993, became the first state to limit gifts from the drug industry to physicians, banning gifts of more than $50, and to require companies to disclose payments to physicians in excess of $100.  In 2008, Massachusetts enacted S.2526, limiting industry gifts to medical professionals and requiring public disclosure of gifts valued at more than $50.  In 2009, Vermont enacted the strictest law to date, S48. As NLARx reports, the Vermont law sets a "nationally significant standard" by banning all gifts to physicians, including meals and travel, with few exceptions.  For allowable gifts, such as payments for speaking, consulting, or research, the law requires strict reporting and public disclosure. Starting in 2011, Vermont will publish the disclosures through a searchable website.

As NLARx reports, Minnesota, Massachusetts, Vermont, West Virginia, the District of Columbia, Maine, and California have enacted laws requiring disclosure of marketing and/or advertising spending. Yet, none of these laws is perfect, as several have sweeping trade secret loopholes and rely on aggregate reporting. The most effective are the Massachusetts and Vermont laws, which apply to pharmaceutical and medical device manufacturers, require reporting of specific payment amounts to providers by name, and have few exemptions.

Disclosure laws have exposed millions of dollars spent on payments to physicians and conflicts of interest. A review of Minnesota data showed that, as payments to psychiatrists increased, so did the writing of prescriptions for drugs made by those companies.

Part 2: An Act to Create an Evidence Based Prescriber Education Service According to NLARx, “academic detailing” and other prescriber education programs aim to provide better information to medical providers and consumers about which drugs are the most effective and have the least adverse effects, as well as the costs of these drugs. In contrast to drug company detailers, who are in fact salespeople who focus on a particular drug sold be the salesperson’s company, these programs provide objective, clinical information on a range of treatments including non-pharmaceutical options.

Academic detailing helps improve medical care and save money by supporting chronic disease management and reducing purchases of unnecessary or more costly pharmaceuticals that have the same — or lesser — degree of efficacy, or medicinal value. Programs can be created with minimal state investment, from $1 million annually in Pennsylvania’s system to $50,000 for Vermont’s.  Funding options include a fee on manufacturers, Medicaid match, and federal grants.  Additionally, for a limited time, ARRA funds are available for academic detailing programs as part of comparative effectiveness research initiatives.  The Agency on Health Research and Quality (AHRQ) is accepting applications up until December 16, 2009, to apply for funding of up to $1.5 million per project.

*** Model Legislative Language — Model Act to Create an Evidence Based Prescriber Education Service, compiled for the Prescription Project by staff at Prescription Policy Choices and the National Legislative Association on Prescription Drug Prices.

  • Table of Contents:
    • Section 1. Purposes:    It is the intent of the legislature to ensure that health care professionals have balanced and unbiased evidence-based information readily available in order to ensure the highest quality prescribing decisions are made for the citizens of this state, which will improve health outcomes and reduce unnecessary costs.
    • Section 2. Definitions
    • Section 3. Education services
    • Section 4. Rulemaking

    History and Success: As NLARx reports, a formal cost-benefit analysis of a 4-state Medicaid study involving 435 doctors showing savings of $2 for every $1 the program cost, based on just Medicaid paid claims data. Pennsylvania’s model program, called Independent Drug Information Services, is a partnership between the state and Harvard Medical School.  Vermont’s academic detailing program is run by the University of Vermont Medical School and Maine’s (Public Law Chapter 327) is a collaboration between the Maine Medical Association and the State.  Massachusetts (HB 4900) , New Hampshire (HB 1513), and New York are also implementing systems. 

    Resources:

    Part 1: Gifts

    Part 2: Academic Detailing

    Progressive States Network — Reducing Prescription Drug Costs
    Progressive States Network — Rx Policies — Cut Health Care Costs and Promote Broader Health Care Reform