The Life Cycle of Objectionable Drug Marketing Practices
posted by Frank Pasquale
[This is a guest post by Nathan Cortez, assistant professor of law at the Dedman School of Law at Southern Methodist University. Cortez has published in the peer-reviewed Food and Drug Law Journal and teaches international health, pharmaceutical and administrative law. I've learned a lot from his work, and I'm happy to post his commentary on recent controversies in pharmaceutical marketing.]
By Nathan Cortez
The pharmaceutical industry spends some serious coin on sales and marketing—anywhere between $30 billion and $57 billion per year. And this money funds much more than the ubiquitous ad campaigns to which we’ve grown accustomed (sing along if you know the “Viva Viagra” jingle). Over the years, sales and marketing departments have conjured up increasingly creative marketing practices of questionable legality. For example, drug companies have funded “research” and “educational” grants of questionable validity, sponsored continuing medical education (CME), paid ghost writers to generate favorable journal articles, provided free gifts, meals, and entertainment to prescribers, paid prescribers as speakers, consultants, or preceptors, and even hired former college cheerleaders to gain access to prescribers. Most of these practices have been condemned, and many have been prosecuted, resulting in billions in settlements for federal and state governments. The pharmaceutical industry can’t even give away free drugs without being punished.
Last Monday, the New York Times highlighted yet another objectionable drug marketing practice: targeting medical schools. As the article explains, drug companies have long had ties to medical schools and their students by funding endowed chairs, faculty prizes, research grants, capital improvements, and even volunteering employees to teach classes. Students get showered with enough free pizza and trinkets to think that they might already have prescribing privileges. More recently, the Times reports that the faculty at Harvard Medical School has come under fire for its ties to drug companies that hire faculty as speakers, consultants, or even board members. More than 200 Harvard Med students have objected, leading the school to convene a 19-member panel to reevaluate the school’s conflict-of-interest policies (meanwhile, the University of Minnesota Medical School is loosening them).
In the “Life Cycle of Objectionable Drug Marketing Practices,” we’re currently at the “media coverage and public outrage” phase. Gradually, most of the practices listed in the initial paragraph have either disappeared or have lost their allure. Media coverage and public outrage is quickly followed by government outrage (possibly even Congressional hearings) and promises of self-regulation by the drug companies to preempt more stringent regulation. Self-regulatory efforts like the PhRMA Code and the AMA Ethical Guidelines provide some bright-line standards for complying with ridiculously broad laws like the federal anti-kickback statute and its complicated safe harbors. If companies still don’t get the hint, the government simply tells drug companies what not to do.
And if none of these events ends the Life Cycle of the Objectionable Drug Marketing Practice, litigation usually does. Pretty much every major pharmaceutical company has settled a Corporate Integrity Agreement with the government for violating federal drug marketing laws—the latest being a staggering $1.4 billion settlement paid by Eli Lilly to settle claims that it illegally marketed its anti-psychotic drug Zyprexa. By settling, companies thus avoid the “death penalty”—being excluded from Medicare and Medicaid.
Although the drug companies never die, the practices usually do, precipitated by an avalanche of government investigations, whistleblower suits, shareholder suits, and even marginally-related product liability suits. Federal and state lawmakers also pile on. In the last few years, nine states have enacted (and dozens have considered) pharmaceutical marketing laws, requiring disclosures of marketing payments made by drug companies to potential prescribers, in addition to caps on payments, disclosure of sales representative activities, and other prohibitions. Indeed, the Senate Finance Committee is currently considering a federal bill that would explicity preempt state laws.
Thus, the Objectionable Drug Marketing Practice dies a violent death. It can rest in peace, but the sales and marketing departments can’t. Because they have to find new ways to drive market share.
March 6, 2009 at 1:41 pm
Posted in: Health Law
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Responses (4)
A.J. Sutter - March 6, 2009 at 11:58 pm
I’m not sure I get the point of this article: should we be complacent that each new ODMP will eventually die? Or should the point be that the ODMP life cycle has some essential inputs — in particular, media coverage and public outrage — and that if one or both of these is allowed to flag, some ODMPs will become immortal?
Nathan Cortez - March 9, 2009 at 5:00 pm
A.J.,
Regulation of pharmaceutical marketing is interesting and exceptional for a few reasons, which is why I posted about it. First, business practices that are legal in every other industry are illegal if you’re seeking reimbursement from Medicare, Medicaid, or other federal health care programs (largely due to the anti-kickback statute, which prohibits offering, paying, soliciting, or receiving any remuneration in exchange for any product or service reimbursable by the federal government).
Second, media scrutiny and negative publicity play a particularly important role in shining a light on these practices. Prosecutors, regulators, legislators, and plaintiffs’ lawyers often react to this type of media coverage (note Senator Grassley’s letter to Pfizer). Thus, if coverage of the drug industry’s ties to Harvard Medical School sound familiar, it’s because we’ve gone down this road several times before with other drug marketing practices.
So to answer your question, the answer is the latter: objectionable drug marketing practices might continue without media coverage that might trigger, for example, a DOJ investigation or a letter from the ranking member of the Senate Finance Committee.
Alan - March 9, 2009 at 9:36 pm
I think drug companies should be forced to choose between patent protection and advertising. They can have one, but not both. If they choose to advertise, then they lose patent protection.
A.J. Sutter - March 10, 2009 at 11:42 pm
Thanks, Nathan, for your reply. As a matter of substance, I agree. As a matter of rhetoric, your point is not so clear by the time a reader gets to the end of your post. So if you re-purpose the post, you may want to sharpen that up somewhat.
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