[Congressional Record Volume 147, Number 105 (Wednesday, July 25, 2001)]
[Extensions of Remarks]
[Pages E1421-E1423]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   INTRODUCTION OF THE SAVE MONEY FOR PRESCRIPTION DRUG RESEARCH ACT

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                        Wednesday, July 25, 2001

  Mr. STARK. Mr. Speaker, I rise today to introduce the Save Money for 
Prescription Drug Research Act of 2001. The pharmaceutical industry is 
crying wolf, claiming that forced to reduce prescription drug costs for 
seniors, they will be unable to continue lifesaving drug research and 
development. This bill allows them to stop wasting money on physician 
incentives and redirect those funds to R&D. It would do so by denying 
tax deductions to drug companies for certain gifts and benefits, 
excepting product samples, provided to physicians and encourage use of 
such funds on R&D.
  Presently, these companies are spending billions of dollars on 
promotions to entice doctors to prescribe their products, and these 
dollars are tax deductible. According to a New York Times November 2000 
article pharmaceutical companies spent $12 billion in 1999 courting 
physicians, nurse practitioners, and physician assistants hoping to 
influence their prescribing habits. Experts estimate that drug 
companies spend an average of between $8,000 and $13,000 on individual 
physicians every year. Gifts come in the form of watches, jewelry, 
trips and expensive meals. The New York Times article lists one example 
where SmithKline Beecham offered physicians a $250 `consulting fee' and 
choice of entr6e at an expensive restaurant, merely for agreeing to 
attend an update on use of a cholesterol-reducing drug. These campaigns 
contribute to preference and rapid prescribing of new drugs, and 
decreased prescribing of generics. In other words, tax deductible 
dollars contribute to the rising prices of prescription drugs.
  For years the pharmaceutical industry has claimed that the high price 
of prescription drugs is due to investment in research and development. 
A recent Families USA report, however, indicated that this might not be 
the case. The report showed that at eight major

[[Page E1422]]

pharmaceutical companies, investment in marketing, advertising and 
administration was more than double the investment in R&D. At Pfizer, 
for example, 39% of the net revenue, more than $11 billion, went to 
these expenses, while only 15% of revenues were devoted to R&D.
  It is unquestionable that the research and development of new drugs 
is an expensive process. However, if the pharmaceutical industry 
intends to claim that it cannot afford research if drug prices for 
seniors are reduced, perhaps they ought to more carefully consider 
their priorities. Clever marketing ploys that influence physician 
prescribing habits do little to actually save lives, but do much to 
increase corporate profits.
  Denying the pharmaceutical industry the ability to deduct 
expenditures for gifts to physicians is a solid step toward providing 
Americans with access to more lifesaving drugs. By redirecting drug 
company promotional expenditures to their R&D budgets, the American 
public would reap the benefit of increased medical breakthroughs. Gifts 
from pharmaceutical companies do not improve health care for patients.
  This bill I am introducing today eliminates the tax incentives 
currently in place that encourage drug companies to continue to give 
gifts to doctors to influence their prescribing. It is my hope that the 
industry will redirect these dollars from existing gift practices to 
R&D. The pharmaceutical industry claims it needs financial help to 
increase R&D efforts. This bill gives them billions of new dollars for 
precisely that purpose. I urge the pharmaceutical industry to use these 
funds more wisely. I hope that my colleagues will join with me in 
supporting this endeavor to increase investment in the research and 
development of life saving drugs in the private sector.

                [From the New York Times, Nov. 16, 2000]

       High-Tech Stealth Being Used To Sway Doctor Prescriptions

                (By Sheryl Gay Stolberg and Jeff Gerth)

       As a busy internist, Dr. Bruce Moskowitz frequently 
     prescribes cholesterol-lowering medicines and osteoporosis 
     drugs for his elderly patients. Like most physicians, he is 
     no stranger to pharmaceutical sales representatives, and he 
     often chats with them about his preference in medication.
       But the drug companies know more about Dr. Moskowitz than 
     he realizes. Over the past decade, with the advent of 
     sophisticated computer technology, pharmaceutical 
     manufacturers have been quietly compiling resumes on the 
     prescribing patterns of the nation's health care 
     professionals, many of whom have no idea that their decisions 
     are open to commercial scrutiny.
       These ``prescriber profiles'' are the centerpiece of an 
     increasingly vigorous--and apparently successful--effort by 
     drug makers to sway doctors' prescribing habits. To create 
     them, pharmaceutical marketers are buying information from 
     pharmacies, the federal government and the American Medical 
     Association, which generates $20 million in annual income by 
     selling biographies of every American doctor.
       The profiles do not contain patient names. But they do 
     offer drug companies a window into one half of the doctor-
     patient relationship. And they are raising important public 
     policy questions, both about the privacy of doctors' 
     prescribing decisions, and how much commercial pressures 
     influence them.``As an extension of the doctor-patient 
     relationship, doctors are entitled to privacy,'' said 
     Lawrence O. Gostin, an expert in health privacy at the 
     Georgetown University Law Center.
       In describing the profiles as ``a fundamental violation'' 
     of that privacy, Mr. Gostin said they also raise ``an 
     extremely important policy question, which is to what extent 
     are health care prescribing practices influenced by 
     commercial concerns?''
       That question is now front and center in the political 
     debate. With the price of prescription medication high on the 
     national agenda, the impact of marketing on the cost of 
     pharmaceuticals is at issue. But while the public discussion 
     has focused largely on the recent trend toward advertising 
     directly to patients, the industry still spends most of its 
     money wooing doctors.
       Of the $13.9 billion that the drug companies spent 
     promoting their products last year, 87 percent, or about $12 
     billion, was aimed at doctors and the small group of nurse 
     practitioners and physicians' assistants who can prescribe 
     some medications, about one million prescribers all told.
       ``The pharmaceutical industry has the best market research 
     system of any industry in the world,'' said Mickey C. Smith, 
     a professor of pharmaceutical marketing at the University of 
     Mississippi. ``They know more about their business than 
     people who sell coffee or toilet paper or laundry detergent 
     because they truly have a very small group of decision 
     makers, most of whom still are physicians.''
       Pharmaceutical sales representatives have been a staple of 
     American medicine for decades. Their courtship of doctors is 
     intensive and expensive, and their largess runs the gamut, 
     from trinkets like prescription pads and pens, to staff 
     lunches at hospitals and medical offices and offers of free 
     weekends at resorts.
       Prescriber profiles play a significant role in the 
     courtship; pharmaceutical marketers say they use the reports 
     to help determine which doctors should be offered certain 
     perks. And the perks themselves worry ethics officials at the 
     American Medical Association, who are trying to discourage 
     doctors from accepting them, even as the association's 
     business side sells information that facilitates the giving 
     of gifts.
       Dr. Moskowitz, of West Palm Beach, Fla., is one example. In 
     late August, he received an invitation from two drug 
     companies, the Bayer Corporation and SmithKline Beecham, 
     asking him to a private dinner at the Morton's of Chicago 
     Steakhouse, an expensive chain restaurant not far from his 
     West Palm Beach office, on the evening of Sept. 18.
       The topic was high cholesterol, including an update on 
     Baycol, a drug the two companies jointly market. For his 
     feedback, Dr. Moskowitz would be designated a consultant and 
     given a $250 honorarium, along with his choice entree. He 
     declined.
       ``Drug companies ask me, How can we change your 
     prescribing, what would it take, do you want to serve as a 
     consultant?'' Dr. Moskowitz said. ``The schemes get more and 
     more desperate.''
       Although most doctors do not believe that such entreaties 
     affect their professional behavior, some studies suggest 
     otherwise. Dr. Ashley Wazana, a psychiatry resident at McGill 
     University in Montreal, recently analyzed 29 studies on the 
     effects of gifts to doctors.
       Published in January in The Journal of the American Medical 
     Association, Dr. Wazana's analysis found an association 
     between meetings with pharmaceutical representatives and 
     ``awareness, preference and rapid prescribing of new drugs 
     and decreased prescribing of generics.''
       His conclusion? ``We are influenceable,'' Dr. Wazana said.
       In an effort to save money, and also to avoid this 
     influence, some clinics and hospitals have imposed a ban on 
     free drug samples and visits from sales representatives and 
     discourage doctors from taking consulting fees like the one 
     offered by Bayer and SmithKline Beecham.
       Among them is the Everett Clinic in Washington State, a 
     group practice of 180 doctors that cares for 250,000 
     patients. Its officials say that drug costs have declined 
     since the ban.
       ``Pharmaceutical marketing would often lead to physicians 
     prescribing more costly medicines than are necessary,'' the 
     clinic's medical director, Dr. Al Fisk, said.
       But Dr. Bert Spilker, a senior vice president with the 
     Pharmaceutical Research and Manufacturers of America, an 
     industry trade group, said marketing ``serves an essential 
     function in the health care delivery system'' by helping to 
     educate doctors, so they can prescribe drugs more 
     appropriately.
       Drug companies, however, are often reluctant to disclose 
     details about their marketing efforts, particularly the use 
     of prescriber profiles.
       ``If we talk about what we do and how we do it,'' said Jan 
     Weiner, a spokeswoman for Merck & Company, ``then our 
     competitors will know a whole lot more than they know now.''


                         The A.M.A. Master List

       Singling out doctors is not new, but detailed prescriber 
     profiles have been available only since the early 1990's, 
     when most pharmacies adopted computer systems to process 
     insurance claims, said Pat Glorioso, a marketing executive at 
     I.M.S. Health, a leading pharmaceutical market research 
     concern and one of two companies that specialize in 
     collecting records of pharmacy sales.
       Through the profiles, a drug company can identify the 
     highest and lowest prescribers of a particular medicine in a 
     single ZIP code, county, state or the entire country. They 
     can learn, for example, which antidepressants a particular 
     psychiatrist favors.
       ``It's very flexible in the way we can slice and dice the 
     information,'' Ms. Glojioso said. ``As technology has 
     improved, we havejust ridden that wave.''
       When pharmacies sell records of prescription drug sales, 
     they do not show names of patients or, in some cases, their 
     doctors. But those records are typically coded with 
     identification numbers issued by the Drug Enforcement 
     Administration to doctors for the purpose of tracking 
     controlled substances. The government sells a list of the 
     numbers, with the corresponding names attached, for fees that 
     can nin up to $10,200 a month, depending on how widely the 
     list will be distributed.
       The American Medical Association, meanwhile, sells the 
     fights to what it calls its ``physicians' master file'' to 
     dozens of pharmaceutical companies, as well as I.M.S. Health 
     and other market research concerns. Though only about 40 
     percent of American doctors are dues-paying members of the 
     medical association, the database has detailed personal and 
     professional infor-mabon, including the D.E.A. number, on all 
     doctors practicing in the United States.
       Pharmaceutical marketers consider Lhe master file the gold 
     standard for reference information about doctors. Combined 
     with the records of pharmacy sales, the file helps create 
     portraits of individual doctors, their specialties and 
     interests. As the nation's largest doctors' group, the 
     medical association has maintained the master file for nearly 
     100 years, and has licensed it for more than 50. It is so 
     complete, A.M.A. officials say, that even the dead are 
     included.

[[Page E1423]]

       ``We're trying to provide a reliable database, which is 
     accurate, so that it can be used appropriately to focus 
     efforts on
       There are some restrictions, Dr. Reardon said: the roster 
     cannot be sold to tobacco companies and it cannot be used to 
     deceive doctors or the public. While they say sale of the 
     master file brings about $20 million in annual income to the 
     association, officials would not say what they charge 
     individual companies.
       Much of the information in the association's database is 
     available from sources scattered around the country. But one 
     major element is not: the medical education number, which the 
     A.M.A. assigns to new medical students in order to track them 
     throughout their careers. Most doctors do not even know they 
     have one.
       This number, which enables computers to sort through the 
     huge A.M.A. master file, is ``the core element in the 
     database of tracking physicians,'' said Douglas McKendry, a 
     sales executive at the Acxiom Corporation, a pharmaceutical 
     marketing company that recently formed a partnership with the 
     medical association to manage the database.
       ``The A.M.A. data helps identify the individual physicians 
     that are being targeted,'' Mr. McKendry said.
       Doctors who do not want their names sent to marketers can 
     ask the association to remove them from the file, Dr. Reardon 
     said. But in interviews, several prominent doctors said they 
     were unaware that their biographies were being sold.
       Among them is Dr. Christine K. Cassel, a former president 
     of the American College of Physicians and chairman of the 
     department of geriatrics at Mount Sinai School of Medicine in 
     Manhattan. In Dr. Cassel's view, information about doctors' 
     prescribing habits may appropriately be used by their health 
     plans to improve quality of care. She called the commercial 
     use of the data outrageous, saying, ``This is not about 
     quality. It's about sales.''


                          Dinner and a Motive

       Pharmaceutical marketing is big business not only for drug 
     companies, but also for companies firms like I.M.S. Health 
     and Acxiom, which cater to them.
       Overall spending on pharmaceutical promotion increased more 
     than 10 percent last year, to $13.9 billion from $12.4 
     billion in 1998. Experts estimate that the companies 
     collectively spend $8,000 to $13,000 a year per physician. In 
     recent years, as demands on doctors' time have grown more 
     intense, pharmaceutical marketers say they have been forced 
     to become more creative.
       ``You have to have a hook,'' said Cathleen Croke, vice 
     president of marketing for Access Worldwide Communications 
     Inc., which specializes in drug marketing. ``if you offer 
     them $250, that might get them. Or they are attracted to the 
     prestige of being a consultant, that a company is asking for 
     their opinion.''
       The offer of dinner and a $250 consulting fee was 
     sufficient to draw about a dozen South Florida physicians to 
     Morton's in West Palm Beach on Sept. 18. They gathered there, 
     on a muggy Monday night, in a back room called the boardroom, 
     where a slide show and a moderator from Boron, LePore & 
     Associates Inc., the market research firm hosting the event, 
     awaited their arrival.
       Dr. Moskowitz, who has been in practice in West Palm Beach 
     since 1978 and heads a group of 12 doctors, says he routinely 
     receives--and rejects--such invitations.
       The Morton's dinner was not open to the public; had Dr. 
     Moskowitz accepted, he would have been required to sign a 
     confidentiality agreement. Instead, he told the companies he 
     intended to take a reporter for The New York Times.
       But when Dr. Moskowitz and the reporter showed up at 
     Morton's, the Boron LePore moderator, Alexander Credle, told 
     them to leave.
       ``This is a clinical experience meeting, a therapeutic 
     discussion,'' Mr. Credle said. ``There is an expected degree 
     of confidentiality.''
       Dr. Moskowitz asked Mr. Credle why he was invited; Mr. 
     Credle had no answer. But in an interview a few weeks after 
     the dinner, John Czekanski, a senior vice president at Boron 
     LePore, said the invitations were ``based on databases 
     targeting physicians'' who prescribe cholesterol-lowering 
     drugs or who might.
       Boron LePore calls these dinner sessions ``peer-to-peer 
     meetings,'' and in 1997, it acted as host at 10,400 of them. 
     Typically, they feature presentations from medical experts, 
     on the theory that doctors are receptive to the views of 
     their peers. With new drugs coming onto the market all the 
     time, physicians are hungry for information about them. 
     Pharmaceutical companies say it is that desire for education, 
     rather than a free meal or modest honorarium, that draws many 
     doctors to the meetings.
       But the dinners are creating unease among officials of the 
     American Medical Association's Council on Ethical and 
     Judicial Affairs, which in 1990 published guidelines that 
     limit what gifts doctors may accept. The guidelines, which 
     have also been adopted by the Pharmaceutical Research and 
     Manufacturers' Association, the drug industry trade group, 
     prohibit token consulting arrangements. but permit ``modest 
     meals'' that serve ``a genuine educational function.''
       Compliance is voluntary, and Dr. Herbert Rakatansky, who is 
     chairman of the A.M.A.'s ethics council, says doctors 
     routinely ignore the rules. That is in part because they are 
     murky, as the dinner at Morton's reveals.
       Whether the dinner was intended to educate doctors, or was 
     part of a marketing campaign, or both, is not clear. In the 
     $7.2 billion market for the cholesterol-lowering drugs known 
     as statins, Baycol ranks last in sales, with just $106 
     million in sales last year. Bayer and SmithKline Beecham 
     recently introduced a new dosage for the drug, and the 
     companies said
       ``As far as we're concerned, it's educational,'' said 
     Carmel Logan, a spokeswoman for SmithKline Beecham. But Tig 
     Conger, the vice president of marketing for cardiovascular 
     products at Bayer, said the company intended to teach a 
     select group of doctors about Baycol, then use their feedback 
     to hone its marketing message. And Allison Wey, a spokeswoman 
     for Boron LePore, said the dinner was ``part education and 
     part marketing.''


                        Raising Ethics Question

       While Dr. Rakatansky, of the A.M.A., could not comment 
     specifically on the Baycol meeting, he had harsh words for 
     these dinners in general.
       ``We think 99 percent of those are shams,'' he said. ``They 
     are marketing devices and not true requests for 
     information,''
       As to whether the dinner fit the ``modest meal'' criteria, 
     that, too, is unclear, because the guidelines offer no 
     specifics. At Morton's in West Palm Beach, the entrees range 
     from $19.95 for chicken to $32.95 for filet mignon--a la 
     carte. The sales manager, Lauren Carteris, said the 
     restaurant frequently was the site of pharmaceutical meetings 
     for Boron LePore.
       ``Doctors,'' Ms. Carteris said, ``will only go to an 
     expensive restaurant.''
       To heighten doctors' awareness about the ethics of 
     accepting gifts, the medical association is beginning an 
     educational campaign. In addition, The Journal of the 
     American Medical Association devoted the bulk of its Nov. I 
     issue to conflict of interest in medicine, including an essay 
     entitled ``Financial Indigestion'' that questioned the 
     effects of pharmaceutical company gifts on doctors' 
     professional behavior.
       But some prominent doctors say the medical association 
     needs to address its own role, as a seller of information 
     that helps drug marketers select which doctors to target.
       ``It potentiates this gift giving, and implicitly endorses 
     it,'' said Dr. David Blumenthal, a professor of health policy 
     at Harvard Medical School who has used the A.M.A.'s data for 
     his academic research.
       The sale of the master file to drug companies, Dr. 
     Blumenthal said, ``hands the weapon to the drug company that 
     the A.M.A. is saying is an illicit weapon.''
       Dr. Reardon, the past president of the medical association, 
     dismisses such a connection. Doctors are responsible for 
     their own decisions about whether to accept gifts, he said, 
     adding, ``I don't think the database has anything to do with 
     ethical behavior of physicians.''
       Dr. Reardon noted that drug marketers could obtain 
     information about doctors from other sources, including the 
     federal government. But Mr. Gostin, the privacy expert at 
     Georgetown, who is also the health law and ethics editor of 
     The Journal of the American Medical Association, said that 
     did not justify the association's action.
       ``We live in a society where, if you comb long enough and 
     hard enough with sophisticated enough search tools, you can 
     find just about everything,'' Mr. Gostin said. ``That doesn't 
     mean it's all right for people to assemble it, make it easy 
     and sell it.''
       As for Dr. Moskowitz, he is still receiving invitations 
     from drug companies, despite his longstanding habit of 
     spuming them. One arrived on Oct. 18, from Aventis 
     Pharmaceuticals and Procter & Gamble Pharmaceuticals, who 
     jointly market Actonel, an osteoporosis drug.
       Attendance at the meeting, scheduled for Saturday , will be 
     limited to 12 doctors, the invitation said. Breakfast and 
     lunch will be served; in between, there will be a clinical 
     discussion of osteoporosis, with 30 minutes reserved for 
     doctors' feedback. The honorarium is $1,000.

     

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