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The Pharmaceutical Industry Facts, Fiction, Policy and Ethics Martin Donohoe

The Pharmaceutical Industry Facts, Fiction, Policy and Ethics Martin Donohoe. Outline. Economics Influences on Physician Prescribing Academia-Industry Connection Ethical and Policy Issues. Prescription Drugs. 10,000 FDA-approved drugs 70% of all office visits lead to prescriptions

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The Pharmaceutical Industry Facts, Fiction, Policy and Ethics Martin Donohoe

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  1. ThePharmaceutical IndustryFacts, Fiction, Policy and EthicsMartin Donohoe

  2. Outline • Economics • Influences on Physician Prescribing • Academia-Industry Connection • Ethical and Policy Issues

  3. Prescription Drugs • 10,000 FDA-approved drugs • 70% of all office visits lead to prescriptions • 1.5 - 2.0 billion prescriptions/year

  4. Prescription Drugs and Health Care Costs • >10% of U.S. medical costs • The fastest growing component of the $1.3 trillion US health care bill

  5. Economics of the Pharmaceutical Industry • Sales revenues tripled over last decade • Prices increased 150% (versus 50% CPI) • Spending up 17% from 2000 to 2001

  6. Economics of the Pharmaceutical Industry • Worldwide sales > $145 billion/year • US = Largest market • 40 % of worldwide sales • Average CEO compensation = $20 million (1998)

  7. Economics • 16.4% profit margin in 2000 ($24 billion) -Largest of any industry-4 times greater than average return of all fortune 500 companies-8 out of 25 most profitable U.S. companies are pharmaceutical companies

  8. Economics of the Pharmaceutical Industry • Greater than 5000 companies worldwide • Less than 100 companies account for over 90% of worldwide market

  9. Mergers and Acquisitions • Drug company mergers - Pfizer-Warner-Lambert - Upjohn-Pharmacia →Pfizer acquired Pharmacia in 2002 for $60 billion to become the world’s most powerful drug conglomerate

  10. Drug Industry Lobbying • Pharmaceutical Research and Manufacturers’ Association powerful lobby • 623 lobbyists for 535 members of Congress

  11. Drug Industry Lobbying • $38 million donated to Congressional campaigns in the 1990s • $84 million in 2000 election (2/3 to Republicans) • Orrin Hatch (R-Utah) - $169,000 in 2000 - #1 • John Ashcroft (Atty. Gen’l) - $50,000 in losing 2000 Senate bid • GW Bush received $456,000 during his 2000 election campaign

  12. Drug Costs • U.S. highest in the world55% > Europe35% to 80% > Canada (drug companies still among the most profitable in Canada) • Cross border pharmacy visits increasingly common • Canada vs. Mexico

  13. Drug Costs • U.S. only large industrialized country which does not regulate drug prices • Single payer system would dramatically decrease drug costs • Single purchaser able to negotiate deep discounts

  14. Drugs: Who Pays? • 55% out-of-pocket • 25% private insurance • 17% medicaid • 3% Other (VA, Workman’s Comp, IHS, etc..)

  15. Where Prescription Dollars Go • Research and development - 12%-preclinical testing - 6%-clinical testing - 6% • Manufacturing and distribution - 24% • Sales and marketing - 26% • Administrative / miscellaneous expenses - 12% • Taxes - 9% • Net profit - 17%

  16. The Elderly and Prescription Drug Coverage • Elderly represent 12% of U.S. population, yet account for 33% of drug expenditures • Almost 2/3 of elderly Medicare enrollees have no coverage for outpatient drugs • sicker and poorer then their counterparts with supplemental insurance.

  17. The Elderly and Prescription Drug Coverage • Drug expenditures increasing up to 10 times as fast as SS and SSI benefits • 1 out of 6 elderly Medicare patients are poor or near poor (incomes less than $7,309 or $9,316 respectively)

  18. Consequences of No Prescription Drug Coverage for the Elderly Noncompliance, partial compliance Increased ER visits and preventable hospitalizations, higher rates of disability, and greater overall costs

  19. Consequences of No Prescription Drug Coverage for the Elderly Elderly, chronically ill individuals without coverage are twice as likely to enter nursing homes

  20. The Elderly and Prescription Drug Coverage • Universal outpatient drug coverage cost-saving -pharmaceutical industry strongly opposed -Citizens for Better Medicare (pharmaceutical industry front group) $65 million ad campaign to defeat a Medicare prescription drug plan in 2000 • Bush/Congressional prescription drug benefit proposals woefully inadequate

  21. Generics • Increased market share-1983 = 15%-1993 = 40%-2000 = 42% • Average cost 1/3 of comparable name-brand drug

  22. Generics • Brand name manufacturers acquiring generic producers • E.g., Merck-Medco • Prices rose almost twice as rapidly as those of brand-name drugs in 2002

  23. Delaying Generic Competition • Nuisance lawsuits against generic manufacturers • Lobbying for Congressional Bills Extending Patent Protection • Schering Plough / Claritin - $20 million lobbying campaign • Big-name lobbyists (Howard Baker, C Everett Koop, Dennis Deconcini, Linda Daschle)

  24. Influences on Physician Prescribing Habits • Texts • Journals • Colleagues • Formularies • Samples • Patient requests • Personal experience • Cost

  25. Influences on Physician Prescribing Habits • Gifts • Drug advertisements • Pharmaceutical representatives

  26. Gifts from Pharmaceutical Companies • Pens, toys and puzzles • Household gadgets • Food • Books • Event tickets • Travel and meeting expenses • Cash

  27. Patients’ Attitudes Toward Pharmaceutical Company Gifts(Gibbons et al.) • 200 patients, 270 physicians • 1/2 of patients aware that doctors receive gifts • 1/4 believe their doctor(s) accepted gifts • 1/3 felt costs passed along to patients • Patients felt gifts less appropriate then did physicians

  28. AMA Guidelines Re Gifts to Physicians from Industry • Gifts of modest value which benefit patients O.K. • Pens, notepads, modest meals, textbooks acceptable • Film, videos, CDs; “Dinner to Go” (Merck); “Look for a Book” GlaxoSmithKline PLC); Palm Pilots (Dupont) – may be acceptable

  29. AMA Guidelines Re Gifts to Physicians from Industry • No cash gifts • No gifts with strings attached

  30. AMA Guidelines Re Gifts to Physicians from Industry • CME sponsorship money to conference sponsor, not participating physicians • Meeting expenses for trainees funneled through institution

  31. Pharmaceutical Company Advertising • $15 billion in 2000 • up to $15,000/U.S. physician • over $6 billion - advertising and marketing • over $7 billion - sales reps’ salaries • 50,000 salespersons: 1/10 prescribing physicians

  32. Pharmaceutical Company Advertising – Drug Samples • $8 billion/year in samples • Dispensed at 10% - 20% of visits

  33. Drug Samples • Only ½ of samples go to patients • 60% of pharm reps self-medicate • 50% of residents self-medicate, often using samples • early 1990s - benzos • 2000 - SSRIS for depression, antihistamines for sleep

  34. Truthfulness in Drug AdsWilkes et al.Ann Int Med 1992:116:912-9 • 10 leading medical journals • 109 ads and all available references (82%) • 3 independent reviewers

  35. Truthfulness in Drug Ads: FDA Requirements • True statements-effectiveness-contradictions-side effects • Balance • Instructions for use • Approved uses only

  36. Truthfulness in Drug Ads: Data • 57% little or no educational value • 40% not balanced • 33% misleading headline • 30% incorrectly called drug the “agent of choice” • 44% could lead to improper prescribing

  37. Truthfulness in Drug Ads • Higher percentage of ads misleading in Third World • Many agents available OTC • Increased FDA oversight and enforcement needed

  38. Doctors are Influenced by Pharmaceutical Advertising and Marketing • Prescribing patterns • e.g., Calcium channel blockers • 1998: Trovan most promoted drug in US; sales most ever for an antibiotic in one year; use since limited by FDA due to liver toxicity

  39. Doctors are Influenced:Formulary Requestsby P and T Committee Members(JAMA 1994;271:684-9) • Met with drug rep – 3.4X more likely to request company’s drug • Accepted money to speak at symposia – 3.9X • Accepted money to attend symposia – 7.9X • Accepted money to perform company-sponsored research – 9.5X

  40. Pharmaceuticals Sales Reps’ Techniques • Appeal to authority • Appeal to popularity • The “red herring” • Appeal to pity • Dryden - “Pity melts the mind”

  41. Pharmaceuticals Sales Reps’ Techniques • Appeal to curiosity • Free food/gifts • Testimonials • Relationship building/face time

  42. Pharmaceutical Sales Reps’ Techniques • Active learning – reinforcement / change • Favorable but inaccurate statements • Negative comments re competitors’ products • Reprints not conforming to FDA regulations

  43. Relating to Pharmaceutical Reps • Awareness of sales tactics • Learn about new agents/formulations being developed and tested • Question them, ask for references • Evaluate quality of references

  44. Sources of Accurate and Reliable Drug Information • The Medical Letter • Peer-reviewed studies and reviews • Micromedex • Prescribers’ Letter • Large databases-The Cochrane Collaboration

  45. Sources of Accurate and Reliable Drug Information • Textbooks • Facts and Comparisons • AHFS Drug Evaluations • AMA Drug Evaluations • Conn’s Current Therapy • The FDA (sometimes) • Not PDR

  46. Direct to Consumer Advertising • Began in 1980, briefly banned 1983-85 • Expenditures: $155 million—1985 $356 million--1995 $1 billion--1998 $2.8 billion--2000

  47. Direct to Consumer Advertising • US and New Zealand only countries to allow prime time TV advertising • 1989 - one drug achieved >10% public recognition • 1995 - 13 of the 17 most-heavily marketed • 2000 – Schering-Plough spent more to market Claritin than Coca-Cola Enterprises and Anheuser Busch spent to market their products

  48. Direct to Consumer Advertising:Use of Celebrities • Micky Mantle – Voltaren • Bob Dole – Viagra • Joan Lunden – Claritin • “Newman” - Relenza

  49. Effects of Direct to Consumer Advertising • Better educated/informed (?misinformed?) patients • Discovery of unrecognized illnesses: diabetes, hypertension, hep C, ED • More proactive patients • Diversion from important health issues; wasted time

  50. Pet Pharmaceutical Industry • $3 billion market • Examples: • Clonicalm (clomipramine) for separation anxiety in dogs • Anipryl (seligeline) for canine Cognitive Dysfunction Syndrome • “Sea pet” shark cartilage treats for doggie arthritis • Pet superstores and websites sell multiple antibiotics

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