Healthy Skepticism Library item: 1017

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

 

Publication type: news

Ballenden N.
The Hard Sell
Consuming Interest (Australia) 2003 Feb

Full text:

The marketing activities of big drug companies are under more fire than ever before.And with its new code of conduct being scrutinised by the nation’s consumer watchdog, the pharmaceutical industry is at a crossroads.

What’s the difference between marketing and information? If you believe the major drug manufacturers, not much. In fact, their lobbyists seldom talk about ‘marketing’ at all. According to them, drug salespeople are the source of important information doctors and patients must have, and any more regulation would be a very bad thing indeed. Unlike other areas of medicine and pharmaceuticals, marketing is regulated through a code of conduct administered by Medicines Australia, the industry lobby body. Medicines Australia has asked the Australian Competition and Consumer Commission to endorse the code’s newest edition for the purposes of the Trade Practices Act 1975.

Drug promotion is big business, costing billions of dollars each year. It’s marketing, not research, which accounts for the biggest dollars in the pharmaceuticals business. Globally, the big drug companies spend around twice as much on marketing and administration as on research and development.[i]

To maintain ever-growing sales and profits, the major pharmaceutical manufacturers spend very large sums annually on promoting drugs – and particularly newer, more expensive drugs – to doctors. In 2000, over $13.2 billion was spent in the United States; in the developing world 20% to 30% of the sales dollar goes into promotion.[ii],[iii]

There are currently around 88,000 sales representatives in the US alone (up by 12,000 since 1995), a ratio of eight doctors to each sales person. The industry sponsored about 314,000 physician events in 2000.[iv],[v] In this country, the Australian Pharmaceutical Manufacturers Association (now Medicines Australia) estimated last year that its members employ more than 3,000 sales reps or ‘detailers’.[vi]

Even though medicines are so important – and potentially so dangerous if misused – regulation of this critical area is largely left to the industry itself. And that leads to problems.

In Australia, companies are forbidden by law to advertise their products directly to the consumer. But although the rest of the pharmaceutical business is heavily regulated, the industry is largely left to run its own regulatory regime. According to the lobby group Medicines Australia, it and its code ‘set the standards for the ethical marketing and promotion of prescription pharmaceutical products in Australia’.

The code claims that the quality use of medicines and appropriate prescribing are encouraged through ‘appropriate educative and promotional measures’. It covers issues such as product information, advertising, promotional campaigns, starter packs, gifts and entertainment, trade displays, travel and sponsorship, medical education, communications with the general public and training of medical representatives. It also defines the processes to be followed when a complaint is received about a company’s actions, and what sanctions can be applied if a company is found to be in breach of the code.

This raises two fundamental questions. How well does the present system work? And is it appropriate for the pharmaceutical industry to regulate itself in such important areas as marketing and company ethics, or should an external, independent process be considered?

Many of the complaints received by Medicines Australia’s Code of Conduct Committee are by one company against another. Their high-powered lawyers fight it out in front of the committee, and in most cases the competing sides are evenly matched.

The process works much less well when individuals or consumer organizations make a complaint. Although there is no obligation for complainants to do any more than write a letter, those who choose to pursue their case more closely may find themselves up against experienced senior counsel retained by a drug company.

The entire process – including the complaint documents, hearings and findings – remain confidential. Occasionally an aggrieved private complainant may ignore confidentiality undertakings and make these matters public, but this is unusual. So however serious a breach of the industry’s own ethical code may be, a company is unlikely to suffer public embarrassment.

The Code of Conduct Committee may impose fines of up to $75,000 and require public retractions to be published, though most fines are much less than this and retraction orders unusual. A single drug may earn for its manufacturer more than $100 million a year within Australia, so a fine of this size does not constitute a serious financial sanction.

Companies unhappy with a decision may take their case to an appeals committee which – according to people involved in the process – has frequently overturned findings or watered them down. It is at the appeals stage that senior, expensive legal counsel are most likely to be used.

It has been claimed by some independent players close to the Code of Conduct process that the more aggressive companies may regard complaints against them as a badge of honour, and a measure that they are “pushing the envelope” in what their overseas head offices regard as the difficult Australian environment.

Because doctors derive so much of their knowledge of new drugs from company-sourced promotional material, the ACA believes regulation of drug promotion can and should be more rigorous than that applied to other industries.

Most importantly, there can be health and financial consequences for consumers who are inappropriately prescribed medications because their doctor has not received accurate, complete and balanced information from the pharmaceutical company marketing the product. If, for example, a doctor has incomplete information about the side effects of a medication, it can lead to inappropriate and possibly dangerous prescribing. If the benefits of a drug have been exaggerated, the doctor might be encouraged to prescribe a medication that may be of little or no benefit to the patient.

The influence of unbalanced promotion in driving inappropriate prescribing is not just an issue for individual consumers. It is also an issue for the Pharmaceutical Benefits Scheme and for the taxpayers who support it. For example, where a medication is heavily promoted, prescribing rates for that medication may be much higher than is clinically necessary or desirable. One of the key drivers of the blowouts in the cost of the Pharmaceutical Benefits Scheme is ‘leakage’, where a medication is prescribed for a broader range of conditions than that for which is has been approved.

The cost of leakage to the PBS is highly controversial and needs to be properly researched. Estimates vary from $50 million a year (the Australian Pharmaceutical Manufacturers Association) to as much as $1 billion (former members of the Pharmaceutical Benefits Advisory Committee). Most experts accept that the likely cost is in the hundreds of millions of dollars.

For example, expensive proton pump inhibitor drugs to control stomach acid are listed on the PBS for severe ulcerating oesophagitis, but as many as two-thirds of prescriptions are believed to be for lesser gastric ailments.[vii] The three drugs in this class cost the PBS more than $250 million in 2000-2001. This is a particularly troublesome class, but leakage for these three drugs alone may by now be approaching $200 million a year. Drug companies can heavily promote non-PBS uses, even though this is likely to induce doctors to commit legal fraud by writing such prescriptions on the PBS.[viii]

Two recent examples highlight the practical problems of self-regulation in this area of drug industry ethics and marketing.

The ‘Healthy Weight Taskforce’ (HWT) was marketed as being the ‘first ever network of primary healthcare professionals to have formed in response to the rising levels of excess weight and obesity in Australia’. The taskforce evaluated the available methods of weight loss, including pharmaceutical products and weight loss programs such as weight loss. The findings were presented as a matrix designed to assist healthcare professionals and consumers identify current models of ‘best practice’. A pharmaceutical product (Xenical) was considered to be the most effective and appropriate form of weight loss. The findings and educational materials produced by the Healthy Weight Task Force were broadly promoted to the mainstream media and directly to general practitioners.

What was not stated in any information provided by the HWT was that the pharmaceutical company, Roche, funded the project. It also did not state that the recommended product, Xenical, was produced by Roche. In fact, this information was only revealed on ‘Media Watch’, a program broadcast on ABC TV which examines the media portrayal of current events.

The HWT material is in breach of the code in numerous ways[ix]. It deliberately blurs the line between education and promotion, a breach which is made more serious by the fact that the HWT materials do not acknowledge any company sponsorship. It is stated throughout the code that the name of the company must clearly stated on any promotional campaigns, educational material or product information[x].

By promoting the material on mainstream media, Roche, or their public relations firm, Burson Marsteller, were arguably attempting to increase or create a demand for their product.[xi] By not disclosing who had sponsored the information, they made it harder for media outlets to recognise that the material was promotional rather than educational. The Healthy Weight Taskforce material is also arguably breaching the Code in terms of encouraging consumers to seek a specific prescription. Provision 9.4 stipulates that ‘any activity directed towards the general public which encourages a patient to seek prescription for a specific prescription–only product is unacceptable’.

The code also states that information must be produced in ‘balanced and correct way’. The information presented by the HWT is biased towards to pharmaceutical and pharmacy products and towards a medical management of the problem.

The matrix presented did not mention any of the side effects associated with the treatments described. The code clearly states that information about side effects is to be included with product information and advertisements. It is interesting to note that in assessing safety, the taskforce stressed that Weight Watchers, a non-pharmacological method of weight loss, could possibly encourage restrictive eating behaviours — but there was no mention of the side-effects of Xenical. According to the drug’s official product information, side effects can include ‘increased flatulence, oily discharge from anus and abdominal pain’[xii]. While concerns are raised about the safety of other non-prescription products, especially those not supervised by doctors,[xiii]

no comment was made about the potential long-term physiological effects of taking this product or even of short term discomfort.

In another case, the Pfizer company attempted to pressure Alzheimer’s patients into lobbying politicians in support of the PBS funding of a new product. The drug was being supplied free of charge by the company and was still going through the PBS process, which was complicated by issues of price and drug efficacy. The company wrote to patients asking them to lobby politicians on the company’s behalf and enclosed a list of parliamentarians.

Following a complaint, the Code of Conduct Committee strongly criticised the company for inappropriately dealing with a highly vulnerable group of patients, but did not impose any fine or sanction because, they said, such a matter was not covered by the code and there was nothing that could be done. The whole matter remained confidential.

The code’s latest edition is currently before the Australian Competition and Consumer Commission, which has been asked by Medicines Australia to grant its approval. This is important to the industry because without the ACCC’s approval, some conduct authorised under the code could still be liable to action under the Trade Practices Act. The ACCC has approved earlier editions but this time the process may be less straightforward.

Following a period of public consultation – which included comments from the ACA — the ACCC has referred the draft back to Medicines Australia, drawing attention to a number of issues that arose during the consultation process. These include the secrecy of the process, membership of the appeals committee, hospitality and sponsorship given to doctors and medical organizations by drug company sales departments, the effects of drug promotion on the PBS, and loopholes that allow companies to subvert the ban on direct-to-consumer drug advertising.

Three options are available to the ACCC. It can approve the new draft, approve it with conditions, or deny the application altogether – which would expose drug companies to action under the Trade Practices Act and expose them to the possibility of fines of millions of dollars rather than the Code of Conduct’s $75,000 upper limit.

If the new version of the code was not approved, a crisis could be created. But the Trade Practices Act is a cumbersome vehicle for actions in the issues now covered by the Code of Conduct, and the ACCC is pessimistic about its chances of success in court. If the present system becomes unworkable and a new regulator is required, this will be less likely to be the ACCC than an agency within the Health portfolio, such as the Therapeutic Goods Administration. But such a development would require a U-turn in government policy and substantial changes to the law.

The most likely outcome is that the new code will be endorsed, perhaps with new conditions to make the process fairer and more open. But for company marketeers it will be business as usual, with no significant sanctions against unethical conduct or misleading marketing.

The promotion of medicines, the information flow to doctors and the courting of prescribers with payments, sponsorships, lavish meals and overseas trips, have the potential of distorting the practice of medicine. Drug marketing is more important than the marketing of almost any other product because if the doctor makes the wrong decision, the patient may suffer injury or even death. Medical mistakes cost thousands of lives every year. Plausibly, over-enthusiastic marketing is involved in some of these mistakes.

The ACA believes the present system needs thorough reform, with priority given to these major principles:

Self-regulation of pharmaceuticals does not work. A new, independent regulator must be found.

The process must be open. Hearings must be in public and the findings published.

Fines and other sanctions must be in proportion to the damage suffered by any individual or group, and to the potential profits gained by any conduct held to be in breach.

Hospitality, sponsorships, payments to doctors and industry funding of medical and consumer groups should be closely scrutinised.

Loopholes in the ban on direct-to-consumer advertising of drugs should be eliminated.

Complaints from consumers and other non-industry stakeholders should be facilitated.

Non-industry complainants should not be disadvantaged by being pitted against company-retained legal counsel.

As well, the ACA believes an independent inquiry is needed into all aspects of pharmaceutical marketing in Australia, its impact on medical practice and its contribution to cost pressures on the health system.

The cost of prescription medicines is rising so fast that the long-term sustainability of the Pharmaceutical Benefits Scheme has been questioned by the Treasurer, Mr Costello, and many others. The government has tried to unload some of those costs onto consumers by raising the patient copayment, a measure which has been rejected by the Senate. But other cost-cutting measures, some of which may limit consumer access to medicines, have been suggested.

Overall costs increases are driven almost entirely by the high prices demanded for new, patented prescription medicines. These companies compete rigorously in marketing their rival products, but seldom do they respond to competition by lowering the prices of drugs still covered by patent, no matter how many near-equivalent alternative products there may be.

Because drug makers have managed to retain high and ever-increasing prices, they have been under much less pressure than most industries to rationalise their own cost base. The biggest single component of that cost base – and the ripest for rationalisation – is their marketing departments.

Not surprisingly, the industry has a record of opposition to any measures by third-party payers, such as Australia’s PBS, to enforce price discipline. Arguably, pharmaceutical makers can afford to sustain substantially lower prices while retaining profitability, but only if they cut back on their over-lavish marketing programs.

Consumers have a clear interest in the maintenance of a viable, innovative drug industry that can continue to deliver important and life-saving medicines. But they have an equal interest in maintaining access to those drugs through a comprehensive and universal PBS. Because drugs are by far the fastest-rising cost element in the entire health business, and are so central to medical practice, the threat extends not only to the PBS but to the whole health system. More modest company marketing, with savings passed on in the form of lower prices, is perhaps the single most important key to the long-term survival of affordable, accessible health care.

Reform is needed not only to the industry Code of Conduct but across the gamut of drug company marketing, pricing and competition. After all, it’s our money they’re using.

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[i] Newby, David A and Henry, David A “Drug advertising: truths, half truths and few statistics” in Medical Journal of Australia, Vol 177, pp285-286.

[ii]. IMS Health. US promotional spend by type. www.imshealth.com/public/structure/dispcontent/1,2779,1343-1343-143223,00.html (accessed Dec. 6, 2001).

[iii]. Lexchin J. Deception by design: pharmaceutical promotion in the third world. Penang: Consumers International, 1999.

[iv]. Scott-Levin. Rx’s and RSVP’s: pharmaceutical companies holding more physician meetings and events. www.quintiles.com/products_and_services/informatics/scott_levin/press_releases/press_release/1,1254,244,00.html (accessed Dec. 6, 2001).

[v]. Pharmaceutical Research and Manufacturers of America. Backgrounders and facts www.phrma.org/publications/documents/backgrounders//2001-06-06.231.phtml (accessed Dec. 6, 2001).

[vi] Interview by Alan Evans, CEO, Australian Pharmaceutical Manufacturers Association, World Today, ABC Radio, July 2001.

[vii] Australian Institute of Health & Welfare GP Statistics and Classifications Unit, 2001. Sydney SAND abstract No. 18 from the BEACH program: Peptic ulcer disease. Sydney: GPSCU University of Sydney. With further unpublished analysis by the Pharmaceutical Benefits Advisory Committee Drug Utilisation Subcommittee Secretariat, 1999.

[viii] Pharmaceutical Benefits Branch: PBS statistics 2000-2001, Dept Health & Ageing, Canberra 2002.

[ix] See for example Code of Conduct 1.10,9.5.2

[x] See Code of Conduct 9.5.4.

[xi] Australian Broadcasting Corporation (ABC) (2002). Media Watch: Burson-Marsteller Task Force, broadcast 30/09/2002

http://www.abc.net.au/mediawatch/transcripts/300902_s3.htm

[xii] Xenical ® Consumer Medicine Information, Roche Products Pty Ltd.

[xiii] As an aside, the HWT taskforce strongly argues that obesity is best managed by primary care professionals. This fails to recognise the effect of many self-help groups and the capacity of individuals to make sustained lifestyle changes without the intervention of pharmaceuticals and/or the medical profession. In its mandate, the HWT fails to consider the many other factors which contribute to obesity.