Drug Industry adopts guidelines that pare perks used to woo physicians

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The lavish edge has been taken off the way drug company representatives woo doctors to use their products. Gone are the free tickets. What has grown in its place is a more businesslike approach.

By Jeff Swiatek

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Indianapolis Star, Oct. 16, 2002


New guidelines for drug sales representatives have taken the lavish edge off the business of marketing drugs.

Gone, for the most part, are the free tickets to sporting events, shows, concerts and other entertainment dangled before doctors and other health care professionals.

In their place: a more businesslike approach to pitching medicines to prescribers and buyers.

As drug firms began adopting the stricter guidelines this summer on what's kosher behavior for sales reps, their routine offers of entertainment, trips and free dinners have faded from the medical marketing scene.

"All of that has pretty much gone by the wayside," said Dr. Thomas Moretto, a Westside Indianapolis family practitioner. "I haven't seen anything said about 'Come to Chicago and listen to a speech, bring your wife and we'll buy you a hotel room.' "

When sales representatives call at her Fishers practice now, says Dr. Colleen C. Root, "It feels like visits to the office are more productive because they feel that's the only way they will see you."

Before the guidelines kicked in this summer and fall, Root said, she got regular invitations from drug reps to "a concert, a play or something at the Murat," and was usually told to bring along her husband.

Now, the marketing code expressly forbids drug firms from paying the way for spouses or guests of medical professionals to attend dinners or other events.

The industry's pullback from lavish marketing and entertainment is, in part, a response to negative public fallout from media reports about all the wining and dining of medical providers that became accepted business practice starting in the late 1980s.

Drug companies spend heavily on marketing. The nine publicly traded U.S. drug companies, including Eli Lilly and Co., spent $45 billion in 2001 on marketing, advertising and administration, according to the health care advocacy group Families USA.

Industry marketing had become so intense that it spurred a growing number of hospitals and physicians to ban drug reps from their premises. Last year, for instance, Indiana University Medical Group barred drug company salespeople from its 20 clinics around Indianapolis.

Driven by Indianapolis-based Lilly and other drug firms, the new marketing code grew out of almost two years of work by the drug industry's main trade group, Pharmaceutical Research and Manufacturers of America, based in Washington, D.C.

Pharma's voluntary code came out a few months ahead of proposed federal marketing standards for drug firms that will carry the force of law.

The trade group drew up its code independently of the Department of Health and Human Services, which released the first-ever federal marketing standards for the drug industry earlier this month, said Scott Willoughby, assistant general counsel of Pharma and the main staffer who worked on its guidelines.

The government's proposed standards, which await final approval after a public comment period this month and next, incorporate the industry's code and go beyond it to give guidance on drug pricing and regulatory compliance, said Bradley Merrill Thompson, a partner at the Indianapolis law firm Baker & Daniels who specializes in pharmaceutical law.

"They're sort of saying the Pharma code is a floor" that drug companies should abide by, he said.

Under the proposed federal standards, drug companies that flaunt the Pharma code on gift-giving to health care professionals would "run afoul of the federal anti-kickback statute" and be open to prosecution, Thompson said.

Not following the Pharma code "stacks the deck against you" in any federal legal case, he said.

Willoughby said drug companies found out the federal standards were coming shortly after starting to draw up their own ethical code. "They wanted to make sure the public perception of what they were doing was right," he said of Pharma's members.

Willoughby said Lilly President Sidney Taurel, who sits on the executive committee of Pharma's board, "was one of the principal drivers behind the guidelines. His slant was we need to improve things."

The code went through 15 drafts, starting out more general and becoming increasingly prescriptive, and brings "significant changes" to pharmaceutical marketing, Willoughby said.

Lilly began following the Pharma code for its U.S. sales force on June 1, a month earlier than the suggested effective date, said Lilly spokesman Edward Sagebiel. Pharma members include most of the leading drug firms in the world that do business in the United States. None has said they won't follow the code, Willoughby said.

Once the federal standards kick in, probably sometime next year, companies won't have much choice but to follow the code.

Government regulators believe federal standards are needed because, "In today's environment of increased scrutiny of corporate conduct and increasingly large expenditures for prescription drugs, it is imperative for pharmaceutical manufacturers to establish and maintain effective compliance programs," said Janet Rehnquist, inspector general of Health and Human Services.

At Lilly, offers such as free tickets to sporting events or shows have been "completely eliminated" as a marketing tool for its 4,500-person U.S. sales force, said Gino Santini, president of U.S. operations for the Indianapolis drugmaker.

"They created a perception in the general public that was inappropriate," he said of the perks.

Santini said complying with the Pharma code has meant only "marginal changes" in Lilly's marketing. "We never got to the level (of aggressive marketing) as some of our competitors did," he said. "We certainly would rather compete on the basis of science . . . rather than compete on entertainment."

Not that Lilly was averse to entertaining.

A case decided by the State Ethics Commission last week showed how extensive Lilly's use of entertainment could be for just a single customer.

The commission reprimanded and fined a Madison State Hospital pharmacist, saying he broke rules for state employees against accepting valuable gifts from vendors. The pharmacist illegally accepted offers from Lilly to watch an Indiana University basketball game in Lilly's suite, cruise aboard Ohio River riverboats, and attend opening-day festivities of the Kentucky Derby Museum, the commission said.

Lilly spokesman Sagebiel said Lilly's actions in the case occurred before the new code took effect and "it's a state employee's obligation to know his or her responsibility to the law." But he added, "These are the type of actions that create the perception we want to avoid."

With such after-hours entertainment and other freebies now being phased out, "the focus is on education" all the more for drug company sales forces, said Mary Anne Rhyne, a U.S. spokeswoman for the multinational British drug firm GlaxoSmithKline.

"We want to make sure our practices are responsible, ethical and patient-centered. We think this Pharma effort is a step in the right direction," she said.

Rhyne said Glaxo, which rents a 15-person suite in the RCA Dome, did only a moderate amount of wining and dining of health care clients in the past.

For smaller drug firms, the end of high-priced giveaways puts a small company on more equal competitive footing with larger rivals, said Terri Pascarelli, president of Integrity Pharmaceutical Corp. of Indianapolis. Its sales force of fewer than 100 people focuses on prenatal vitamins and a urology product.

"We can't spend as much money as the big companies" on marketing, she said. With entertainment now out as a promotional tactic, she said, "We think that helps level the playing field for small companies like ours."

Even so, the guidelines still let sales representatives buy entree to doctors, their staffs and other medical professionals by supplying free meals. The catch: The free food must be "modest" and accompanied by a medical lecture or business talk. No longer may drug reps simply drop off meals at doctors' offices or hospitals, or invite doctors to stop by a restaurant after work and carry home a so-called dine-and-dash meal.

Whether the industry code and pending federal standards will permanently put a lid on drug company wining and dining is another matter.

Root, the Fishers physician, thinks nonbusiness marketing tactics will creep back into use as the highly competitive drug companies keep looking for ways to get the ear of doctors and other customers.

"This probably is something we'll ride out for a year or two and then those things will come back," she said.


Call Jeff Swiatek at 1-317-444-6483.


Expensive gifts, gourmet meals and other nonmedical perks once routinely dispensed by drug company sales representatives now are banned under a voluntary "code on interactions with health care professionals" adopted by the Pharmaceutical Research and Manufacturers of America.

Among the practices or items barred under the code:

* Tickets to entertainment or recreation events, such as football games, symphony performances or riverboat cruises

* Meals that aren't "modest," don't include business or educational discussions and are not held in a place conducive to informational communication

* Invitations for spouses or guests of the health care professional to conferences or business meals

* Grants, scholarships or consulting contracts given in exchange for prescribing products

* Gifts that cost more than $100 and are not primarily for the benefit of patientsGifts by drug firms restricted

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