Healthy Skepticism Library item: 1710

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

Moynihan R.
ACA urges cut to $4bn drug bill
Australian Financial Review 2002 Mar 8

Full text:

The Australian Consumers’ Association has called on the Federal Government to remove tax deductibility for drug company promotional expenses, to help curb growth in the nation’s $4 billion drug bill.

The ACA chief executive, Ms Louise Sylvan, said other countries had stopped tax deductibility in the area, or capped the amount companies can spend on promotions.

``There is no reason for Australia to hang back.” she said yesterday.

The pharmaceutical industry spends more than $600 million a year on promotions in Australia, and aggressive marketing tactics are under scrutiny as the Government looks for ways to control the budgetary growth of the $4 billion Pharmaceutical Benefits Scheme.

The PBS grew by 20 per cent, or more than $600 million, last year, in part because of heavily promoted new drugs such as the arthritis pill Celebrex, anti-smoking drug Zyban and heart drugs called statins.

In August last year, the Nine Network’s Sunday program sparked controversy with hidden camera footage of a company-funded event about heart disease. Doctors were seen enjoying a lavish harbour cruise and floor-show of scantily clad women, which was part of an educational evening funded by drug giant Pfizer. The company declined to answer questions from The Australian Financial Review yesterday about whether the harbour cruise would be an expense for which Pfizer would claim a tax deduction.

In its recent budget submission, the Australian Medical Association has argued for closer monitoring of drug company marketing and greater use of independent information to try to improve the quality of doctors’ prescribing.

AMA president Dr Kerryn Phelps told the AFR yesterday ``the Government should look at clamping down on direct-to-consumer promotion”, citing examples of heavy media coverage of Zyban and Celebrex.

Manufacturers maintain that costly new drugs lead to savings elsewhere in the health system, but they also acknowledge concerns about the cost blowouts on heavily promoted products. Celebrex was supposed to cost about $50million a year, but blew out to $200million.

Despite its modest benefits and well publicised side-effects, including seizures, the anti-smoking drug Zyban cost taxpayers about $80million in just 12 months.

According to the CEO of the Australian Pharmaceutical Manufacturers Association, Mr Alan Evans, his budget submission suggested a range of company-funded measures to improve marketing practices, which he said could reduce annual growth in the PBS from a predicted 15 per cent to 10 per cent.

The ACA’s Ms Sylvan said removing tax deductibility for promotional expenses would be one way to try to curb drug company influence over GP prescribing.