Were you as thrilled as I was Monday when pharmaceutical giant GlaxoSmithKline announced that it was going to stop paying doctors to push its drugs? It's also going to “stop tying compensation of sales representatives to the number of prescriptions doctors write … effectively ending two common industry practices that critics have long assailed as troublesome conflicts of interest.” (Us too!) Writes the New York Times,
[I]t comes at a particularly sensitive time for Glaxo. It is the subject of a bribery investigation in China, where authorities contend the company funneled illegal payments to doctors and government officials in an effort to lift drug sales.
The company denies this move has anything to do with China. Maybe it has to do with the fact that in July 2012, the company paid a “record $3 billion settlement for a range of practices [like] promoting the antidepressant Paxil for children and Wellbutrin for sexual dysfunction and weight loss [and] failing to report safety concerns for its diabetes drug Avandia." But of course, that's exactly "what caught the eye of Chinese officials, who this July announced their own investigation of GSK practices in China, which allegedly included funding fake conferences and hiring prostitutes.”
Yikes. Well whatever the reason, the company’s CEO said “He’s taking meaningful steps to challenge an industry business model in which success means getting people to consume as many of your drugs as possible.”
Today, the New York Times is reporting on another story which, unbeknownst to us, is an “open secret” within the drug industry. To wit:
As drug prices have soared in recent years and insurers have increased co-payments, a new type of charity has blossomed to fill a vital niche — helping patients pay the steep out-of-pocket costs for their medicines.
But … the bulk of the contributions to these charities come from the pharmaceutical companies. The foundations not only help hundreds of thousands of patients a year, they also raise drug company sales and profits. …
“These subsidies are unfortunately used to promote the overutilization of expensive brand-name drugs,” said Wells Wilkinson, a lawyer at Community Catalyst, a consumer advocacy organization.
It’s all legal, of course, “as long as a company does not require that the money it donates be used exclusively to pay for its own drugs.”
Woops. Enter the Chronic Disease Fund. Writes the Times, “81 percent of the contributions to the Chronic Disease Fund in 2011 came from two pharmaceutical companies.” And it looks like this charity “might be showing improper favoritism toward Questcor Pharmaceuticals, which sells an expensive drug for immune diseases” [and] “was purchasing millions of dollars a year in services from for-profit companies owned by the charity’s founder and president, Michael Banigan.”
Well, he and the entire board have now left. But “Don M. Bailey, Questcor’s chief executive, said at an investor conference last week that the company was ‘doing exactly the same thing everybody else is doing’…”