[Senate Hearing 110-253]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-253
 
                           PAID TO PRESCRIBE?
    EXPLORING THE RELATIONSHIP BETWEEN DOCTORS AND THE DRUG INDUSTRY

=======================================================================

                                HEARING

                               before the

                       SPECIAL COMMITTEE ON AGING
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             WASHINGTON, DC

                               __________

                             JUNE 27, 2007

                               __________

                           Serial No. 110-10

         Printed for the use of the Special Committee on Aging



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                       SPECIAL COMMITTEE ON AGING

                     HERB KOHL, Wisconsin, Chairman
RON WYDEN, Oregon                    GORDON H. SMITH, Oregon
BLANCHE L. LINCOLN, Arkansas         RICHARD SHELBY, Alabama
EVAN BAYH, Indiana                   SUSAN COLLINS, Maine
THOMAS R. CARPER, Delaware           MEL MARTINEZ, Florida
BILL NELSON, Florida                 LARRY E. CRAIG, Idaho
HILLARY RODHAM CLINTON, New York     ELIZABETH DOLE, North Carolina
KEN SALAZAR, Colorado                NORM COLEMAN, Minnesota
ROBERT P. CASEY, Jr., Pennsylvania   DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri           BOB CORKER, Tennessee
SHELDON WHITEHOUSE, Rhode Island     ARLEN SPECTER, Pennsylvania
                     Debra Whitman, Staff Director
            Catherine Finley, Ranking Member Staff Director

                                  (ii)

  


                            C O N T E N T S

                              ----------                              
                                                                   Page
Opening Statement of Senator Herb Kohl...........................     1

                                Panel I

Jerome Kassirer, M.D., distinguished professor, Tufts University 
  School of Medicine, Boston, MA.................................     3
Greg Rosenthal, M.D., retinal specialist, Toledo, OH.............    12
Peter Lurie, M.D., MPH, deputy director of Public Citizen's 
  Health Research Group, Washington, DC..........................    19
Sharon Treat, state representative, executive director, National 
  Legislative Association on Prescription Drug Prices, Hallowel, 
  ME.............................................................    30

                                Panel II

Robert Sade, chair, Council on Ethical and Judicial Affairs, 
  American Medical Association, Washington, DC...................    52
Marjorie Powell, Esq., senior assistant general counsel, 
  Pharmaceutical Research and Manufacturers of America, 
  Washington, DC.................................................    61

                                APPENDIX

Dr. Kassirer's Responses to Senator Kohl's Questions.............    87
Dr. Rosenthal's Responses to Senator Kohl's Questions............    89
Peter Lurie's Responses to Senator Kohl's Questions..............   127
Rep. Sharon Treat's Responses to Senator Kohl's Questions........   128
Marjorie Powell's Responses to Senator Kohl's Questions..........   133
Statement from the American College of Physicians................   142
Testimony of Anthony Fleg, American Medical Student Association..   146
Statement of Lewis Morris, Chief Counsel to the Inspector 
  General, Office of the Inspector General, U.S. Department of 
  Health and Human Services......................................   168
Testimony submitted by the National Physicians Alliance..........   175

                                 (iii)

  


 PAID TO PRESCRIBE? EXPLORING THE RELATIONSHIP BETWEEN DOCTORS AND THE 
                             DRUG INDUSTRY

                              ----------                              --



                        WEDNESDAY, JUNE 27, 2007

                                       U.S. Senate,
                                Special Committee on Aging,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:39 a.m., in 
room SD-106, Dirksen Senate Office Building, Hon. Herb Kohl 
(chairman of the committee) presiding.
    Present: Senators Kohl, Carper, and McCaskill.

        OPENING STATEMENT OF SENATOR HERB KOHL, CHAIRMAN

    The Chairman. Hello to one and all, and we will call this 
hearing to order at this time.
    Today, we look forward to examining the financial 
relationship between the pharmaceutical industry and 
physicians. Interactions between doctors and drug manufacturer 
representatives often involve payments that can actually take 
the form of cash and gifts, such as meals, travel to 
conferences, or textbooks.
    Unlike other professions, physicians are allowed to take 
payments from companies whose products they may choose to 
prescribe to their patients. Recent studies show that the more 
doctors interact with drug marketers, even through small gifts 
and modest meals, the more likely doctors are to prescribe the 
expensive new drugs that are being marketed to them when a more 
affordable generic would do just as well.
    Seniors lose out with unnecessarily high drug costs while 
doctors and drug manufacturers benefit financially. The rising 
drug prices don't only harm the elderly. They hurt us all, as 
they undermine our private and public health systems.
    Health insurance premiums continue to skyrocket, and 
escalating drug costs have played a large role. The Federal 
Government, now the largest payer of prescription drugs with 
the new Medicare drug benefit, feels the squeeze as well, and 
considerably.
    Even more alarming, these gifts and payments can compromise 
physicians' medical judgment by putting their financial 
interest ahead of the welfare of their patients. Over the last 
several years, there have been attempts by the Federal 
Government, medical organizations, and drug companies to curb 
the excessive gifts and payments to physicians.
    Unfortunately, as we will hear from some of our witnesses 
today, financial ties between doctors and drug companies are 
only deepening. In fact, a study published in the New England 
Journal of Medicine earlier this year reported that 94 percent 
of physicians have received food and beverages, medication 
samples, and other gifts, as well as payments for trips, from 
drug companies.
    The pharmaceutical industry remains one of the most 
profitable industries in the world, returning more than 15 
percent on their investments, which is extraordinary. As a 
businessman myself, I fully respect an industry's right to 
maximize profits.
    Nevertheless, I believe they are charging Americans--and it 
is a fact--the highest drug prices in the world, forcing some 
employers to drop health coverage for their employees, 
squeezing budgets of State and Federal Governments and, 
ultimately, harming our seniors by putting drug costs out of 
their reach.
    It has been estimated that the drug industry spends $19 
billion annually on marketing to physicians in the form of 
gifts, lunches, drug samples, and sponsorship of education 
programs. Companies certainly have the right to spend as much 
as they choose to promote their products, but as the largest 
payer of prescription drug costs, the Federal Government has an 
obligation to examine and take action when companies unfairly 
or illegally attempt to manipulate the market.
    Today's witnesses will discuss the current state of the 
physician-drug industry relationship, recent attempts at the 
state level to increase disclosure of payments, and attempts to 
reduce the influence of the drug industry on physicians' 
prescribing behaviors. We will also hear testimony from one 
doctor who feels that these potential conflicts of interest 
have reached a disturbing level in his profession and is 
adversely affecting medical research.
    Our second panel will include representatives of the 
pharmaceutical industry and the medical profession, and they 
will provide us insight into their voluntary guidelines 
addressing physician gifts and payments. We look forward to 
hearing from each of our witnesses in terms of their 
perspectives on this issue and their recommendations.
    Obviously, we take this issue very seriously, and we will 
continue oversight of the relationship between doctors and the 
drug industry. While there are voluntary guidelines already in 
place, to us it seems clear that they are not being 
sufficiently followed. We intend to vigorously pursue stronger 
adherence to these guidelines, as well as to propose a national 
registry to require disclosure of payments and gifts.
    I believe we need transparency at the minimum and at the 
outset. Many of these gifts are not illegal, but we need them 
disclosed. These interactions involving things of value between 
the pharmaceutical industry and doctors, in our judgment, need 
to be made public.
    So we thank you all for being here today.
    At this point, I will introduce our first panel.
    Our very first witness today will be Dr. Jerome Kassirer, 
who is a distinguished professor of medicine at Tufts 
University. Dr. Kassirer has published numerous original 
research and clinical studies regarding quality health care, 
and he served as the editor-in-chief of the New England Journal 
of Medicine from 1991 to 1999.
    After that, we will hear from Dr. Greg Rosenthal, the chief 
of ophthalmology at Toledo Hospital and Toledo Children's 
Hospital and the director of retina care at Vision Associates 
in Toledo. He has extensive training in all diseases and 
surgery of the retina, and he serves on several national 
committees with respect to eye health.
    Our third witness today will be Dr. Peter Lurie, who is the 
deputy director of Public Citizen's Health Research Group, a 
consumer advocacy group here in Washington, DC. Dr. Lurie has 
worked on a myriad of issues related to pharmaceutical policy, 
including the cost and safety of prescription drugs.
    Our fourth witness on the first panel will be State 
Representative Sharon Treat. She is a member of the Maine 
legislature, where she has served for nearly 15 years, 
including two as Senate majority leader. Representative Treat 
is also executive director of the National Legislative 
Association on Prescription Drug Prices.
    So we welcome all of you here today, and we look forward to 
your testimony.
    Dr. Kassirer, we will start with you.

 STATEMENT OF JEROME KASSIRER, M.D., DISTINGUISHED PROFESSOR, 
        TUFTS UNIVERSITY SCHOOL OF MEDICINE, BOSTON, MA

    Dr. Kassirer. Thank you, Mr. Chairman.
    As you heard, I am Jerome P. Kassirer. I am a distinguished 
professor at Tufts University School of Medicine in Boston and 
visiting professor at Stanford University. I am a former 
editor-in-chief of the New England Journal of Medicine and 
author of the Oxford University Press book, ``On the Take: How 
Medicine's Complicity with Big Business Can Endanger Your 
Health.'' I represent no institution and no medical 
professional organization.
    I have been asked to provide a brief overview--actually, 
you did it pretty well already--of the complex intertwining of 
the medical profession and the pharmaceutical, biotechnology, 
and device industries and the consequences of these 
relationships.
    I will assert that the medical profession has become 
excessively dependent on the largest of industry, that these 
financial connections have a negative influence on the quality 
and cost of patient care and the trust of the public, and that 
the profession's response to these threats has been inadequate.
    American doctors train for many years, and many accumulate 
substantial debt to become physicians. They then work long 
hours, struggling in a complex health care delivery system to 
reduce the burden of illness.
    There is no other country where I would prefer to get care 
for my family or myself. Our physicians, hospitals, medical 
centers, and medical professional organizations are respected 
around the world.
    In the same vein, the pharmaceutical, biotech, and device 
industries have revolutionized clinical practice by developing, 
often with the help of academic physicians, new diagnostic 
tools, prostheses that improve day-to-day living, and life-
saving medications.
    The companies are also a vigorous engine that accounts, in 
part, for our country's phenomenal economic growth. But these 
companies require big profits, and, to do so, they mount 
massive marketing campaigns, much of it directed at doctors. 
Doctors are human and, like the rest of us, they respond to 
financial incentives.
    I need not remind any of you what a struggle it has been to 
eliminate physician self-referral of patients to their 
personally owned health care facilities. But the extent of 
self-referral pales compared with the enormous financial 
incentives generated by these industries.
    The magnitude of drug promotion astonishes, as 100,000 drug 
reps visit doctors, residents, nurses, and medical students 
every day and ply them with free gifts, meals, and gadgets. 
Medical meetings are mini-circuses, replete with enormous 
glittering displays and hovering attractive personnel. Although 
couched as education, these marketing efforts are thinly 
disguised bribes.
    Just as surprising is the magnitude of physician 
involvement with industry. As you pointed out a few minutes 
ago, among a random sample of doctors reported just weeks ago 
in the New England Journal of Medicine, more than three-
quarters had taken free samples, free food, and free tickets to 
sporting events from industry; more than one-third accepted 
free continuing medical education; and another third had 
received payments for speaking or consulting for the companies 
or enrolling patients in clinical trials.
    Some have estimated the industry's total advertising bill 
at $70 billion. There is nothing fundamentally wrong with 
advertising products, but when financial incentives yield 
inappropriate or dangerous care, when they inordinately raise 
the cost of care, when they risk patients' lives in clinical 
trials, and when they damage the profession, they have gone too 
far.
    We need not look back very far. Only 2 weeks ago, the New 
York Times reported that drugs were being selected for cancer 
patients depending on the profit they would achieve for a 
medical practice. The same week, we read a study that showed 
that sponsorship of controlled trials of statins was closely 
correlated with positive results of such trials.
    Three weeks ago, we learned that payments for enrolling 
patients in clinical trials were leading to shabby research 
practices by unqualified researchers. This spring, we learned 
that physicians with financial ties to the company that makes 
Epogen were inappropriately represented on a National Kidney 
Foundation committee that recommended potentially dangerous 
doses of the drug.
    These recent revelations are just a continuation of reports 
over the past 10 years or so. Dozens more are detailed in my 
book.
    Financial payments have swayed professional medical 
organizations to make inappropriate clinical recommendations. 
They have influenced industry-paid speakers to recommend risky 
drugs. They have biased FDA panels and yielded inappropriate 
behavior by NIH scientists.
    Free drug samples encourage doctors to use the newest and 
most expensive drugs, and the samples themselves often get into 
the wrong hands. Drugs such as Natrecor, approved for acute 
heart failure only in the hospital, found widespread use in 
doctors' offices, costing taxpayers hundreds of millions of 
dollars.
    What have leaders in the profession done to counter a trend 
in which the profession has become increasingly beholden to 
industry? Not much.
    The American Medical Association and many other physician 
organizations permit their members to receive gifts and meals 
and to serve on pharmaceutical companies' speakers bureaus. 
Most of them have no proscription against members' involvement 
as consultants to industry for marketing or for the development 
of educational materials. In fact, most medical society rules 
are no more stringent than those of PhRMA.
    Last year, my colleagues and I recommended conflict-of-
interest policies for academic medical centers. We proposed 
that industry-paid gifts and meals be eliminated; that faculty 
should not join industry speakers bureaus; that all faculty 
consulting with industry be strictly overseen by contract; that 
drug formulary committees be free of conflicted physicians; and 
that free drug samples be regulated by a voucher system.
    Since then, a number of medical centers, including 
Stanford, Penn, Yale, and U.C.-Davis, have revised their 
policies along these lines, but most of them have picked off 
the low-hanging fruit, proscribing visits by drug reps and 
eliminating industry-supported meals. None of them has 
eliminated faculty involvement on speakers bureaus or 
consultations on marketing issues.
    Doctors are at risk of corruption from the perverse 
incentives from industry. I prefer that the profession police 
itself, but in the 3 years since publication of my book, 
progress in extricating medicine from industry influence has 
been minimal.
    Newspaper reports and State reporting requirements have not 
been sufficient. I would like to see a Federal registry for 
reporting analogous to those of some States. I would also like 
to see a congressional mandate to the Institute of Medicine of 
the National Academy of Sciences for studies that mirror those 
that called attention to medical errors.
    We must put more pressure on both the profession and the 
industry. In my opinion, both have reneged on their ethical 
responsibilities for the care of the sick.
    Thank you, Mr. Chairman.
    [The prepared statement of Dr. Kassirer follows:]

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    The Chairman. Thank you so much for your testimony.
    Mr. Rosenthal.

STATEMENT OF GREG ROSENTHAL, M.D., RETINAL SPECIALIST, TOLEDO, 
                               OH

    Dr. Rosenthal. Thank you very much. I am Dr. Greg Rosenthal 
[off-mike]--I am having microphone problems.
    Is that better?
    The Chairman. That is good.
    Dr. Rosenthal. OK. I have a number of leadership positions, 
and I am also a co-founder of Physicians for Clinical 
Responsibility, or PCR.
    We are living in an age of pharmaceutical influence, where 
companies sponsor physicians, medical research, and clinical 
decisionmaking. Pricing of retinal pharmaceuticals is such that 
one agent could cost CMS as much as the entire eye care budget, 
so the motivation to control this market is strong.
    Such influence is inappropriate when it serves company 
interests at the expense of patient and societal interests. In 
the retinal field, this is a particular threat to seniors due 
to the prevalence of macular degeneration and diabetic 
retinopathy common in this group.
    There is a schism in the retina community between the 
majority who want to do legitimate research and patient care 
and a strategically cultivated group of doctors willing to help 
corporate interests in exchange for valuable consideration.
    Drug companies exert control by controlling drug trials and 
linking them to marketing efforts; nurturing key opinion 
leaders, or KOLs, to influence medical decisionmaking; 
providing money, travel, and publicity for community doctors 
when they agree to promote certain products; funding 
professorships and other academic needs of those who support 
company interests; using unrestricted grants to influence 
journals, societies, meetings, and Web sites; controlling 
speakers and presentation of CME courses and materials; and 
creating bogus expert panels to promote products and 
treatments.
    Physician opposition to this complicity is growing and 
summarized in a recent quote from Dr. Jerry Sebag, a leader in 
our community. He writes, ``It is becoming increasingly obvious 
to me that many speakers on the AMD circuit, the so-called 
experts, are puppets serving their needs and the companies that 
pay them. While many of us may not be 'key opinion leaders,' we 
are 'key care leaders,' and as such, it is up to us to promote 
the interests of our patients and society at large.''
    The influence of Big Pharm, as we call it, is pervasive. 
Research used to be independently funded and designed, but with 
the decrease in public funding, drug companies have moved in 
aggressively. The independent trials have been replaced by 
corporate-sponsored RCTs, or randomized control trials.
    Although bias in such trials has been well-documented, 
companies have, largely through their KOLs, promoted the idea 
that only sponsored data is valid, and there is growing 
pressure to ignore any non-CSRCT data. Either through financial 
inducement or fear tactics, many physicians are persuaded to 
comply. There have also been efforts to block studies and 
ignore data that might conflict with CSRCTs.
    In redefining the RCT, pharmaceutical companies are 
exerting control over what to study, which questions to ask or 
not ask, IRB independence--that is, Institutional Review Board 
independence--what to report or not report, and the 
presentation of the data. Drug companies also tightly 
coordinate their studies with their marketing plans.
    Researchers are recruited, some with conflicts of interest 
ranging from excessive cash to stock options and lab and 
professorship funding. Some of these same doctors are then 
cultivated as key opinion leaders and are further compensated 
to promote the company's message. I recently spoke with an M.D. 
employed by a major drug company whose actual title was 
``Thought Leader Liaison'' and whose job was to recruit and 
tend to the KOLs.
    Even good research is tainted by the possibility of bias, 
and it is very difficult to know what and what not to believe. 
We recently declined participating in a study of a promising 
drug simply because the study was so laden with perks for 
doctors that participation would have begged unavoidable 
questions about the credibility of our work.
    Drug companies also work at the community level. Doctors 
whose only qualification is that they use a product are 
recruited and paid to do studies or sit on ``expert panels'' 
and travel to exotic destinations to discuss, that is, promote 
products. Invitations to nominal scientific advisory boards are 
made on a similar basis.
    Retina doctors often complain that society meetings have 
lost credibility since almost every speaker is compromised by 
financial relationships. These same meetings serve as little 
more than preliminaries for after-hours seminars, usually in 
luxurious hotels where doctors can receive CME credits, meals, 
and often gifts for listening to the sponsor's spin on standard 
care.
    Societies and medical journals have become dependent on 
unrestricted grants from numerous pharmaceutical companies. In 
this context, ``unrestricted'' means, ``Use this for whatever 
you want, but if you ever want another one, don't displease 
us.''
    As an example, last year, I wrote an op-ed criticizing 
conflicts of interest, and although it was hailed by several 
retina leaders as ``right on the mark, very important, and the 
right thing to do,'' it was proved unpublishable. Several 
journal editors praised the article but indicated that they 
could not publish it, due in part to concern about advertisers 
and the reviewer's relationships with the pharmaceutical 
companies.
    None of these concerns was put in print. One editor even 
suggested that I ``shouldn't take this on.'' Another time, I 
was to speak on this topic, but 5 minutes before the talk, I 
was asked to change topics because the society had just 
received a large sponsorship check from a drug company.
    Physicians face a difficult choice. One path is to go 
along. With drug company money, you can increase your income, 
prestige, build your practice, or fund a department, research, 
or professorships. The middle ground is to simply look away.
    The hard choice is to fight back. The road back to 
credibility is long. Opposing forces are well-funded and well-
motivated. Still, there are many, many retinal specialists who 
are disturbed by the slide of our profession. The formation of 
PCR is a first step.
    Current dynamics will continue to permit uncontrolled 
compromise of the public welfare for personal or corporate 
gain. The system needs to be changed in response to this 
extreme opportunism. Dr. Kassirer, Dr. Marsha Angell, and 
others have outlined steps that can be taken to restore the 
independent practice of medicine.
    The majority of physicians desire to practice honest 
medicine in their patients' and in society's best interests, 
and these doctors would welcome any changes that would mitigate 
financial conflicts and restore credibility to our research, 
our education, and our practice of medicine.
    Thank you very much.
    [The prepared statement of Dr. Rosenthal follows:]

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    The Chairman. Thank you, Dr. Rosenthal.
    Dr. Lurie.

STATEMENT OF PETER LURIE, M.D., MPH, DEPUTY DIRECTOR OF PUBLIC 
        CITIZEN'S HEALTH RESEARCH GROUP, WASHINGTON, DC

    Dr. Lurie. Good morning, Senator. Thank you for inviting me 
to speak.
    I have brought along the people who helped me prepare this 
testimony, who are able to take any more detailed questions you 
might have.
    I am here to talk about the State laws that require 
disclosure of gifts from drug companies to doctors, and let me 
start with my conclusion.
    What we really need is a national law. We have a minority 
of States that have laws, and as I will show, those laws are 
riddled with holes and poor enforcement. So I think your idea 
and that of Senator Grassley to move forward with a national 
reporting law is spot-on.
    The laws are on the ascendancy. The Minnesota statute dates 
from 1993, but nobody took any further action on this until 
2001. But since then, we have seen three States and D.C. that 
have enacted similar laws. Eleven States thought about imposing 
them in 2006, but none of them, to our knowledge, became law.
    The drug industry estimates that it spent $25.3 billion in 
2003 on marketing. The doctors think that they are exempt from 
this. They think they are unaffected by such interactions. But 
it seems unlikely that pharmaceutical companies would be 
catering to the culinary and travel preferences of doctors if 
they didn't think that they were getting some bang for the 
buck.
    The evidence, as reviewed by Dr. Kassirer in his written 
testimony, strongly suggests that the drug companies are right. 
There are multiple studies showing an impact upon changes in 
prescribing of doctors, upon their early adoption of new 
medications which themselves might be hazardous, and changes in 
formularies, all of them the result of interactions with drug 
representatives, with all-expenses-paid travel to various 
exotic locations and the like.
    The companies, therefore, have a clear conflict of 
interest, and yet we have surrendered the marketplace to them 
by allowing them to influence physicians. The result can be 
prescribing that is based on marketing instead of on science. 
Patients are the victims of all this.
    The physician disclosure laws are just one of many ways 
that we might go about trying to limit the damage of this 
marketing, and we have already seen the benefits of these laws. 
We published our article in the JAMA back in March, and in 
Minnesota, there have been already at least four positive 
results: firstly, an undertaking by the executive director of 
the Minnesota Board of Pharmacy to actually put the data up on 
the Internet. Although, when I last looked, it actually wasn't 
there.
    Several clinics contacted us, alarmed that physicians in 
their employ were taking money in such large amounts from drug 
companies and they had been unaware of it.
    There were two important articles in the New York Times, 
the first of which identified physicians who had been used by 
pharmaceutical companies to run clinical trials, even though 
they had long records of discipline from the Minnesota Board of 
Medical Practice, and another which documented particularly 
large payments to the thought leaders to which Dr. Rosenthal 
just referred.
    My testimony has two parts, and the first is a review of 
existing State physician payment disclosure laws. We, for this 
testimony, conducted a detailed analysis of five State laws 
which are currently in place, and they are summarized in a 
table on page 3 of my testimony and in more detail in an 
appendix.
    What we learned was that none of the statutes requires 
device or biologic manufacturers to report payments, and I 
think that will be the first error to correct. Two of the five 
States do not require separate reporting of each payment, 
permitting various forms of data aggregation and the loss of 
important detail. In West Virginia, you don't even have to 
report the name of the physician, so that is a particularly 
weak statute.
    Exclusions from reporting are common. The threshold for 
reporting ranges from $25 to $100. Four States exempt certain 
payments related to medical conferences and research studies 
from the reporting requirement, and all exempt free samples for 
patients, even though most studies show that the samples are, 
in fact, the largest expenditure for the pharmaceutical 
companies when it comes to marketing.
    We don't think that these exclusions are justified, as long 
as each payment is clearly identified as having a particular 
purpose. We think that researchers, patients, and congressmen 
are able to look at these particular payments and make 
decisions for themselves as to whether or not they think they 
are appropriate. Only the Minnesota statute makes all of the 
disclosed information part of the public record without 
exception, although the four remaining States do require annual 
summary reports to the legislature.
    Now I want to turn to the second part of my testimony, to 
the paper that we published in the JAMA relating only to 
Vermont and Minnesota, which are the only two that are actually 
in place right now. In both States, payment disclosures can be 
obtained, but you really have to run through the hoops in order 
to get them.
    In Vermont, we had to enter into extensive negotiations 
with the attorney general's office and submit simultaneously an 
Open Records Act request. It took 12 months before we got any 
of this information, and even then, 30 of the 68 companies in 
the most recent year designated at least some of their payments 
as trade secret, and, as a result, all of those records were 
withheld.
    Subsequently, we initiated a lawsuit against the attorney 
general, and most of the companies have now settled with us, 
providing some form, often of redacted data, but some data at 
least, but setting no precedent for release to others.
    In Minnesota, the data are easier to find but harder to 
use. You have to make a trip to Minneapolis to the office of 
the Minnesota Board of Pharmacy, and there you will find a 
bunch of boxes gathering dust because no one has bothered to 
open them for the last several years, let alone enter them into 
a database.
    So they are there for you. You pay to photocopy them. We 
did that and then entered them into a database for our study. 
But that hardly qualifies as adequate access for the public.
    Now, as far as the quality of the payment data in these two 
States is concerned, again, many of the entries aggregated the 
data, describing payments made to multiple physicians. Others 
describe payments made to individuals, so it is very hard to 
interpret.
    In Minnesota, some of the disclosures were handwritten, and 
I can speak for myself in saying that the handwriting of a 
doctor is not to be trusted, and, certainly, we encountered 
that kind of difficulty in Minnesota. The data quality was also 
poor, with many entries providing no information on the payment 
purpose.
    Now, as to the value of these disclosures, which we think 
is a dramatic understatement of the amount of payments that 
actually take place due to the various exemptions and because 
of the threshold for reporting and underreporting by the 
companies--because it is clear that many of them don't report 
each time. We focused on those payments that are valued at over 
$100, because that is what the AMA and the PhRMA codes say is 
the limit that one ought to respect.
    In dollar terms, in Vermont, 61 percent of all of the State 
payments were withheld on trade secret grounds, which I alluded 
to earlier, and of the publicly disclosed ones, which were a 
minority, there were 2,416 to physicians for $100 or more, 
totaling $1 million over a 2-year period. The median payment 
was $177, and the largest payment was $20,000.
    Sixty-eight percent of these payments were in the form of 
food, which clearly provides no patient benefit and, therefore, 
in our view, is likely to violate the AMA and the PhRMA 
guidelines.
    In Minnesota, over a 3-year period, there were 6,238 
payments to physicians for $100 or more, totaling $22.4 
million; median, $1,000; highest gift, $922,000. Again, because 
of deficiencies in the laws and their enforcement, we think 
these are substantial underestimates of the extent of actual 
gift giving.
    Payment disclosure laws are a first step toward addressing 
the overall problem of drug company marketing, but they are not 
the only method, and they are not necessarily even the most 
effective one. No physician is obligated to accept the gifts. 
It does take two to tango, and there is an organization which 
has identified at least about 500 physicians who have taken a 
pledge not to take any gifts whatsoever from drug companies.
    Certain prominent medical schools, as laid out by Dr. 
Kassirer, have severed their ties in various respects with the 
drug industry. The industry and the AMA have their own 
guidelines, but as we pointed out, those are voluntary and 
rather weak. We also need stronger enforcement of existing 
restrictions on marketing at the levels of the Justice 
Department, the Federal Trade Commission, the FDA, and State 
Governments.
    So let me conclude with my recommendations.
    The first overriding point is that any national law should 
include device and biologic companies as well.
    But, really, my most important point is where I started. 
What we really need here is a national law. The overall quality 
of the statutes in the different States has been poor. Their 
implementation has been worse. Because the physician payment 
issue is a national one, not a State one, the most rational 
approach to this issue is a national reporting requirement.
    Thank you.
    [The prepared statement of Dr. Lurie follows:]

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    The Chairman. Thank you very much, Dr. Lurie.
    Now we will hear from Representative Treat.

STATEMENT OF HON. SHARON TREAT, STATE REPRESENTATIVE, EXECUTIVE 
DIRECTOR, NATIONAL LEGISLATIVE ASSOCIATION ON PRESCRIPTION DRUG 
                      PRICES, HALLOWEL, ME

    Hon. Treat. Thank you very much, Chairman Kohl. I am very 
pleased to be here today to testify on behalf of State 
legislators on what is a very important issue.
    I am Sharon Treat, a member of the Maine House of 
Representatives, as well as executive director of the National 
Legislative Association on Prescription Drug Prices, which is a 
network of State legislators around the country, stretching 
from Alaska to Maine, working on prescription drug issues, 
trying to increase access to lower-priced drugs.
    Since at least 1993, as you have heard, when Minnesota 
passed the first State law banning certain gifts and requiring 
the disclosure of drug industry marketing payments, States have 
been at the forefront of efforts to ensure that the 
pharmaceutical industry does not unduly influence the practice 
of medicine and adversely affect patient health and safety.
    As of this month, at least 30 States have enacted laws or 
introduced legislation on one or more of the following topics: 
disclosing spending, as we have just heard; beefing up State 
authority to enforce misleading advertising and marketing 
rules; protecting privacy by restricting the marketing use of 
prescription data; regulating instant messaging and advertising 
in electronic prescribing software; regulating drug industry 
sales representatives' activities; establishing independent, 
evidence-based, detailing programs; and requiring disclosure 
and posting of clinical trials information.
    The States' actions find their legal and policy support in 
the traditional State role of licensing doctors, pharmacists, 
and other healthcare professionals; protecting consumers from 
misleading advertising and unsafe products; protecting the 
public health; ensuring that private information is protected 
from unwarranted invasions of privacy; and partnering with the 
Federal Government in funding and administering Medicaid and 
now Medicare Part D.
    Without the data collected through the Minnesota disclosure 
law, we would not have had the week-long series of front-page 
articles in the New York Times detailing payments to doctors 
and the questionable or unsafe prescribing patterns attributed 
to some of those doctors.
    Without the public online clinical trials databases 
required by the Paxil settlement, a case brought by State 
attorneys general, spearheaded by New York, the data would not 
have been available which formed the basis of a study linking a 
popular diabetes drug to increased risk of heart attack. We 
have heard about that already this morning.
    Maine law requires the results of all clinical trials to be 
published online, and other States are following suit. State 
attorneys general have been in the forefront, initiating 
consumer protection and Medicaid fraud prosecutions for 
kickbacks and misleading marketing tactics, including off-label 
promotions and failure to accurately and completely disclose 
adverse effects. The multi-State Neurontin litigation and 
Oxycontin cases are examples.
    States are concerned that marketing activities affect 
patient safety and provider prescribing patterns. Vermont, West 
Virginia, California, the District of Columbia, and Maine have 
joined Minnesota in requiring disclosure of marketing and 
advertising spending, as you have heard, with some concern 
about how effectively they have done it. However, they have 
gone ahead to try to get the information.
    Maine and Vermont also grant clear authority to enforce 
misleading marketing standards in the courts. These States have 
acted, in part, in response to a significant reduction in 
recent years in the overall number of Federal enforcement 
actions for misleading marketing as well as FDA delay in acting 
to curb abuses.
    Vermont now requires in a recent law enacted just this last 
month that pharmaceutical sales representatives disclose to the 
prescriber evidence-based information, including alternatives 
to the drugs that they are marketing, as well as the cost of 
treatment.
    Pennsylvania has a comprehensive evidence-based academic 
detailing program to provide objective information and 
``unadvertisements'' to physicians to counteract biased or at 
least one-sided information that is provided by sales 
representatives. Several other States have followed suit.
    With Medicaid costs always a significant factor in State 
budgets, States are looking at issues of doctor and drug 
company conflicts of interest, payments for prescribing and for 
specialty drugs, and the targeting techniques for marketing, 
such as data mining. Data mining also raises issues of privacy 
that resonate with State legislators and their constituents 
familiar with these issues in other policy areas.
    Many States have passed medical records confidentiality 
laws that predated HIPAA by many years. Some of these laws were 
significantly more protective of patient privacy than the 
Federal law that followed.
    Over the past decade, States have also dealt with privacy 
issues related to credit cards and credit ratings, debating 
between opt-in and opt-out approaches that mirror the debate 
right now over prescription data. A landmark 2006 New Hampshire 
law prohibits the use of doctor specific prescription 
information for drug marketing purposes. The data can still be 
used for health purposes, such as tracking patient safety. At 
least 13 States have similar proposals with two more signed 
into law this month, Vermont and Maine.
    There certainly is a strong role for the Federal Government 
to take action in many of these areas. To begin with, just to 
shine a light on marketing practices, as this Committee is 
doing, is of great value.
    There is also a need to have much stronger standards 
governing conflicts of interest, to take action to curb 
misleading marketing, and to require disclosure of payments and 
gifts, as well as of clinical trials data and other safety 
data.
    It would also, I need to stress, be a major step forward if 
the Federal Government would start by vigorously enforcing the 
laws already on the books which bar misleading advertising and 
off-label promotion, and if labeling standards and enforcement 
were not subject to negotiation with the industry.
    That said, we do have concerns about laws which might 
preempt State authority to act, particularly in those cases 
where States are acting within their traditional regulatory and 
enforcement functions and have actually stronger State laws. 
States have a traditional and effective role in enforcing 
consumer protection and misleading advertising laws, protecting 
public health, regulating medical professionals, implementing 
Medicaid, and safeguarding the privacy of their citizenry. It 
would be a bad bargain to trade strong State laws, even if they 
are in place only on a patchwork basis, for weak Federal laws 
that limit or prohibit State action.
    States are passing laws because there is a regulatory and 
enforcement void. But public health issues need to be 
addressed, nonetheless, and they are taking action to do that. 
Congress should act, but it should partner with the States 
rather than preempt them.
    I do have a whole lot of information about the specifics of 
what every State is doing appended to my testimony, which I can 
go over in more detail later on if you are interested.
    Thank you very much.
    [The prepared statement of Ms. Treat follows:]

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    The Chairman. Thank you very much, Representative Treat.
    To the entire panel, I would like to devote the time of my 
questioning to this issue of a registry that would require 
virtually all payments of any sort that are made from the 
industry to physicians to be made public and to be made 
available to people wherever and whenever they wish.
    Do you think that this is something that we should be 
doing, that it is necessary, that it would have an impact, a 
positive impact, would be a great step to take? Do you see 
problems in doing it? Do you think we ought to get after it as 
quickly as we can?
    What is your opinion, your experienced opinion, on this 
question of full disclosure of payments of any sort that are 
made between the industry and physicians?
    Dr. Kassirer.
    Dr. Kassirer. Thank you, Mr. Chairman. I was extremely 
impressed with the reporting of Gardner Harris on the 
information that he was able to obtain as a consequence of the 
State laws.
    What surprised me about it was that there were insights 
that I hadn't even thought about that came out, including the 
notion that there were physicians who had lost their licenses 
and were not practicing anymore, who were still allowed to do 
research for industry. That information would never have been 
otherwise available. These were physicians who were incapable 
of doing adequate clinical research.
    I would certainly support the notion that a Federal 
registry of some kind would be of value in identifying at least 
the extent of the involvement of physicians and industry. I 
think that more needs to be done besides that, and I made the 
point about shining more light on the problem by commissioning 
the National Academy of Sciences to study the issue.
    I spent time with the president of the Institute of 
Medicine about a year ago. He indicated that he would be 
interested in doing such a study, but didn't have the funding 
to do it. The study that the Institute of Medicine did on 
medical errors shined a light on a series of extremely 
important issues that were, before that, hidden. I think the 
same could be true of a study by the IOM of this particular 
issue.
    But in terms of a Federal registry of some kind, I am all 
for it.
    The Chairman. Dr. Rosenthal.
    Dr. Rosenthal. Thank you, Mr. Chairman. I agree with [off-
mike]--I am still having microphone problems, but I think it is 
OK. I agree that the concepts of light and disclosure are very 
useful in this area, and there are a number of areas that need 
light shed upon them, and this is one.
    The data as to which doctors are receiving which kinds of 
valuable consideration, whether they be payments or stock 
options or whatever, is available. It exists, and I think that 
that data needs to be disclosed. It needs to be completely 
transparent, and we should demand it. I think that would be a 
great and fairly easy way to generate a database of that 
information for public use.
    There are several other areas that need illumination, and I 
assume we can talk about that later.
    The Chairman. Thank you.
    Dr. Lurie.
    Dr. Lurie. I think my testimony makes clear that I do think 
it is a good idea, but let me make three points--well, four.
    The first is that there is a tendency to think of 
disclosure as a panacea in a lot of areas, not just this one. 
So, as welcome as a registry would be, I think we need to think 
beyond that, and some of those are laid out in my testimony.
    The second point is just to refer to what Representative 
Treat had to say. I certainly agree that the last thing we need 
is a national registry that is weak and has the effect of 
preempting the, at least, good attempts that have been made at 
the State level, so preemption should not be of stronger State 
laws. Of course, a good cure for that is just to have a good 
Federal one.
    My next point is when it comes to shining light on this, I 
mean, part of what has allowed all of this to take place to 
date is, in fact, that it occurs, in effect, in darkness. I 
think it is worth thinking about the 2002 American College of 
Physicians' policy statement regarding pharmaceutical 
companies.
    They offer three criteria for determining the 
appropriateness of a payment, and the first one is, ``What 
would my patients think about this arrangement? What would the 
public think? What would I feel if the relationship was 
disclosed through the media?''
    What these disclosure laws do, in effect, is to put these 
theoretical questions that the ACP says are so important to the 
test and allows patients to make up their minds for themselves.
    My final point is this. When we set about writing our JAMA 
paper--and my co-authors who are here will attest to this--I 
was somebody who was rather skeptical about the naming of 
physicians. I thought that what we wanted to do was provide 
aggregate information and be able to describe the extent of 
things in a kind of public health way, not in an individual 
way.
    But in the course of doing the study, a lot of private 
information--not private, but personal information did come 
out. I have become a strong convert to the idea that, in fact, 
there is a lot to be gained from putting out the actual names 
of the doctors. There is a lot of creative work, some of it 
done in the New York Times, in which you can link particular 
people to other information, be it doctor disciplinary records, 
whether or not they are key opinion leaders, et cetera, et 
cetera, whether they sit on FDA advisory committees.
    All of those kinds of things can only be done when you have 
the doctors' names. If the doctors are not ashamed of this, 
they shouldn't be objecting to this.
    The Chairman. All right. Thank you so much.
    Representative Treat.
    Hon. Treat. Yes, thank you. I would concur that if we can 
do it right, a national registry would be great.
    I was interested in Dr. Lurie's testimony, because those 
are a lot of the issues that we, as an organization, are 
advising States, about what is the best way to write these 
State laws when they go about it.
    We are trying to make sure that they don't look at a law 
that has been passed somewhere else and say, ``Well, that 
passed. This is the way to go,'' because many of those, of 
course, include compromises that went into effect and were the 
only reason the law passed. Those compromises really are the 
loopholes that Dr. Lurie has identified.
    Certainly, having prescriber identity is important. I know 
that that is something that the Vermont legislature has been 
trying to focus on and make sure that its laws, which initially 
had that only in the aggregate, now provide in more 
specificity.
    I think we need to remember that some of the State laws 
were initially passed without really understanding the 
relationships between these payments and actual prescriber 
behavior. A lot of the States were actually looking initially 
to shine a light on how much money was being spent on marketing 
and advertising activities.
    So many of the laws are really focused on just collecting 
information on how much money was spent as opposed to really 
making the link between prescriber behavior and payments to 
those prescribers. I think States have become more and more 
aware of that, particularly as the data in Minnesota is now 
being analyzed, and I give a lot of credit to the New York 
Times and the reporters there for actually spending, as I 
understand, well over a year going through those boxes.
    Just in Minnesota's defense, I think that the Web and Web-
based information was a lot less common in 1993 than it is in 
2007. That brings me to my point that having Web access, and 
having it in a format that is, in fact, accessible would be 
very important.
    I agree with Dr. Lurie that the trade secret exemption is 
an exemption that can be a loophole that swallows the whole 
rule. This comes up in many, many contexts. It is very 
important to get that right and to make sure that just anything 
can't be claimed to be a trade secret and thus be protected 
from disclosure.
    I agree on the medical devices, making sure that those are 
in. I think, again, that is something that when State 
legislators were passing these laws, they were focused on 
prescription drugs and not so much on medical devices. But that 
is an issue that has come to light.
    Another area where there are loopholes in the Minnesota and 
other laws is the definition of educational activities and 
continuing medical education activities and making sure that 
those are included as well.
    I just say that transparency alone may not be enough, and I 
think many States think that it isn't enough. Certainly, an 
analysis of the data from Minnesota shows that the voluntary 
guidelines that are in place are not being honored. So it may 
be that since no one knew what was in those documents, since 
they were all in big boxes, it is not a fair test of 
transparency, and a registry that had information posted on the 
Web somewhere where everyone could go see might be much more 
effective.
    But that said, there are a lot of other issues. Some of 
them have been alluded to by other members of the panel, and 
some of them are addressed in the State legislation that I 
mentioned, including the kinds of practices that go on in 
doctors' offices, the data mining issues, and some of the other 
things around actually banning gifts that might be appropriate 
for this Committee and Congress itself to consider doing.
    The Chairman. Dr. Kassirer.
    Dr. Kassirer. Thank you, Mr. Chairman. Dr. Lurie's comments 
reminded me of a point that we really must make, and that is 
that we have spent a lot of time talking about disclosure. In 
fact, if you look at the reports in the newspapers, it has been 
largely about the lack of disclosure.
    So people have made a lot about the fact that physicians 
have done various things and made various comments but have not 
disclosed their ties with industry, which could have influenced 
their opinions.
    The fact is that we must pay attention to a much more 
fundamental issue, and that is that disclosure is perhaps 
necessary in terms of identifying those who have conflicts of 
interest, but it is not sufficient, because disclosure doesn't 
solve the problem. The problem is the conflict, and disclosure 
doesn't solve the conflict.
    The Chairman. Very important point.
    Well, we have with us today a distinguished senator from 
the State of Delaware, Mr. Tom Carper.
    We would love to hear your comments and questions, Senator 
Carper.
    Senator Carper. Thank you, Mr. Chairman.
    I am happy to be here, and I think this is a busy time--we 
have three separate hearings going on at once. We are being 
briefed by the director of national intelligence, we are doing 
immigration reform on the floor, and we have got a bunch of 
people here from Delaware. But I wanted to be here at least for 
part of this, because this is a good and important hearing.
    I have missed your statements, and what I am going to ask 
you to do--and I do this sometimes when I am sort of in and out 
of a hearing. But could each of you take maybe a minute or so 
and give me a couple of major takeaways, from your opening 
statements please.
    Representative Treat, that is a great name. That would be a 
great name to have as a politician. If I had a name like that, 
I could go somewhere. [Laughter.]
    Hon. Treat. Especially when you are going door to door 
right before the election, which would be around Halloween.
    Senator Carper. You probably have a lot of fun with that.
    Hon. Treat. Yes. Well, thank you very much for an 
opportunity to reiterate everything I said already, which I 
won't do. [Laughter.]
    Senator Carper. Not everything, not everything.
    Hon. Treat. No, I won't do that. But my takeaway would be 
that, you know, States have really been in the forefront on 
this issue, not only on disclosure, but in a lot of other 
areas.
    Let me just give you an example. I think as sort of an 
early warning system, one of the bills--actually, it is a bill 
I sponsored, and it was initially passed into law in Florida, 
and Vermont just did it, and it looks like New Hampshire is 
just about to. It focuses on a whole new area of electronic 
prescribing, where there is this huge push, a lot of it going 
on here in Congress, to get doctors to put everything onto 
electronic recordkeeping, you know. Well, what that means--and 
actually have electronic prescribing, where you just write into 
your PDA and it goes straight to the pharmacist.
    That enables tremendous new tools in terms of mining that 
data, questions about privacy. Questions in this legislation--
the legislation I had and others had, which are actual messages 
that pop up from a pharmaceutical company. Let's see. You are 
just about to write a prescription for a particular drug, and 
it says, ``Hold on there. I will show you one that is 
prescribed as--Drug Y has much better effects,'' and all this 
clinical information, and that could be a lot better.
    Well, you could see that being done in a way that is very 
objective and presenting information on all sides. But you 
could also see it--as has been the experience in Australia, 
which is much farther along this road of electronic, you know, 
records and prescribing--as really interfering with doctors' 
behaviors and actions. This is an issue that the States are 
focused on, and the Federal Government is very far behind.
    So, I guess, you know, my message is that States may not be 
doing it perfectly, but they are kind of an early warning 
system, and they are tackling issues that aren't likely to be 
addressed anytime soon by the Federal Government. We need to 
make sure that as Congress moves ahead in doing things like a 
registry, which I think is a great idea, that we are not 
preempting State laws that might actually be stronger.
    Maine has a clinical trials database law that is far more 
comprehensive than the Federal law on the books. If there were 
preemption of State laws, you would end up not actually getting 
the data from Maine. So that would just be my proviso on it, 
and there are a lot more issues than just transparency for you 
to focus on.
    Senator Carper. Thank you, Representative Treat.
    Dr. Lurie.
    Dr. Lurie. As long as you are making observations on 
Representative Treat's name, I will point out that she is the 
right person to be speaking at a meeting about conflict of 
interest. It really seems just the right name for that.
    The points that I made in my testimony were, one, that 
physicians typically believe they are unaffected by 
interactions from drug companies though they believe that their 
colleagues are likely to be affected, which is, you know, kind 
of a logical contradiction.
    Senator Carper. What we hear around here sometimes, you 
know, we work on ethics legislation, you know.
    Dr. Lurie. Right. It is, ``I am immune, but nobody else 
is.'' I went on to talk about some of the successes of the 
State payment disclosure laws. Then I went on to talk about the 
five that have so far been enacted, and I pointed out that 
there were a number of gaping holes in those, and I pointed out 
that sometimes the exemptions swallow up the law itself.
    But there are ways to make them better, to be sure, and we 
lay out a series of recommendations at the end of our 
testimony, which run the gamut from literally how to enter 
things on the Internet to what the exemptions should be and so 
forth--how often reporting should be made to the legislature 
and so on.
    Anyway, the point is that there are holes in all of the 
existing State pieces of legislation so far. Then we went on to 
look in more detail at Minnesota and Vermont, which are the two 
that actually have reporting requirements that are in place.
    We showed that the accessibility of payment data is very 
poor, that either through the legal loopholes or through, 
really, negligence on the part of the Board of Pharmacy in just 
not analyzing the data that kept coming in, there is de facto 
little access to information, that the quality of the payment 
data in data terms is often poor, allowing aggregation of data 
where individual data would be much more helpful, both for the 
public and for researchers, that----
    Senator Carper. Doctor, I am going to ask you to go ahead 
and sum it up, because I need to hear----
    Dr. Lurie. Absolutely.
    Senator Carper [continuing]. From the other witnesses, 
and----
    Dr. Lurie. That is fine.
    Senator Carper  [continuing]. Senator Kohl has infinite--
well, almost infinite patience, but he won't let me go on 
forever, so just wrap it up, please.
    Dr. Lurie. I am sorry.
    So the disclosed payments are large in our study in the 
JAMA, although they are probably underestimates. Finally, as a 
result of this, we conclude that a national State reporting law 
is what is required, although we agree with the comments of 
Representative Treat about preemption.
    Senator Carper. Good. Thank you. Thanks so much.
    Dr. Rosenthal, just a minute or 2 of a takeaway, please.
    Dr. Rosenthal. Thank you, Senator.
    I would encourage you to read the written statements and, 
also, some of the media coverage of this is covered on our Web 
site, the Physicians for Clinical Responsibility Web site, 
which is clinicalresponsibility.org.
    In a nutshell, my testimony was the view from the trenches, 
particularly in retinal surgery. It is a before-and-after 
story.
    Until seven years ago, research was independently funded. 
It was credible. It was trustable. People would get up at 
meetings and give talks that you knew were fact based and 
unbiased.
    About seven years ago, with the advent of a treatment 
called photodynamic therapy, this brought in the era of 
corporate sponsored clinical trials. Since then, it has been 
one example after another, and with each succeeding iteration, 
the drug companies have gotten better at marketing to doctors, 
crossing the line to paying poorly qualified clinical doctors 
to do paint-by-numbers research according to their dictates, 
and we are supposed to just trust their altruism that it is all 
unbiased. Studies don't support that unbiased character.
    We have seen the sort of perfection of the recruitment of 
doctors to be key opinion leaders and to either fail to 
disclose or, more commonly, euphemistically disclose their 
relationship with companies to the point where we have very 
little credibility at society meetings, in many of the--not 
all, but many of the journal articles and this sort of thing.
    This has created a significant pressure on doctors to 
follow drug company party lines on clinical decisionmaking. The 
monetary impact of this is phenomenal. There is a single drug--
--
    Senator Carper. I am going to ask you, if you will, to wrap 
up because my time is limited. Thank you.
    Dr. Rosenthal. This is my last thing.
    There is a single drug that we are currently expected to 
use, that if all patients were treated with this drug, 
according to the study protocol, out of Part B, it would cost 
about $5 billion per year. That is just a little bit more than 
the entire eye care CMS budget.
    So, as you can see, the stakes are very high.
    Senator Carper. Yes, thank you.
    Dr. is it Kassirer?
    Dr. Kassirer. Yes.
    Senator Carper. Has your name been mispronounced?
    Dr. Kassirer. No, it is pronounced correctly. Thank you. It 
is usually not.
    A couple of words. I have asserted that the medical 
profession has become excessively dependent on the largest of 
industry, that these financial connections have had a negative 
influence on the quality and the cost of patient care and the 
trust of the public, and that the profession's response to 
these threats have been inadequate. I made the point that the 
leaders of the profession have done little to counter a trend.
    It always amazes me that there is a paradox in their 
policies. On the one hand, they admit that physicians can be 
influenced by gifts and trips and things like that, and yet 
they allow it, anyway, and that seems to me to be something 
that is counter productive in terms of the cost of care and the 
quality of care.
    Thank you, sir.
    Senator Carper. Thanks very much for both of those points.
    Mr. Chairman, I have a couple of questions I want to submit 
for the record to this panel, if I may.
    But thank you for your testimony and for summarizing for 
me. Much obliged.
    The Chairman. Thank you, Senator Carper. We thank you very 
much for your questions.
    Senator McCaskill.
    Senator McCaskill. Thank you very much.
    I apologize for not being here to hear all of your 
testimony, although I heard it. You know, it is so funny, 
because we have senators give speeches on the floor, and 
afterwards, someone says, ``Well, I heard your debate.'' You 
realize that most people watching things around here are 
watching on television while they are trying to multitask. So, 
I was listening to your testimony as I was multitasking 
upstairs in my office.
    I wanted to focus a little bit on this panel--and anyone 
can address this question that would like. I am concerned about 
the research component of this.
    I am very concerned about the conflicts--if I look through 
JAMA and I look through the New England Journal, first of all, 
I am concerned about all the ads, and then I am concerned that 
we are going to get to the point that the conflict paragraph at 
the end of these articles is longer than the article.
    Now, the good news is that there is disclosure, and that 
these doctors are disclosing that they are receiving money from 
these various pharmaceutical companies and these various 
prescription drug companies, and that is good. But what I am 
worried about is the research that is going on that is not 
getting published because maybe the results aren't what the 
people who paid for the research wanted.
    I am particularly worried about PhRMA research that is 
ongoing and that maybe, because the results of that PhRMA 
research are not what they hoped it would be, it never sees the 
light of day. I would welcome your comments on that potential 
problem that we have under the current scenario.
    Dr. Kassirer. Well, as a former medical editor, I feel 
somewhat compelled to speak out. You are absolutely right about 
the disclosures at the end of these articles. They are 
monumental, it seems to me.
    When I was the editor of the New England Journal, we had a 
simple policy, and that is that if someone had a financial 
conflict of interest, we would not allow them to write an 
editorial or a review article. We also had a policy in which 
none of our editors had a financial conflict of interest. I got 
a report every single year from all of the editors, and anyone 
who developed a financial arrangement was no longer an editor.
    With respect to scientific studies, the kinds of studies 
you were referring to, first of all, it is possible that one 
could eliminate those studies in which people had a conflict of 
interest. The problem would be that you would have no studies 
left, because most of the studies that are published in major 
journals are supported in some part by industry, and many of 
the investigators have financial arrangements with industry. 
That is the reason for all these disclosures that you have now 
begun to see in medical journals.
    What I am always surprised about is how many of these 
investigators have how many conflicts of interest--some of 
them, 15 or 20 or 30 conflicts of interest with companies that 
they work with. You have to ask yourself, ``What are they doing 
at home if they have conflicts of interest with all these 
different companies?'' Whether or not these conflicts influence 
the science is a critical question. I can tell you that two 
British editors, Richard Smith, the former editor of the 
British Medical Journal, and the editor of the Lancet, Richard 
Horton, have recently spoken up, saying that they don't trust 
the studies that even they themselves have published in their 
journals.
    With respect to the advertising in the journals, well, it 
is a complex problem. I can tell you that the New England 
Journal--when I was there, the New England Journal could have 
survived financially with just the job ads and the subscription 
cost of the journal, and you could have eliminated all 
pharmaceutical ads.
    But the Massachusetts Medical Society that owned the 
journal would never have heard of that. I mean, they made a lot 
of profit on the journal, and they built an incredible 
organization as a consequence of all those profits.
    I can tell you one thing about--at least, I can tell you 
about the New England Journal, and I am sure it is certainly 
true today--and that is that the ads in the journal have never 
had any kind of effect on the content of the journal, the 
editorial content of the journal. I am sure that is also true 
for JAMA. I can't tell you for sure if it is true for all 
medical journals.
    It certainly is possible that, in some way, medical journal 
editors are influenced by their advertising. In fact, you heard 
already--Greg mentioned an example where a medical journal 
editor refused to publish one of his conflict of interest 
pieces because he was afraid an advertiser would go away. So I 
think there may be examples in which editors craft their 
content, their editorial content, based on their advertising.
    With respect to negative studies, it is a mixed bag, I 
think, in the sense that journal editors are not excited about 
publishing negative studies, anyway. They are not very exciting 
studies. So some of the reason for these studies not getting 
published might be the fact that journal editors just turn them 
away. They are not interesting.
    On the other hand, the current crop of medical journal 
editors have set out a series of guidelines requiring the 
registration of clinical trials, and that registration would at 
least alert you to the fact that there is a study that hasn't 
been published. It is not complete. It needs a big fix before 
it can function effectively.
    So is it possible that there are studies with negative 
results that are not being published? Yes, it still is 
possible.
    Senator McCaskill. Well, I think figuring out a way that 
everyone knows when clinical trials are going on would be 
really, really important, because then there would be an 
opportunity for research--even if they were not published.
    Now, with our technological capability in terms of the 
Internet, there is absolutely no reason that non-published 
stories could not be available to people who are interested, 
and that information that clinical trials are ongoing, I think, 
would be key.
    Just briefly, one follow-up question, Mr. Chairman, if you 
don't mind.
    If, in fact, the large hand of the pharmaceutical industry 
is essential to these research projects going forward, then 
would it be the opinion of the panel that independent research 
at--and here is what I am referring to now.
    At higher education institutions, where these companies are 
coming in and saying, ``We will give you money at your school 
if your academicians in the medical field will do these 
studies,'' and then you have academicians now kind of being 
harnessed by virtue of the flow of money--and what worries me 
is where are we going to end up 10 or 20 years from now in 
terms of truly independent academic studies.
    Are these academicians that may want to go and research 
something that would be a terrible outcome for the flow of 
money--and I think this may be, frankly, a corollary of the 
fact that we have sadly, sadly, in this country, short-changed 
higher education in terms of research money and the kind of 
money that we need to be investing in terms of keeping the 
prominence of our country in terms of the field of higher 
education.
    Now, that is my own political bias about funding higher 
education. But if any of you would comment on that? Yes?
    Dr. Lurie. Well, I certainly agree with all of this.
    I think when we talk about the conflict-of-interest 
statements, first of all, I mean, I think they have become so 
long that we literally risk turning them into a laugh line at 
some point, where it becomes a joke the way the surgeon 
general's warning on tobacco became a joke after a while, and 
you wind up on ``Saturday Night Live'' joking about the extent 
of the disclosures. I once read the transcript of an FDA 
advisory committee meeting, where they are busy disclosing all 
of this, and somebody gets up to say, ``I just want to say you 
didn't mention my conflicts. I don't have any, but I sure wish 
I did,'' you know.
    So it becomes a bit of a joke, and that is one of the 
limitations of disclosure, as important as it is.
    I think when it comes to the research, as important as all 
of the data suppression examples--which there are, be they the 
class study with regard to Celebrex, where the company 
published half the data, because it knew that the full data set 
that it had in its possession didn't show the benefit that half 
the data set showed; or be it withholding of the studies on 
SSRIs, many of which turned out to be negative, as far as the 
company was concerned.
    By the way, the FDA knew all of this, and because of its 
own secrecy laws wasn't able to expose the way that the 
companies were withholding the information. So the levels of 
secrecy at the FDA are also a part of the problem here.
    But with regard to the funding of research, as important as 
the data withholding is, probably more important is the fact 
that as industry is a larger and larger funder of research in 
this country, they are setting the agenda. They are asking the 
questions. They decide which questions get asked and which 
ones, in effect, do not, because the academicians have only so 
much time to do their work.
    You know, physicians could say no to that--the researchers 
could say no to that money, but they don't. So what we have are 
questions that are of interest to drug companies that may be of 
absolutely trivial interest to the public health: whether the 
24th non-steroidal anti-inflammatory drug has some minor 
advantage over the 25th non-steroidal anti-inflammatory drug. I 
am just not that interested in that question.
    I am interested in questions about diet and exercise and 
truly breakthrough drugs. But those studies are harder to get 
funded, and the industry is not nearly as interested in them.
    I will point out that back in the 1970's, there were 
proposals that the pharmaceutical industry would pay into a 
large pot from which studies would be done, selected in terms 
of their public health importance by impartial people and then 
conducted by people who would be responsible for both doing 
them and analyzing them. That is really the way out of this 
problem. I mean, it is----
    Senator McCaskill. What happened to that suggestion in the 
1970's?
    Dr. Lurie. You know, it went the way of many proposals, I 
am afraid. We hear about it periodically as if it is, you know, 
something completely impossible. Actually, the New Yorker has a 
little article about it just this week in which that idea is 
revived as if it were something new. But it is something that 
periodically percolates up as----
    Senator McCaskill. I think that would be a spectacular 
idea.
    Dr. Lurie. I would agree.
    Senator McCaskill. It would solve the problem.
    Dr. Lurie. Yes, it would. Unfortunately, certain of the 
monied interest wouldn't be terribly happy with it, and that is 
probably where it went. But I agree with you.
    If you think about it, as Dr. Kassirer was saying, when you 
think of conflict, I mean, the best solutions to conflicts are 
not merely disclosure. They are structural approaches that 
remove conflict, and this would be an example of the same.
    Senator McCaskill. Right.
    Mr. Rosenthal.
    Dr. Rosenthal. If I could quickly comment on a couple of 
things, first, I would like to point out that, in my field of 
retinal medicine, there are many very, very good researchers 
who are trying to do good work and trying to do non-conflicted 
work. I believe that they find it annoying that there is so 
much pharmaceutical influence, because it does make it hard for 
the reader to know what is biased and what isn't, and I think 
that casts good work in a more tentative light as well.
    I also wanted to agree that there are many areas where it 
is the way you ask a question, it is what you decide to look 
at, that sort of thing. There is one study of a commonly used 
treatment where they redefined visual success to include three 
lines of visual failure. If they hadn't done that, the data 
wouldn't have looked so good.
    Senator McCaskill. Right.
    Dr. Rosenthal. That same study elected not to look at 
toxicity effects for 3 months after the treatment. We now know 
that that particular treatment is highly toxic to the macula.
    There is another example where a company had two versions 
of the same drug. One had already been priced for another 
treatment and could be available in doses we needed for eye 
care at around $50 a dose. The other version of the same 
molecule is $2,000 a dose, and you have to give it more often. 
So which would you choose to study in a randomized trial and 
get approved? It is not hard to see.
    Senator McCaskill. Thank you, Mr. Chairman, very much.
    The Chairman. Thank you, Senator McCaskill.
    We thank this panel exceedingly for being here today. You 
have provided great testimony, great observations, and, 
hopefully, we will be able to make some progress as a result of 
your testimony. Thank you for being here.
    Our second panel consists of two witnesses.
    The first will be Dr. Robert Sade. Dr. Sade is chair of the 
American Medical Association's Council on Ethical and Judicial 
Affairs, and he is a professor of cardiovascular and thoracic 
surgery at the Medical University of South Carolina.
    Our second witness will be Marjorie Powell. Ms. Powell is 
the senior assistant general counsel at the Pharmaceutical 
Research and Manufacturers of America. Her current work focuses 
on the legal implications of State legislation regarding 
prescription drugs as well as oversight of PhRMA's legal 
matters.
    We thank you both for being here.
    Dr. Sade, we will take your testimony.

    STATEMENT OF ROBERT SADE, CHAIR, COUNCIL ON ETHICAL AND 
 JUDICIAL AFFAIRS, AMERICAN MEDICAL ASSOCIATION, WASHINGTON, DC

    Mr. Sade. Thank you, Chairman Kohl and members of the 
Committee, for convening this hearing to examine financial 
relationships between physicians and the pharmaceutical 
industry.
    The topic is very timely, and the AMA sees today's hearing 
as an opportunity to communicate the ethical standards that 
guide all physicians in the practice of medicine and in their 
interactions with the pharmaceutical industry.
    My name is Robert Sade. I am chairman of the Council on 
Ethical and Judicial Affairs of the AMA, and I am also 
professor of surgery and director of the Institute of Human 
Values and Healthcare and the Medical University of South 
Carolina in Charleston.
    Physician prescribing decisions depend heavily on a quality 
of available scientific information. The pharmaceutical 
industry and Federal regulators are important information 
sources. There is a clear need for interactions between 
physicians and the pharmaceutical industry to ensure the free 
flow of valid scientific information.
    When the information is accurate and complete, physicians 
have the necessary tools to make the right prescribing 
decisions for their patients. If information is not properly 
provided by industry, or if physicians never receive such 
information, quality medical care can be jeopardized.
    The AMA was created in 1847 for the specific purpose of 
establishing ethical standards for all physicians. The AMA code 
of ethics has been continually revised for 160 years, guided by 
the Council on Ethical and Judicial Affairs, and serves as the 
primary compendium of medical professional ethical statements 
in the United States.
    The code has clear ethical guidelines that govern physician 
interaction with the pharmaceutical industry. For example, 
physicians must not place their own financial interests above 
the welfare of their patients.
    A physician's medical recommendations must not be 
inappropriately influenced by financial considerations. 
Accordingly, it is unethical for a physician to accept any kind 
of compensation from a pharmaceutical company as a quid pro quo 
for prescribing its products.
    The AMA code acknowledges that the giving of gifts reflects 
a customary social practice. However, it warns that gifts to 
physicians from commercial businesses may not be consistent 
with the AMA code. The code requires that gifts accepted by 
physicians must mainly benefit patients and should be of only 
modest value.
    Also, the AMA code explicitly provides that no gifts should 
be accepted if conditions are attached, such as prescribing 
certain drugs. All gifts, however, are not inappropriate. 
Indeed, many of them will benefit patients. An example is when 
physicians provide drug samples to patients who have a 
medically indicated need for treatment but cannot afford to buy 
the necessary drugs.
    The AMA works with State medical associations and specialty 
societies to disseminate ethical standards. To ensure 
compliance with these standards, the AMA relies not only on the 
Council on Ethical and Judicial Affairs, but also on medical 
licensing boards.
    About six years ago, the AMA undertook a major campaign to 
educate physicians and industry representatives about the AMA's 
ethical guidelines regarding promotional gifts to physicians 
from industry. More than 30 other physician and healthcare 
organizations came together to form the working group on the 
communication of ethical guidelines for gifts to physicians 
from industry. As a result of this collaboration, the AMA 
created an awareness program to educate physicians and other 
stakeholders on ethical guidelines and developed an educational 
program.
    The AMA is currently developing a series of educational 
programs for medical students and physicians designed to 
promote the importance of sound prescribing, focusing on how to 
minimize and eliminate undue influence by industry marketing 
practices. Special attention is given to medical students in 
resident positions in addressing this important issue, since 
interactions with industry often start very early in a 
physician's professional career.
    The interactions between industry and the medical 
profession must be defined by the exchange of sound scientific 
information which benefits patients. All practices that 
surround those encounters, from the visits of pharmaceutical 
representatives to large educational gatherings, must be framed 
in terms of such an exchange and must not constitute an attempt 
to inappropriately influence the medical treatment that 
physicians provide to patients. The health and welfare of 
patients depend on this.
    The AMA looks forward to working with the Committee to 
achieve our shared goals. Thank you for the opportunity to be 
here today.
    [The prepared statement of Mr. Sade follows:]

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    The Chairman. Thank you, Dr. Sade.
    Ms. Powell, we would like to hear from you.

 STATEMENT OF MARJORIE POWELL, ESQ., SENIOR ASSISTANT GENERAL 
COUNSEL, PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF AMERICA, 
                         WASHINGTON, DC

    Ms. Powell. Thank you, Mr. Chairman, Senator McCaskill. My 
name is Marjorie Powell. I am the senior assistant general 
counsel at PhRMA, which is the trade association representing 
those companies that are researching and developing new 
medicines.
    One of the important responsibilities of a pharmaceutical 
company when FDA has approved a new medicine is to make sure 
that physicians know that the medicine is available and know 
how and when to use that medicine and how and when not to use 
that medicine. That is the purpose of what is called 
pharmaceutical marketing or promotion. It is to make sure that 
physicians know when to use and when not to use medicines.
    In 2002, PhRMA adopted a significantly revised marketing 
code, which focused exactly on that, identifying that the role 
of a physician's prescribing is to meet the patient's medical 
needs using the physician's medical knowledge and clinical 
experience. But some of that medical knowledge comes from using 
prescription drugs once they have been on the market and 
experience with those drugs. It also comes from learning about 
new medicines, and that is the role of the pharmaceutical 
industry which has developed those new medicines.
    In our code, we have clearly identified that if a 
pharmaceutical sales representative is providing a gift to a 
physician, it should be to benefit the patient. It should be of 
insubstantial value, not of any substantial value. It should 
not be frequent. It should also not be in exchange for 
prescribing any particular drug.
    We also talked about a number of other things in our code, 
including the ways that pharmaceutical companies might enter 
into consulting arrangements with physicians and other members 
of the healthcare profession, because those healthcare 
professionals have important information to convey to 
pharmaceutical companies, partly running clinical trials, but 
also helping a company to identify, for example, why it is that 
a patient may not be compliant with a drug regimen and what 
kinds of possible changes in a medicine would improve 
compliance.
    Our pharmaceutical code has been a leader in the industry, 
although I must admit that we have clearly followed the AMA in 
many of our issues and worked closely with the AMA in trying to 
make sure that physicians are aware of the provisions of the 
code.
    A number of other groups also regulate pharmaceutical 
promotion and marketing. The FDA clearly has a major role in 
that, as you know, particularly, because you have just 
considered the new prescription drug user fee bill that has 
moved through the Senate and now moved through the House Energy 
and Commerce Committee. In addition, the Inspector General of 
HHS has said that compliance with the PhRMA code, while it is 
not a guarantee that you will be compliant with Federal law, 
goes a long way to indicating that a company is making a major 
effort to comply with all the Federal regulations.
    Let me turn now to the other side of my testimony, which is 
the importance of pharmaceutical marketing. Physicians 
recognize that they get valuable information from 
pharmaceutical representatives. They also recognize that some 
of that information is promotional and that they need to ask a 
variety of questions. Physicians are, in fact, trained 
professionals who know how to ask questions and how to evaluate 
both their own experience and all of the information that they 
receive.
    Pharmaceutical marketing is an important counter to many of 
the other influences on physicians' choices of treatment. For 
example, one study found that physicians don't even talk to 
patients about treatments that their healthcare insurers will 
not pay for. That is a way of screening physician actions that 
has nothing to do with pharmaceutical marketing, and, in fact, 
one study found that 54 percent of physicians said that 
formularies had a major impact on their prescribing.
    Another thing that formularies and managed care have done 
is to increase the percentage of scripts that are actually 
generic prescriptions. In the United States, this past year, 63 
percent of all scripts written were for generics. That is a 
much higher percentage than in other countries, particularly 
Europe, where there is much less pharmaceutical promotion.
    Let me wind up by saying--and if Senator Carper were still 
here, I would give him my summary by saying--that there are a 
number of chronic conditions that are the drivers of healthcare 
expenditures. A number of people have identified that 
approximately 75 percent of healthcare spending is on chronic 
diseases, many of which are undiagnosed or underdiagnosed and 
clearly are undertreated.
    Prescription medicines are prescription medicines, not 
over-the-counter medicines, because they have both benefits and 
risks, and they can only be used, in the opinion of the FDA, 
when they are prescribed by somebody with medical education and 
professional clinical experience. That is why it is important 
that the companies who have developed those medicines 
communicate information about both the benefits and the risks 
of those products to the people who will be prescribing them.
    [The prepared statement of Ms. Powell follows:]

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    The Chairman. Thank you very much, Ms. Powell.
    Dr. Sade, the guidelines that the AMA has out there, would 
you support making these guidelines mandatory, and would you 
support enforcing your guidelines?
    Mr. Sade. Thank you, Senator Kohl.
    The guidelines of the American Medical Association already 
are being enforced. The Council on Ethical and Judicial 
Affairs, of course, has jurisdiction only over its own members.
    But the council screens between 250 and 300 alleged 
physician violations of the ethical code every year, and of 
those, 30 to 40 actually come to a due process hearing. 
Sanctions are levied against some members of the AMA in the 
form of having their membership revoked or having their 
membership suspended or being put on probation, et cetera.
    But the reach of the disciplinary value of the AMA code 
goes far beyond that. Most medical boards in the United States 
use the AMA's code of medical ethics as their standard for 
ethical behavior of physicians, and they sanction physicians 
based on violations of the AMA code. That is a very powerful 
influence of the code on medical practitioners.
    The courts also refer to the code in deciding, actually, 
many cases, and that is another way in which the code is very 
useful in the American judicial system. So I don't think it is 
quite accurate to say that the code of ethics of the American 
Medical Association isn't being enforced. In fact, it is.
    The Chairman. So you would support full disclosure in a 
national registry?
    Mr. Sade. I don't know the answer to that question, because 
the AMA has not yet considered it or deliberated over it.
    The Chairman. Well, do you consider it to be a good idea?
    Mr. Sade. I don't know that, because we only have a limited 
experience with the States, which I think are very valuable 
experiments in determining the benefits of such a program, as 
well as the potential risks of such a program. Both the 
benefits and the risks were pointed out by the previous panel.
    The Chairman. How do you feel about Minnesota's law?
    Mr. Sade. Well, I will say the same thing, that the 
analysis of the data is too incomplete at this time to make a 
decision. But the fact of the matter is that AMA has not 
developed any policy on this, but it is monitoring the 
situation closely and will be creating policy in the near 
future.
    The Chairman. Ms. Powell, how do you feel about full 
disclosure in a national registry?
    Ms. Powell. We have been working with a number of States as 
they have first considered legislation and then developed 
regulations. It is very clear that the State legislators, as 
they have been putting together legislation and making 
amendments, have not fully understood the complexities of what 
it was that they were dealing with or the potential interaction 
with FDA regulations, which, of course, are national and are 
the ones that pharmaceutical companies have to abide by.
    As they have moved to the regulation stage, they have had 
even more difficulty in defining what it is they think should 
be included in a registry. So we would caution that that 
indicates that perhaps there is a need for much consideration 
about what would be included. Take, for example, the question 
of pharmaceutical samples, which some States have defined as 
gifts, but which we think are essential practice tools for 
physicians and patients to learn about whether a new medicine 
will be helpful for them, particularly when a patient may not 
have insurance.
    There has been one study that found that a large number of 
the patients to whom physicians have given samples were 
patients without insurance. If you define those as gifts, that 
implies that the physician is receiving a benefit, when, in 
fact, the samples are, under FDA law, required to be given free 
of charge to patients who need them. So there are those kinds 
of complexities that would make the effort toward developing a 
national registry very difficult.
    The Chairman. OK.
    Senator McCaskill.
    Senator McCaskill. I know, Mr. Chairman, they have called a 
roll-call vote, and so we don't have much time.
    You know, we are trying to go through the process of 
lobbying reform in Congress right now, and I think anyone would 
have to be honest and acknowledge that a lot of what is going 
on with the pharmaceutical industry, as it relates to their 
contact with doctors, is lobbying. It is lobbying, pure and 
simple.
    My brother ran a restaurant in Springfield, and he said the 
most lucrative part of their business was the private room that 
was reserved by pharmaceutical companies four nights a week. 
The wine consumed was unbelievably expensive. The dinners were 
unbelievably expensive. Now, I have got to tell you, I don't 
think most Americans think that is about patients first. That 
is about lobbying.
    What I would ask of PhRMA is if we are going to limit the 
lunches that can be bought for Members of Congress in the 
context of lobbying, shouldn't we have the same kind of 
disclosures with doctors, because there is a financial 
relationship there. If, in fact, it is about the patient, then 
PhRMA should have no problem with disclosing how much money 
they are spending on doctors in terms of recreational time.
    I am not talking about a member of the pharmaceutical 
industry visiting an office and dropping off some sample packs. 
I am talking about golf. I am talking about trips. I am talking 
about dinners. I am talking about expensive wine. Why in the 
world would we allow that to go on without the public and the 
patients knowing that is going on?
    Ms. Powell. Senator McCaskill, under the PhRMA code, as it 
was issued in 2002, expensive dinners, wine, golfing trips, 
sporting events are inconsistent with the PhRMA code. They are 
inconsistent with the inspector general's description of the 
guidance for the pharmaceutical industry. They are inconsistent 
with the requirements of various individual company compliance 
and ethics codes.
    I would, with all due respect, suspect that there has been 
some change in your brother's experience in the restaurant in 
recent years, because I know that there have been changes in 
the kinds of behaviors. Pharmaceutical representatives, when 
they are buying meals for physicians, are buying them in a 
place where it is quiet, and they can focus on communication of 
information. I don't believe that there are lots of examples of 
the type you describe, and if there are, I would certainly 
encourage you to forward them to the companies involved, 
because I think those are now inconsistent with both the AMA 
and the PhRMA code.
    Senator McCaskill. So they are not allowed to buy alcohol 
for doctors anymore?
    Ms. Powell. The code says that they may buy a meal in a 
reasonable setting at a reasonable price----
    Senator McCaskill. That wasn't my question.
    Ms. Powell [continuing]. Which I would----
    Senator McCaskill. Are they allowed to buy alcohol for 
doctors anymore, yes or no?
    Ms. Powell. Our code does not explicitly go to that level 
of detail----
    Senator McCaskill. So they can?
    Ms. Powell. If a company were to decide that a glass of 
wine was reasonable, yes, I think they could. But the purpose 
of the interaction would be communicating information to the 
physician, and that would more likely happen in a setting where 
you didn't have either food or alcohol, or perhaps you were 
bringing pizza so that not only the physician, but the nurse 
practitioner, who is actually dealing with the patient and 
telling the patient how to use the medicine, knows what 
information needs to be conveyed to the patient.
    Senator McCaskill. I just don't have a sense that the 
enforcement--I mean, I know, Dr. Sade, that the AMA has done 
some in this area. But there is, I think, out there a real 
perception, and--as we do here in this body. We fight 
perception sometimes, not reality.
    I don't think that lobbyists buying lunch for any 
individual congressman is necessarily polluting the process. 
But what has happened is because of abuses over the years and 
because of the prevalence of that kind of activity, we are now 
moving to cutoff that kind of activity and, therefore, doing 
something about the perception.
    I just think that your industry has got your head in the 
sand if you think you have turned the corner on this, because I 
don't believe, in terms of the public's perception, that you 
have at all.
    Mr. Sade. If I may comment----
    Senator McCaskill. I am sorry. We have a vote, and----
    The Chairman. I will give you 30 seconds, so go ahead, Dr. 
Sade.
    Mr. Sade. OK, a 30-second comment.
    Over the last 4 years, since the PhRMA code went into 
effect, we in my medical school have noticed a distinct change 
in the relationship of pharmaceutical representatives and 
physicians. Expensive dinners never have taken place all that 
much. Yes, they do take people to dinner, but they are always 
at modest prices and at restaurants in which actual real 
educational programs take place.
    So I think that the perception lags the reality in this 
case. The perception will change when the reality becomes more 
obvious.
    Senator McCaskill. Thank you.
    Ms. Powell. Senator McCaskill, we are working to educate 
not only our company sales representatives and, with the AMA 
physicians, but trying to change the perception. I agree with 
you that there is a perception problem, but it is one we are 
working very hard to try and change.
    Senator McCaskill. OK. Thank you.
    Anyone who has anything they want to add, I am sure the 
Chairman will allow them to submit it to the record.
    The Chairman. Thank you so much, Senator McCaskill.
    Senator McCaskill. Thank you, Senator.
    The Chairman. We thank our witnesses. You shed a lot of 
light on the issue and the topic, and it is really important.
    We thank the first panel, also, and you can all look 
forward to some progress on this matter.
    So thank you for being here.
    Mr. Sade. Thank you very much.
    [Whereupon, at 12:16 p.m., the Committee was adjourned.]


                            A P P E N D I X

                              ----------                              


           Dr. Kassirer Responses to Senator Kohl's Questions

    Question. Four years ago, the Office of the Inspector 
General at the Department of Health and Human Services issued 
ethics guidelines, in an effort to enforce its mandate to 
investigate and prosecute illegal kickbacks to physicians from 
drug companies. Do you think these guidelines have been 
effective in curbing ethical conflicts?
    Answer. In a highly unfortunate action, the Office of the 
Inspector General failed to take an opportunity to strengthen 
conflict of interest guidance. It merely accepted the 
recommendations of PhRMA and the American Medical Association. 
In my opinion, these recommendations are lax. They continue to 
allow gifts and meals as well as participation by physicians in 
industry speaker's bureaus and consultations on marketing 
issues. Since their pronouncements in 2002, there have been no 
apparent actions by the OIG on this issue. If these ethical 
conflicts are to be curbed, the OIG will have to promote new, 
more stringent guidance.
    Question. The voluntary guidelines put into place by both 
the medical industry and pharmaceutical industry several years 
ago have done little to curb the excessive marketing to 
physicians. In fact, the problem seems to be getting worse. 
Since the guidelines were adopted, drug industry spending on 
physician marketing has increased roughly $7 billion. If the 
voluntary guidelines were mandatory and they were properly 
enforced, would that be a good first step in cracking down on 
the problem?
    Answer. No. Because the voluntary guidelines of the 
``medical industry'' and the pharmaceutical industry are so 
deficient, even making them mandatory would have little effect.
    Question. We've heard testimony about efforts to tighten 
ethical guidelines in states, hospitals, and universities 
around the country, for example the University of Wisconsin 
Hospital banned free samples outright in 2001. What role should 
the federal government play in limiting these conflicts of 
interest and the troubling perceptions that they cause?
    Answer. Free samples are ideally used for patients who 
cannot afford them, but they often get into the wrong hands. 
Nurses, technicians, and doctors often use them. In addition, 
free samples are fundamentally marketing gimmicks, allowing 
physicians to familiarize themselves with the newest and most 
expensive drugs, and then to prescribe them. I believe all free 
samples should be sent to a central repository and given out by 
a voucher method to those who would benefit most from them. The 
federal government could promote this practice.
    Question. At the hearing, Dr. Lurie recommended a national 
disclosure law to provide transparency of gifts and payments 
physicians have received from drug companies, do you agree with 
his recommendation and would disclosure of these gifts and 
payments be an important first step in eliminating these 
conflicts of interest?
    Answer. In my testimony, I agreed that a federal registry 
would be valuable, at least in identifying the physicians who 
receive the largest payments from industry. But a registry 
alone is not sufficient. We must have data that includes the 
industry money that goes to professional organizations and lay 
organizations, not just individual doctors. We need information 
on what influence industry money has on medical organizations.
    Question. After hearing the testimony of Dr. Rosenthal, 
that these countless gifts and financial conflicts of every 
kind have caused a rift in his corner of the medical 
profession. At least some of his colleagues appear to be fed up 
with the negative effects that this money is having upon 
medical research. Do you perceive any evidence of a backlash or 
revulsion by younger physicians or medical students against 
accepting gifts, grants, trips, and honoraria of every 
description?
    Answer. The American Medical Student Association (no 
connection to the AMA) has taken a strong stand against 
students accepting gifts and food from industry. A Web site by 
New York physician Bob Goodman (www.nofreelunch.org) has taken 
a similar stand, and scattered across the country are students 
who regularly eschew free gifts.

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         Responses to Senator Kohl's Questions from Peter Lurie

    Question. In your testimony, you recommend a national 
disclosure law to provide transparency of gifts and payments 
physicians have received. Who should administer this program 
and be responsible for enforcing it?
    Answer. We recommend that the database of payments to 
physicians be maintained by the Department of Health and Human 
Services (DHHS). The agency already has experience with a 
similar national database, the National Practitioner Data Bank. 
Moreover, the increased expenditures on drugs that ensue from 
the industry's heavy reliance upon marketing are borne by the 
Medicaid and Medicare programs, both of which are also housed 
under DHHS. We would urge stiff penalties for instances of non-
compliance with any reporting requirement.
    Question. Additionally, some states have exempted certain 
things, such as drug samples or gifts under $100. Do you think 
certain gifts or payments should be exempted from disclosure?
    Answer. We believe that, as long as the nature of the 
payments is clearly part of each disclosure, the public is 
quite capable of distinguishing between, for example, payments 
for research and those for elaborate meals. Let the information 
be made public, in as detailed a fashion as is feasible, and 
let the public decide for itself what it deems objectionable. 
Sample, in particular, should not be exempted from disclosure, 
as these are the single largest item in pharmaceutical company 
expenditures on promotion. As noted in our testimony, three of 
the five states with disclosure laws (District of Columbia, 
Maine and Vermont) exempt payments under $25 and the remaining 
two (Minnesota and West Virginia) exempt those under $100. We 
would favor as low as exemption as possible. In Vermont, for 
example, only 23% of payments over $25 exceeded $100 (Ross, et 
al. JAMA 2007;297:1216-23), so high exemptions can result in 
the loss of information about the majority of payments.
    Question. The voluntary guidelines put into place by both 
the medical industry and pharmaceutical industry several years 
ago have done little to curb the excessive marketing to 
physicians. In fact, the problem seems to be getting worse. 
Since the guidelines were adopted, drug industry spending on 
physician marketing has increased roughly $7 billion. If the 
voluntary guidelines were mandatory and they were properly 
enforced, would that eliminate the problem?
    Answer. The underlying purpose of the medical and 
pharmaceutical industry guidelines on gifts to physicians was 
to preempt any federal or state legislation. We therefore have 
no confidence that these codes will ever be enforced. We would 
suggest that the Senate Special Committee on Aging ask the 
industries to list all the enforcement actions they have taken 
under their codes to date.

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