As Doctors Write Prescriptions, Drug Company Writes a Check

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June 27, 2004As Doctors Write Prescriptions, Drug Company Writes a CheckBy GARDINER HARRIShe check for $10,000 arrived in the mail unsolicited. The doctor whoreceived it from the drug maker Schering-Plough said it was made out tohim personally in exchange for an attached "consulting" agreement thatrequired nothing other than his commitment to prescribe the company'smedicines. Two other physicians said in separate interviews that they,too, received checks unbidden from Schering-Plough, one of the world'sbiggest drug companies."I threw mine away," said the first doctor, who spoke on the conditionof anonymity because of concern about being drawn into a federal inquiryinto the matter.Those checks and others, some of them said to be for six-figure sums,are under investigation by federal prosecutors in Boston as part of abroad government crackdown on the drug industry's marketing tactics.Just about every big global drug company — including & , Wyeth and Bristol-Myers Squibb — has disclosed in securitiesfilings that it has received a federal subpoena, and most are jugglingsubpoenas stemming from several investigations.The details of the Schering-Plough tactics, gleaned from interviews with20 doctors, as well as industry executives and people close to theinvestigation, shed light on the shadowy system of financial lures thatpharmaceutical companies have used to persuade physicians to favor theirdrugs. Schering-Plough's tactics, these people said, included paying doctorslarge sums to prescribe its drug for hepatitis C and to take part incompany-sponsored clinical trials that were little more than thinlydisguised marketing efforts that required little effort on the doctors'part. Doctors who demonstrated disloyalty by testing other company'sdrugs, or even talking favorably about them, risked being barred fromthe Schering-Plough money stream.Schering-Plough says that the activities under investigation occurredbefore its new chief executive, Fred Hassan, arrived in April 2003, andthat it has overhauled its marketing to eliminate inducements. At the heart of the various investigations into drug industry marketingis the question of whether drug companies are persuading doctors —often through payoffs — to prescribe drugs that patients do not needor should not use or for which there may be cheaper alternatives.Investigators are also seeking to determine whether the companies aremanipulating prices to cheat the federal Medicaid and Medicare healthprograms. Most of the big drug companies, meanwhile, are also grapplingwith a welter of suits filed by state attorneys general, industrywhistle-blowers and patient-rights groups over similar accusations. In many ways, the investigations are a response to the evolution of thepharmaceutical business, which has grown in the last quarter-centuryfrom a small group of companies peddling a few antibiotics andantianxiety remedies to a $400 billion bemoth that is among the mostprofitable industries on earth.Offering treatments for almost any affliction and facing competition inwhich each percentage point of market share can represent tens ofmillions of dollars, most drug makers now spend twice as much marketingmedicines as they do researching them. Their sales teams have changedfrom a scattering of semiretired pharmacists to armies of young womenand men who shower physicians with attention, food and - until the drugindustry recently agreed to end the practice - expensive gifts, just toget two to three minutes to pitch their wares. A code of conduct adoptedin 1990 by the American Medical Association suggests that doctors shouldnot accept any gift worth more than $100, but the guidelines are widelyignored.A quarter-century ago, the Food and Drug Administration was the lone copon the drug industry beat. But the F.D.A.'s enforcement powers over drugmarketing have been severely curbed since 1976 by a series of courtrulings based mainly on the companies' free-speech rights. That left avacuum that many companies decided to exploit, said Vodra, aformer F.D.A. lawyer."A lot of people decided there was no check on what they were allowed todo," Mr. Vodra said. Using fraud, kickback and antitrust statutes,federal prosecutors, state attorneys general and plaintiffs lawyersstepped into the void, asserting that the companies' sales pitches havecost the government billions of dollars in payments for drug benefits. This legal scrutiny can be expected to intensify. Once the new Medicaredrug benefit takes full effect in 2006, the government will pay foralmost half of all medicines sold in the nation. So the marketingprograms will cost the government even more money and, if they areuncovered and determined to be illegal, will probably result in evenlarger fines.Last month, Pfizer agreed to pay $430 million and pleaded guilty tocriminal charges involving the marketing of the pain drug Nuerontin bythe company's Warner-Lambert unit. AstraZeneca paid $355 million lastyear and TAP Pharmaceuticals paid $875 million in 2001; each pleadedguilty to criminal charges of fraud for inducing physicians to bill thegovernment for some drugs that the company gave the doctors free. Over the last two years, Schering-Plough, which had sales of $8.33billion last year, has set aside a total of $500 million to cover itslegal problems - mainly for expected fines from the Boston investigationand from a separate inquiry by federal prosecutors in Philadelphia whoare investigating whether Schering-Plough overcharged Medicaid.Besides looking into whether Schering-Plough paid doctors large sums toprescribe the company's drug for hepatitis C, prosecutors areinvestigating whether many company-sponsored clinical trials for thedrug were simply another way to funnel money to doctors. Dr. Pappas, director of clinical research for St. Luke's TexasLiver Institute in Houston, said that Schering-Plough "flooded themarket with pseudo-trials." Dr. Pappas and eight other liver specialists who were interviewed saythe system worked like this: Schering-Plough paid physicians $1,000 to$1,500 per patient for prescribing Intron A, the company's hepatitis Ctreatment. In conventional clinical trials, participants are given drugsfree, but the doctors said that in these cases the patients or insurerspaid for their medication. Because patients usually undergo Intron Atreatment for nearly a year and the therapy costs thousands of dollars,Schering-Plough's payments to physicians left plenty of room for thecompany to profit handsomely, the doctors said.In return for the fees, physicians were supposed to collect data ontheir patients' progress and pass it along to Schering-Plough, thedoctors said. But many physicians were not diligent about theirrecordkeeping, and the company did little to insist on accurate data,according to Dr. Pappas and the others. One of the nation's most prominent liver disease specialists, who spokeon condition of anonymity for fear of angering big drug makers, calledthe trials "purely marketing gimmicks.""Science and marketing should not be mixed like that," the doctor said.Schering-Plough did more than encourage physicians to place patients onIntron A, many of the physicians said. They said the company wouldremove any doctor from its clinical program - and shut off the moneyspigot - if he or she wrote prescriptions for competing drugs,participated in clinical trials of alternatives to Intron A or evenspoke favorably about treatments besides Intron A. The main competitor to Intron A, which Schering-Plough now sells asPeg-Intron, is Roche's comparably priced drug Pegasys.Dr. Jensen, the hepatology director at Rush University MedicalCenter in Chicago, said he wanted to perform clinical trials using drugsfrom both Schering-Plough and Roche. "I was told by Schering-Plough thatI couldn't do both - that I had to sign an exclusive agreement withthem," Dr. Jensen said. "That was the juncture when Schering and Iparted ways."Six specialists in liver disease said Schering-Plough also paid what itcalled consulting fees to doctors to keep them loyal to the company'sproducts. The letter accompanying a check for $10,000 explained that themoney was for consulting services that were detailed on an accompanying"Schedule A," said a doctor who insisted on anonymity. But when thedoctor turned to the attached sheet, he said, "Schedule A" were the onlywords printed on an otherwise blank sheet of paper. Dr. Pappas, who in the past has consulted for Schering-Plough and workedfor Roche, said that stories about the enormous sums thatSchering-Plough paid its consultants were common among liverspecialists. "These were very high-value consulting agreements withselected opinion leaders that looked like payments of money with noclear agreements on what was supposed to be executed," Dr. Pappas said.In an interview, Mr. Hassan and other top executives declined to discusspast marketing practices. Kogan, the company's previous chairmanand chief executive, declined to be interviewed. Schering-Plough's current management says that much has changed at thecompany since Mr. Hassan took over. The company no longer allows salesrepresentatives or marketing executives to have any say over itsclinical trials, physician education or medical consulting, they said.And in all clinical trials begun in the last year, they said, drugs havebeen provided free to the enrolled patients, rather than being billed tothem or their insurers. "The temptation to give clinical grants to high prescribers andconsulting agreements to high prescribers is why we pulled thosedecisions out of the hands of the sales representatives," said BrentSaunders, who was named senior vice president for compliance andbusiness practices last year. "Sales representatives had an input intothat process before, which I think is still fairly normal in theindustry."In the separate Philadelphia investigation, Schering-Plough is expectedto plead guilty soon to charges that it failed to provide Medicaid withits lowest drug prices, as is required by law, and to pay a fine.Investigators are examining whether Schering-Plough, to gain sales withsome private insurers, offered premiums, such as free patient consultingarrangements, with its drugs. Prosecutors are arguing that suchincentives had a market value and meant that Schering-Plough wasoffering drugs to private payers at prices well below those offered toMedicaid. Many other drug companies are the targets of similarinquiries. The Boston inquiry into suspected kickbacks and improper marketing bySchering-Plough could take months more to resolve, people close to theinvestigation say. Schering-Plough may also be charged with obstructionof justice and document destruction as part of the Boston inquiry,according to the company's filings with securities regulators. Industry experts say the federal inquiries into Schering-Plough and theother drug giants have led some companies to adopt significant changesin the way they peddle drugs to doctors. Other companies have beenslower to react. "These investigations came out of left field, and noone saw them coming," said Barton Hutt, a former F.D.A. generalcounsel who now advises drug companies. "The industry has since had toreshape entirely what they are doing, but it was too late to redo whatthey'd been doing for years."Tony Farino, leader of the pharmaceutical consulting service atPricewaterhouses, said that as a result of the investigations manycompanies in the drug industry were hiring executives to policemarketing and sales practices."Reputational risk is something they're all trying to manage," Mr.Farino said, "because the damages from failure can be significant." Copyright 2004 The New York Times Company | Home | Privacy Policy |Search | Corrections | Help | Back to Top

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I refused to follow hi sorders. I called his partner and got all of the orders discontinued. Then they had a partner meeting to discuss it. I so agree about the funding. I am so tired of hearing commercials about medications, flyers in magazines, etc etc. What a waste of money. Then my insuranc eprovider keeps not paying for medications. Each month they pay for less and less. Although I don't approve of drug reps giving doctors the world --you should see what they give away--- I am grateful to them because I have a resource for some medications so I do not have to pay for them out of pocket--I get lots of samples. I even got a ton of the seizure med I take from my sons neurologist cause he rarely uses it. It is about $300 a month out of pocket so for that I am grateful.

esnooksmama@... wrote:

e:That is indeed scary. How did you deal with that in the workplace?I will say that it was gratifying to me, that in the article, there weredoctors interviewed who refused to take part in these shady practices. Iwould like to think that for the most part, doctors would refuse toparticipate with these shams. The temptation, however, must be huge. Ihope that there are more controls put on things like this. I have beensaying for years that if all the marketing ploys drug companies pay forwere limited, drug prices would be much, much lower.On Tue, 29 Jun 2004 00:38:17 -0700 (PDT) bound for london<boundforlondon@...> writes:> Unfortunately this is so true. I once worked for a company where one > doctor would do his rounds with a drug rep. The rep would tell the > doc if he thought the patient

would benefit from the drug he was > marketing. It seemed like every patient he was with would benefit. > The doctor would receive sizeable gifts in exchange for prescribing > the med. Scary actually. A lot of studies are funded by the drug > companies so it is really hard to know what is the truth. > > e> > snooksmama@... wrote:> > > > > Stravato for The New York Times> Dr. Pappas, a liver specialist and clinical researcher, said> Schering-Plough funded "pseudo-trials." > > > > > ARTICLE TOOLS> > > E-Mail This Article> Printer-Friendly Format> Most E-Mailed Articles> Reprints & Permissions> Single-Page Format > > > > > > > > MEDICAL MARKETING> Prescriptions by Incentive> > >

> > > > > TIMES NEWS TRACKER> > > > Topics > Alerts > > Drugs (Pharmaceuticals)> > > > > Medicine and Health> > > > > Marketing and Merchandising> > > > > > > > > Research medicine and health> > HighBeam Research has an extensive archive of more than 28 million> documents from 2,600 sources.> > Related Research:> > marketing and merchandising> > undefined> > > > > > > > > > > Have you replaced your local library with online search engines? A > new> study concluded that electronic resources have become the main tool > for> information gathering. > > • See how search

engines and libraries are teaming up together.> • How has Technology changed other aspects of daily life? > > > > > > As Doctors Write Prescriptions, Drug Company Writes a Check> By GARDINER HARRIS> > Published: June 27, 2004> > > he check for $10,000 arrived in the mail unsolicited. The doctor > who> received it from the drug maker Schering-Plough said it was made out > to> him personally in exchange for an attached "consulting" agreement > that> required nothing other than his commitment to prescribe the > company's> medicines. Two other physicians said in separate interviews that > they,> too, received checks unbidden from Schering-Plough, one of the > world's> biggest drug companies.> "I threw mine away," said the first doctor, who spoke on the > condition of> anonymity because of

concern about being drawn into a federal > inquiry> into the matter.> Advertisement> > > > Those checks and others, some of them said to be for six-figure > sums, are> under investigation by federal prosecutors in Boston as part of a > broad> government crackdown on the drug industry's marketing tactics. Just > about> every big global drug company — including & , Wyeth > and> Bristol-Myers Squibb — has disclosed in securities filings that it > has> received a federal subpoena, and most are juggling subpoenas > stemming> from several investigations.> The details of the Schering-Plough tactics, gleaned from interviews > with> 20 doctors, as well as industry executives and people close to the> investigation, shed light on the shadowy system of financial lures > that> pharmaceutical companies

have used to persuade physicians to favor > their> drugs. > Schering-Plough's tactics, these people said, included paying > doctors> large sums to prescribe its drug for hepatitis C and to take part > in> company-sponsored clinical trials that were little more than thinly> disguised marketing efforts that required little effort on the > doctors'> part. Doctors who demonstrated disloyalty by testing other > company's> drugs, or even talking favorably about them, risked being barred > from the> Schering-Plough money stream.> Schering-Plough says that the activities under investigation > occurred> before its new chief executive, Fred Hassan, arrived in April 2003, > and> that it has overhauled its marketing to eliminate inducements. > At the heart of the various investigations into drug industry > marketing> is the question of whether

drug companies are persuading doctors — > often> through payoffs — to prescribe drugs that patients do not need or > should> not use or for which there may be cheaper alternatives. > Investigators are> also seeking to determine whether the companies are manipulating > prices> to cheat the federal Medicaid and Medicare health programs. Most of > the> big drug companies, meanwhile, are also grappling with a welter of > suits> filed by state attorneys general, industry whistle-blowers and> patient-rights groups over similar accusations. > In many ways, the investigations are a response to the evolution of > the> pharmaceutical business, which has grown in the last quarter-century > from> a small group of companies peddling a few antibiotics and > antianxiety> remedies to a $400 billion bemoth that is among the most profitable> industries on

earth.> Offering treatments for almost any affliction and facing competition > in> which each percentage point of market share can represent tens of> millions of dollars, most drug makers now spend twice as much > marketing> medicines as they do researching them. Their sales teams have > changed> from a scattering of semiretired pharmacists to armies of young > women and> men who shower physicians with attention, food and - until the drug> industry recently agreed to end the practice - expensive gifts, just > to> get two to three minutes to pitch their wares. A code of conduct > adopted> in 1990 by the American Medical Association suggests that doctors > should> not accept any gift worth more than $100, but the guidelines are > widely> ignored.> A quarter-century ago, the Food and Drug Administration was the lone > cop> on the drug

industry beat. But the F.D.A.'s enforcement powers over > drug> marketing have been severely curbed since 1976 by a series of court> rulings based mainly on the companies' free-speech rights. That left > a> vacuum that many companies decided to exploit, said Vodra, > a> former F.D.A. lawyer.> "A lot of people decided there was no check on what they were > allowed to> do," Mr. Vodra said. Using fraud, kickback and antitrust statutes,> federal prosecutors, state attorneys general and plaintiffs lawyers> stepped into the void, asserting that the companies' sales pitches > have> cost the government billions of dollars in payments for drug > benefits. > This legal scrutiny can be expected to intensify. Once the new > Medicare> drug benefit takes full effect in 2006, the government will pay for> almost half of all medicines sold in the nation. So the

marketing> programs will cost the government even more money and, if they are> uncovered and determined to be illegal, will probably result in > even> larger fines.> > Subscribe Today: Home Delivery of The Times from $2.90/wk. > Continued> 1 | 2 | 3 | Next>>> >