Healthy Skepticism Library item: 13703

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

Just What the Doctor Ordered
Yahoo Finance 2008 May 21
http://biz.yahoo.com/portfolio/080521/dcr642c8c42131aebe0b184eb8a9ade8930.html?.v=1

Full text:

In the span of just a few weeks, two titans of the drug industry have endorsed a couple of big ideas that Big Pharma has long resisted: GlaxoSmithKline has adopted “tiered pricing,” and Eli Lilly & Co. has promised “full disclosure.”
ADVERTISEMENT

While this isn’t as stunning as, say, the National Rifle Association accepting the idea of regulating handguns, it is an example of how enlightened self-interest seems to be taking hold in at least two pharmaceutical companies.

Drugmaking is an industry that has been rocked by scandals, recalls, plummeting numbers of new drug approvals, and falling stock prices. Pharmaceuticals companies have also seen their public image plummet from beloved to distrusted in less than 25 years.

As recently as the 1980s, a large majority of Americans adored them. Last year, only 27 percent trusted drugmakers somewhat or a great deal, according to a Harris Poll. This compares to 20 percent who trust Congress, and the current 28 percent approval rating for President Bush.

This decline has occurred even as the industry has produced numerous wonder drugs, from cholesterol-lowering statins such as Pfizer’s Lipitor to cancer-busting drugs such as Genentech’s Avastin-though the output of late has been slowing.

Now comes London-based Glaxo announcing the abandonment of a central orthodoxy of its peers: that the entire world should pay First World prices for most drugs. Instead, Glaxo has been experimenting with charging much less in developing countries, running pilot projects in South Africa, Morocco, and India. Internally at Glaxo the project has been dubbed “tearing down the barriers.”

The goal is to continue to charge high prices in wealthy countries, which will remain the primary source of revenue to cover costs and to generate profits, while developing nations will pay what local markets can bear. This will not only provide drugs to those who cannot now afford them, but also will give Glaxo a boost in building new markets in growing economies from North Africa to China.

One fear of a tiered-pricing model has been that middlemen will buy drugs at the lower price and resell them in a “gray market” at the higher price. Glaxo has found that this practice is minimal in their pilot studies. They also have created different packaging, colors and branding of the same medicines.

As volume begins to offset lower prices in India, China, and other vast new markets, prices might even come down in the West as companies maintain or possibly increase profits.

This is what I mean by “enlightened self-interest.”

Meanwhile, back in the U.S., Eli Lilly also broke through another sacrosanct barrier. Last week the company announced its support of a proposal in Congress to require drug and medical-device companies to disclose all payments-including gifts, honoraria, and travel reimbursements-that it gives to physicians.

Lilly executives told the Indianapolis Star that a national registry revealing payments and links is needed to help restore the image of the industry and its relationship with doctors. “We believe that being transparent is one way to help reestablish that trust,” Dr. Jack Harris, vice president of Lilly’s U.S. Medical Division.

A recent study in the New England Journal of Medicine found that three-quarters of physicians surveyed had accepted free drug samples, food, or tickets to events; one-third had accepted free continuing education; and one-third had been paid fees for speaking and for enrolling patients in clinical trials.

A bill in the U.S. Senate would fine drug companies from $1,000 to $50,000 per violation for failing to disclose payments to doctors of $500 or more. The measure would also preempt state laws, some of which are more strict.

Lilly threw in its support after the bill’s sponsors-Republican Chuck Grassley of Iowa and Democrat Herb Kohl of Wisconsin-agreed to soften some provisions, such as lowering the maximum fine and raising the reporting threshold to $500 from $25.

Critics of the drug industry have said that the bill could be stronger, but most are satisfied that a national registry is an important first step. For Lilly, the effort was worth it, in part to fend off a stronger bill that might have more seriously affected its marketing efforts; it also is perhaps recognition that the industry’s low esteem with the public should not be ignored.

These actions by Glaxo and Lilly are long-overdue steps in the right direction for an industry that is still in need of far-reaching reforms and restructuring, and still has a ways to go to restore public trust.

One can only hope this is the beginning of a trend.