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“Gift Ban and Disclosure” — Reduce Costs, Ensure Safety and Accuracy in Prescribing Decisions: Key Facts, Polling, Best Practic

Policy Overview:  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. 

Link: Model Legislation for an Act to Ensure Safety and Accuracy in the Prescribing of Prescription Drugs and Medical Devices

Key Facts on Marketing: In its marketing, the drug industry gets the greatest bang for its buck by developing personal relationships with physicians through gifts and by providing physicians with biased information on a drug’s efficacy.  Studies show that industry gifts to physicians, like lunches or all-expense paid trips to resort conferences, create an unconscious "demand for reciprocity."  State gift 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.

  • Drug manufacturers spend more money marketing drugs ($30B each year) than developing new ones.
  • The industry habitually markets the most expensive drugs over less expensive, yet equally or more effective medications, like generics.  
  • In 2007, the industry spent $6.7 billion on direct-to-physician marketing.
  • 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, armed with an expensive meal, office supplies with the company logo, and drug samples.  
  • 94% of doctors have received industry incentives and studies show that even small gifts create an unconscious "demand for reciprocity."  
  • "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, as the New York Times reported in 2007.

Key Facts on Drug Prices: The pharmaceutical industry is raising its prices at the fastest rate since 1992.  Critics identify this as an attempt to wedge in higher prices before Congress passes health reform that may clamp down on exorbitant drug prices and begins expanding coverage to millions of Americans.  Leading up to the creation of the Medicare Part D drug benefit, which notably lacked authority for Medicare to flex taxpayers’ purchasing power to negotiate lower prices, drug manufacturers raised their prices at the widest margin in 6 years.  The industry has so far protected its profits by spending more than almost all other lobbies in Washington, DC.

  • In 2007, the U.S. spent $287 billion on pharmaceutical drugs, representing 14% of all health care expenditures and a significant driver of health care costs. 
  • 1 in 7 Americans reportedly went without prescribed drugs in 2007, up from 1 in 10 in 2003.

Polling Data:

  • According to a 2008 survey from the Pew Prescription Project:
    • 68% of Americans support requirements on the drug industry to disclose gifts to physicians;
    • 86% would ban free dinners;
    • 80% support a ban on speaking fees;
  •  70% of Americans say the industry puts profits before people, according to a 2005 Kaiser Family Foundation poll.
  • 74% of Americans believe the drug industry makes too much profit, according to a November 2009 Associated Press poll.
  • 9 in 10 Americans support the government using its buying power to negotiate lower prices from drug companies, which many states are already doing, according to a recent Kaiser Family Foundation/Harvard poll.

For more, see Pew and Community Catalyst's public opinion survey on American's concerns about drug industry gifts and other ties to physicians and a recent Kaiser Family Foundation/Harvard/NPR survey on the public's opinion of the role of health care interest groups in health reform.

Best Practices: In addition to our model legislation, several states have enacted laws to reduce the industry’s influence over the prescribing decisions of medical practitioners, including the following models:

  • 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.  A review of Minnesota data showed that, as payments to psychiatrists increased, so did the writing of prescriptions for drugs made by those companies.  
  • In 2008, Massachusetts enacted S2526, limiting industry gifts to medical professionals and requiring public disclosure of gifts valued at more than $50. 
  • In 2009, Vermont enacted the strongest 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.

Possible Federal Action Creates Potential for States to Go Further:  Federal reform may set the stage for states to greatly expand their Rx reform initiatives, most notably those included in PSN’s 2010 Rx Agenda.  While the House reform bill authorizes Medicare to negotiate with the drug industry for reduced prices, a key and necessary reform, the Senate bill simply calls for a study of Medicare Part D drug prices.  Importantly, both bills require greater marketing transparency and disclosure of gifts to prescriber, called "sunshine" provisions.  The strongest language is in the House bill and both would prohibit states from collecting the same information.  However, states would not be prohibited from collecting additional information or prohibiting gifts, which the federal bills fail to do.