Council, drug companies await Ireland's ruling

By Chris Dickerson | Aug 4, 2006

CHARLESTON – Leaders of the pharmaceutical community are relieved that a state council has decided not to make drug companies report how much they spend on marketing with specific doctors even after a ruling from the attorney general's office said it was OK.

The state Pharmaceutical Cost Management Council voted 7-2 last week to send rules to the Legislature requiring drug companies to list the number of physicians to whom they provided "gifts, grants or payments" in categories that range from $1,000-$2,500 to more than $10,000.

"We were quite pleased that they decided not to add additional reporting requirements," said Marjorie Powell, senior assistant general council for Pharmaceutical Research and Manufacturers of America (PhRMA). "We were disappointed, however, that they didn't take into consideration the comments received from a variety of groups, including patient advocacy groups and pharmaceutical companies. The comments pointed out that they're going to get much broader information than they thought they would be receiving and that it would be difficult figuring out how to do anything constructive with it."

In sending the emergency rules proposal to Secretary of State Betty Ireland's office in June, the council and state Pharmaceutical Advocate Shana Farres say advertising by pharmaceutical companies "impacts the price that West Virginians must pay for their drug prescriptions."

If Ireland OKs the rules, drug companies must start disclosing their advertising and marketing costs in April 2007.

"In the United States, drug companies may spend up to 33 percent of their sales revenue on advertising," an accompanying council document justifying the emergency rules state. "Drug companies will spend in the range of $60 billion to $82.5 billion on all sales activities next year, approximately $200 to $280 per person in the United States. Drug companies may be spending over $300 million per year to increase the sales of their products in West Virginia."

Powell and PhRMA, which represents the country's leading pharmaceutical research and biotechnology companies, dispute that claim.

"The statement … creates a perception that the expense of advertising is a fundamental driver of the cost of prescription drugs to the State of West Virginia, and that the State of West Virginia has taken little or no action to address the prescription drug needs of over 425,000 West Virginians," PhRMA documents state. "Further, nothing in the statement of emergency evidences any recognition benefits that are derived from the act of advertising a prescription drug."

Powell said the way the council phrased their questions about cost reporting are too broad.

"The questions, as drafted, are much broader than I think the council wants," she said. "And they're broader than the statute gives them authority to ask for.

She also said the criteria don't merit seeking an emergency rule.

"When you start using emergency rules for non-emergencies, you are depriving the elected body (the state Legislature) a chance to review. It changes the balance among branches of state government."

Now, PhRMA and the rest of the pharmaceutical community are waiting to see what Ireland does. She has about a week to issue a ruling.

If she OKs the rules, Powell said drug companies will have to backtrack to gather information for the first part of 2006 to report next year.

"We think the council has other tings they could be doing that would be more productive uses of everybody's time," Powell said.

The PCMC voted down the stronger rules in May on a 5-4 vote after doctors' groups said the council had no authority to make such demands of drug companies. But an opinion from Attorney General Darrell McGraw's office last month said the state law creating the council in 2004 allows it to require disclosure of spending by drug company sales reps as well as direct gifts, grants and payments to physicians.

Powell argues that creating additional administrative steps throughout the health care system will not lead to lower costs.

"The industry has in place a stringent code regarding interactions with health care providers which was strengthened by PhRMA four years ago," Powell says. "The code clearly states that the primary goal of all activities should be rooted in educating physicians and patients about medicines to improve patient care. That type of conversation should be encouraged.

"The code provides strict guidelines for consulting or advisory arrangements and says that token arrangements of that nature should not be used to justify compensating healthcare professionals for their time or their travel, lodging, and other out-of-pocket expenses. The code also clearly states that expensive meals and lavish gifts are never appropriate."

Powell also says strict federal laws already are in place that have criminal and civil penalties for those who illegally pay a physician to prescribe a medicine or physicians who accept such payments.

"There is a persistent – and inaccurate perception – that outreach to physicians and other prescribers somehow increases the cost of medicines," she said. "That is simply not the case. Consider that according to the most recent data available, pharmaceutical companies spent $3.3 billion in direct to consumer advertising. That number is clearly dwarfed by the $51.3 billion spent on researching and developing new medicines by pharmaceutical companies."

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