Can we regulate spending from pharmaceutical manufacturers? Should we?

Great Debates
41

There is also a lot of convolution between research and marketing in the pharmaceutical industry.

One common tactic is the “Phase 4 Trial”. A phase 4 trial is an aftermarket trial intended to track the progress of a much larger group of users than the pre-approval trials.

Often these are just a gambit to sell more drugs. The pharmceutical company will contact large numbers of doctors and offer them money in exchange for putting a large number of patients on their drug and them filling out an (often ridiculously simple and useless) form documenting their response to the drug.

In reality, these “clinical trials” are often nothing more than a way to pay doctors to prescribe their drug over a competing product…not to mention to incentivize the doctor into giving the drug to people that might not really need it. After all, patients in these stage 4 trials buy the product they are “testing”.

And when the company sends 500 doctors to Aruba for a week and gives them a couple of thousand bucks each to attend and listen to them pimp the latest drug, this is an “educational expense”, not a marketing expense.

42

Why do you believe that by limiting marketing expenditures, companies will necessarily engage in more groundbreaking research (as it seems you might believe)?

Isn’t it perhaps just a likely that, by limiting marketing expenditures, companies will be encouraged slightly to modify commercially successful, patented medications to acquire market share in a proven product family.

After all, if we limit marketing, wouldn’t a less risky approach be to develop copycats of known-to-be profitable medications?

43

This idea persists, but it’s really not the case. It may have been at one time, but not for a long time. The drug companies can still do dinners for us, but they have to be accompanied by a carefully vetted educational program and spouses are no longer welcome. Shows and vacations are right out. They still send some attractive reps around, but while they used to blanket our offices in branded swag they’re not allowed to give us so much as a pen anymore, and the lunches they used to bring for the whole office now have to have that educational component.

And it has to be said that this is all due to self-regulation by the industry itself. And they’ve been quite serious about it; I don’t know if it’s still true, but after these rules went into effect if a drug rep caught another one, say, allowing docs to bring their non-medical wives to a drug dinner, the offending rep was fired and the whistleblower got a $1000 bounty. (No cite; this came from friends who were reps at the time.)

I’ve never been clear on why they imposed such strict regulations on themselves. The story we always heard was that they were afraid the government would regulate them if they didn’t, but I don’t really buy that. I think it was more of a multi-lateral disarmament–no company was going to scale back its doctor marketing and leave the others to take its place, but if they all had to do it at once it was OK.

44

Take it to the Pit, Kimmy_Gibbler. Criticism of the OP’s views is fine; mocking him is not.

45

Actually that makes perfect sense. While I support federal regulations for health and safety, the govt has a poor track record of administering regulation in a sensible manner. Pharma got smart, and made a serious effort to avoid having more serious and less flexible regulations imposed on them. This was a great move, it made them look good while allowing them the freedom to market directly.

46

Drug companies already put a great deal of effort into this. By making relatively minor modifications to existing drugs or getting new approvals, they can extend their patent protection and make more money from sales. A couple of points here:

  1. Sales of prescription drugs did explode after TV advertising of pharmaceuticals was allowed.
  2. It’s harder to come by that kind of sales growth these days because some of those drugs are going off-patent and there’s stiff competition in some fields.
  3. Companies are under pressure to keep their profits up and growing, and that’s led to sharp cutbacks in research and development.
  4. Some people have pointed out that this seems to be self-sabotaging in the long run because where are the next drugs going to come from if research keeps getting cut, but on the other hand,
  5. Shrug.
  6. That’s not to say there is no research going on. Drug companies seem to be paying more attention to research for rare diseases - they can charge high prices for those drugs and competition is limited by orphan drug laws - and they’re looking at areas of “growth” like hepatitis and diabetes and paying more attention to markets outside the U.S., Europe, and Japan.
  7. Advertising on TV was limited in the past and there’s no reason it couldn’t be again. It’s hard to see how this would destroy the pharmaceutical industry, which doesn’t mean it’s a good idea. On the one hand, people have the right to know what medications are out there instead of just relying on doctors. On the other hand people don’t necessarily know what is best for them in terms of medicine.
  8. For-profit research introduces some biases into research and development funding and I think it makes sense to argue that public funding introduces different biases; so it’s fair to argue how those issues should be balanced.
  9. While pharmaceutical companies have altered their marketing practices somewhat over the last few years, there are a lot of troubling aspects to the ways drugs are developed and marketed, including the failure to release unfavorable studies of experimental drugs and illegal marketing, which has resulted in numerous legal settlements in the hundreds of millions and billions of dollars.
47

Yes, this is the basic problem that I have with the OP. He’s assuming that advertising loses money for the company, and I can’t imagine that this is true. Companies will advertise if they find that advertising increases their sales more than the expense of advertising; otherwise there’s no reason to do it.

The proper way to look at the situation is that advertising pays for R&D (and everything else at the company). As such, it should be encouraged.

48

I want to marry Kimmy_Gibbler. I foresee some possible obstacles, such as I’m already married and I think Kimmy is a man, but I’m sure these things can be worked out.

Or, in less effusive terms, I endorse Kimmy’s posts.

49

I agree that it should be obvious that a drug company won’t advertise if it doesn’t increase their bottom line. If you don’t allow them to advertise then they will make less profit. This is pretty much undeniable.

I’m not sure I agree with this conclusion as it assumes a few facts. The most important being that the advertising has no other negative effects (of which a few have been listed up-thread).

I’m unconvinced that DTCA of prescription medication is a net good for society, but I’m not sure that I’m convinced it’s worth banning either. I do know that most of the doctors I know involved in patient care complain of patients coming in asking for a certain drug that is either wrong for their condition or equivalent in effectiveness to a generic that costs much less.

50

Worse than the spending on marketing, at the expense of R&D spending, is the possible corrupting influences of such spending. I think many physicians will laugh in dismay at the notion that patients need to watch TV ads to learn what drugs to tell their doctors to prescribe. Pharmaceutical promotions to M.D.s (some of which are just “junkets”) are said to average $60,000 per American physician. Many patients pay() for expensive drugs when cheaper drugs would work just as well. (- Or rather their insurance companies pay – a buyer/consumer mismatch which is part of the problem but subject for a separate thread.)

First, let’s look at the facts from a peer-reviewed journal article:

Now, before we agree on a solution, we must decide whether transferring money from R&D to marketing is intrinsically good or bad. Unfortunately, debate will be difficult because, as I wrote in another recent thread, there are two competing models of human economic society and its purpose. (For simplicity I’ll ignore shades of gray in between.)

[ul][li] Governments grant charters to corporations to further the public interest. Profits and bonuses earned can be viewed as the just rewards for serving that public interest. Government is by the people for the people and of the people.[/li][li] Human society is better viewed as a jungle, operating under dog-eat-dog rules. Government is by the powerful for the powerful and of the powerful, and exists mainly to ensure that the defeated dog submits to being eaten. I disagree with this view but it is at the heart of some “libertarian” philosophies.[/li][/ul]

Some of the people debating here think that, fundamentally, the pharmaceutical industry exists to serve human society. Others insist that they exist to serve their stockholders. Make them mad enough and they’ll be writing “If you think pharmaceutical profits are too high, why don’t you just buy their stock, hunh?”

Some people are open-minded enough to understand that there are trivial counter-examples to the notion of free-market infallibility. Others cling to the dogmatic views parodied in Atlantic Monthly.

51

Okay, but without the benefit of direct advertising would I have discovered my Mondayitis, sad movie crying disorder, middle-age scrotal depression, or nostril alopecia while they were still treatable?

52

I did not know this…

53

(cost of drug manufacturing+cost of marketing) > (cost of drug manufacturing)

True or false?

54

True. Now answer this one:

(demand with marketing) > (demand without marketing)

True or false?

The point is that it isn’t cut and dry that marketing expenditures reduce research expenditures. It could be true, it could be false. All we know is that marketing increases profits for drug companies, or they wouldn’t do it. Whether they re-invest those profits into R&D is unknown, as is whether any potential benefits from this outweigh the negative consequences of direct marketing of drugs to patients.

55

Apparently until the mid '80s in the US and even now in nearly all Western countries, there are restrictions on direct to consumer advertising. Are you suggesting that people in those countries are less sick or using less medication? That it was the case in this country until the mid '80s?

56

I’m not sure if this question is addressed to me or to the board at large.

I am suggesting no such thing. I’m just saying that the argument “less money spent on advertising equals more money spent on R&D” is not nearly that simple. With the somewhat stronger statement that DTCA must increase the pharm companies bottom lines or they wouldn’t do it (it’s not mandatory to pitch Cialis at football games, and they wouldn’t do it if it was a net loss for the business).

The more complicated question is: Do the negative health and public policy consequences of DTCA in pharmaceuticals outweigh the positive consequences to these companies bottom lines and the (potential) free speech/free enterprise limitations that prohibiting DTCA would entail?

To answer that we’d have to dig in to a number of areas:

  1. Does DTCA increase unnecessary drug use or somehow impair the patient physician relationship?
  2. Does DTCA increase awareness and thus improve health outcomes?
  3. Do pharma companies re-invest increased profits from marketing into R&D activities? If so, to what extent?
  4. How do private R&D budgets in non-DTCA regions compare to those in the US (and NZ I guess)?
  5. Is direct-to-physician marketing more or less effective and/or expensive?

It’s not an easy question, and as much as I hate these ads and have an innate negative reaction to the idea of pitching drugs to the population writ large I’m not going to jump on the “ban DTCA” wagon unless I see a bit stronger arguments than what’s been pitched so far in this thread.

57

That wasn’t the point I was making…I was just saying that the drug companies do a lot of “stealth marketing” and those expenses aren’t always classified as marketing.

For example, it was only a few weeks ago that I found out that many of the patient advocacy groups that run campaigns to increase “awareness” of new conditions and to lobby

Medicare and the insurance companies to cover these new drugs that the suffering patients desperately need are mostly creations of the pharmceutical marketing companies.

And I have no problem with the fact that the pharma companies don’t do much of their own research, good research still needs to developed into mass marketable pills that need to be made and sold.
What I really think as that the companies really shoudn’t use the “expensive research” line to justify their usurious price

58

my two cents

have worked in sales and marketing for many years and the strategies used in the pharmaceutical industry are no different from those used by salespeople in any commercial / industrial where there are several companies courting the business of a limited number of high volume purchasers.

If I am sales and marketing director for the AnnHedonia Window company, my mission is to convince the world that AnnHedonia Windows are the best thing that happened to modern civilization. I’m going to be wining and dining architects to try to get them to specify AnnHedonia Windows for every building they design and to reject any submissions that include inferior non-AnnHedonia windows. I may send the architects that specify lots and lots of AnnHedonia windows to a “seminar” in Hawaii at my expense.

I will give puffery loaded presentations about the powers and glories of AnnHedonia Windows and I will buy trendy designer sandwiches for people who listen. If the budget allows I may run commercials on HGTV suggesting that any builder or contractor that uses blatantly inferior non-AnnHedonia windows is a second-rate hack. I may even plant articles in trade journals about the dangers of million dollar heating bills that plague people that don’t pay a little more for superior windows …I may not even mention AnnHedonia Windows ( at least not much ) in the article but it will make my point. My ultimate success would be if the entire output of the American economy went towards AnnHedonia windows.

And how I price my windows is of utmost importance. After all, every person that buys my windows has to be convinced to exchange their own hard-earned money for my windows. I need to convince them to give up a few vacations or nights out on the town or heating oil for the winter for the privilege and pleasure of owning AnnHedonia Windows. If they want AnnHedonia Windows they need to give up something else, whether it be a new ball gown or baby formula. I will know that I will be likely to convince someone to give up a new ball gown for my windows, but I might have to forgo selling my windows to the guy that can’t afford baby formula and heating oil AND AnnHedonia Windows.

And that is where the pharmaceutical industry is different. If every American had to decide whether it was worth $500 or so of **his own hard-earned money each month **to pee less often and crap more often the playing field would be level and the pharmaceutical industry would have to play by the same rules of supply and demand as the AnnHedonia Window Company.

But that’s not how it works for the majority of people who go to see their doctor and decide to take pills to make their dicks harder and their toenails softer. They aren’t footing the bulk of the tab for their medications. You and I are…we pay in terms of increased prices for everything as manufacturers have to raise prices on everything to foot the outrageous insurance bills that are partially driven by pharmaceutical company marketing. Even more so, we pay by way of increased taxes to foot the Medicaid and Medicare expenses and the government is prohibited by law from negotiating or even questioning those prices.

And I can sell my AnnHedonia windows to people that don’t really need them and still sleep at night. But selling drugs that have potentially deadly side effects to people that don’t really need them is different.

So, I basically think that intense regulation of the pharmaceutical companies is the socially responsible course.

And while I think drug advertising should be banned, I know that if it is it will just be replaced by “awareness” campaigns to alert the public to the hidden epidemics of overactive bladders, restless legs and skanky toenails. And the reform of “pizza and pen” marketing tactics by low level local sales reps is cosmetic as well, cracking down on that makes for good “industry reform theatre” but the real money is spend in major markets to recruit prominent doctors as “key opinion leaders”

59

Government regulation of advertising of the alcohol and tobacco industries has been mentioned a couple of times.

Has the net effect of that regulation caused Anheuser-Busch and Philip Morris to do more research on new kinds of beer and cigarettes?

Regards,
Shodan

60

Dunno about cigarettes, but how about that new beer can with a built-in puncture hole for shotgu… er, easy pouring? Talk about your R&D genius!