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July 25, 2002


Discourse with Jane Galt

Since I responded to Jane Galt's discussion of pharmaceutical company budgets, and particularly marketing, I felt it polite to let her know of my discourse. She kindly emailed this reply

I think we're arguing two different things. Doctors who (forgive me) are a little irrational on the subject of pharma advertising, are arguing that in some sort of ideal world, there would be no marketing. There are a couple of ways in which I think this is ill-informed; in fact, it costs pharmas a lot less to do junkets than it would to do advertising or direct mailings, which have a much lower hit rate; similarly, it costs them less to have sales reps than it would to staff a hotline 24-7. Physicians, left to their own devices, apparently have a very poor record of tracking developments in pharmaceuticals; those marketing efforts do serve a purpose, and in fact do so at a lower cost than many alternatives.

But I certainly wouldn't dispute that there are excesses in the marketing budget, or that pharmaceuticals attempt to get people to take drugs when there are perfectly viable alternatives that are cheaper and just as good. However, the question I was asking is not whether in some ideal world there would be less marketing, but whether lowering drug prices would have the effect of lowering R&D or marketing spending; I think that the evidence indicates that it would be the former rather than the latter. And as you are probably well aware of all the ways in which nationalizing health care would call quality of care to suffer, you should not have difficulty understanding why I believe that there would be similar effects on pharmaceutical research.

So I'm not making an ethical judgement on what I think should happen, but an analytical judgement on what I think will. And I think that reimportation would damage R&D beyond repair. I view the excessive advertising etc. as a small transaction cost to pay for a largely efficient research process.

Let me respond as best I can. First, Jane is speaking from an economic view, and therefore her use of the phrase irrational must be taken in the economic context. While I understand her economic argument, I (as well as many commentors on her site) disagree with some of her assumptions. In economic discussions, we always have the most fun when arguing the assumptions.

I do take umbrage in the generalization that physicians have a poor record of tracking developments in pharmaceuticals. The longer one practices medicine, the more cautious one becomes over the latest and greatest advancement. I have seen too many new drugs found to have major side effects after FDA approval. Unfortunately, sometimes the pharmaceutical company had strong clues, but acknowledgement of difficulties would hurt their marketing efforts.

I believe that there remain major rewards to new drug development. I'm in favor of a reasonable return on investment for advances. I am against the aggressive marketing of "me too" drugs. I am against legal games which delay the introduction of generics. I am against direct to patient advertising for a variety of reasons. When patients ask for a certain medication, I either have to spend time (and time is money) explaining why I do not want to use that drug, or I could just relent and prescribe the drug (even when it is not the best choice). That form of advertising places the physician in an uncomfortable position, can negatively impact the doctor-patient relationship, and rarely benefits anyone (other than the drug company).

There are many new pharmaceutical companies. They are all trying for the big new advance. NIH basic science research allows new ideas and approaches. Not all drugs come from pharmaceutical sponsored research. I really do not believe that research will go out of business if prices decrease (by whatever means).

Finally, I would argue that ethics should trump economics here. The implications of selling your drug by buying influence with physicians are worth considering. This is a societal concern. We should strive for the best care, not care which benefits AstraZeneca (to pick on my favorite target). Who is looking out for the patient? I believe that is the crucial question here. (db steps back off his soapbox - only to return in the near future).

Posted by on July 25, 2002 06:38 AM | TrackBack




Comments:


Again, I think we're arguing different things. Personally, I don't care if we ban consumer advertising of drugs, but it's a small percentage of spending -- 1% of revenues. (Though to be fair, as a friend in pharma points out, physicians also prescribe cpntraindicated things that aren't advertised because they won't tell the patients no, like antibiotics for colds, and "I want what my friend's taking"; it's not really fair to blame the pharmaceutical companies for all those arguments, but physicians often do.) And an advertising ban would seem to be a more effective way of doing this than cutting revenues by 40% and seeing what happens.

I mean irrational in the sense that we tend to overweight what is very vivid to us. Physicians experience the marketing and assume that a) it is cost ineffective and b) it is very, very expensive and a lot of money could be saved by cutting it. These assumptions are questionable. But of course they're perfectly natural if you're attending expensive dinners, and have no idea how a pharma balance sheet works, which most physicians don't.

As for the track record, I'm taking material out of school, where we read med school and public health studies showing that fewer than 25% of physicians will independantly track recent studies on drug effectiveness (positive or negative), medical devices, or updates in the state of the medical art. It gets worse as they get older. Now, you're in a teaching hospital. But most physicians aren't; they're in small private practices. They're tired. They have kids and dogs and billing and dammit, haven't they earned the right to relax? What goes is the time spent reading literature. . . and of course, once you've skipped one generation of literature on a subject, it's very hard to follow the succeeding generations. That's why sales reps are effective and mass mailings aren't. Now, you think that you'd keep up with all the new drugs if no one was shoving them in your face -- but if each rep was replaced by a stack of literature on each of the drugs they sell, c'mon -- how much of it would you really read? How much of what you get sent and handed do you read now?

As for the rest, you're still arguing about what the pharmas should do. I'm arguing what they will. And I don't think you can successfully regulate marketing, other than on a very broad-brush ("No consumer ads") basis. Anything else will have costs, in terms of resources spent on court and compliance, that would far outweigh any benefits.

Posted by: Jane Galt on July 27, 2002 07:24 PM



But on the legal issue we can both agree; the patent games are ridiculous. (Though I would point out that "me-too" drugs actually push down drug prices, so they're good for consumers, not bad. Except in the case of drugs like Clarinex, which are the same company trying to protect its patent.)

Posted by: Jane Galt on July 27, 2002 07:41 PM



Jane Galt makes some interesting points. We do seem to talk about different problems. Could be a Mars - Venus thing.

My objection to direct to consumer advertising has to do with the effect on the doctor-patient relationship. I understand that it does not cost the company a high percentage of costs. However, it causes me much aggravation, and possibly undermines my relationship with patients.

I do understand that the companies would not spend money on dinners and such if they did not get a reasonable return on that investment. I think that is my point, the do influence physicians, and not always positively.

On the issue of continuing education for physicians, I agree that we need to address this better as a profession. I disagree that pharmaceutical reps are an answer. They are salespeople, not educators. They spin faster than James Carville. We (the profession) need to address continuing education in positive ways. At our institution, we are doing research, trying to learn how to help physicians stay up to date. But time is the problem (as I have stated many times). We need enlightened evaluations of the economics of outpatient practice. We spend so much time seeing patients, we have little time for education.

Posted by: db on July 27, 2002 10:24 PM



db,

What would you think of changing the FDA's mandate to determine safety only and let doctors determine efficacy? I favor it. Big time. Doctors can become complacent and rely on the FDA results rather than using their own observations on the ground to determine whether a drug works.

Robert

Posted by: Robert Prather on July 28, 2002 05:04 AM



Great comment. Here is my problem. I am not sure how we can determine efficacy. Efficacy studies are expensive. The NIH rarely funds such studies. Many drugs have significant side effects, but the benefits greatly outweigh the risks.

I would like some evidence of efficacy, but do not want the pharmaceutical industry doing the studies. Could we charge a fee for new drug application (after safety is shown) to fund independently designed and performed studies? This would disentangle the marketing from the study design (and those 2 are entangled), give physicians data, and allow the right studies.

I also believe we should do this for medical devices.

Posted by: db on July 28, 2002 05:30 AM



So you want to charge pharmaceutical companies money to do studies that will cost them business? How about charging doctors a fee to find out where nurse practicioners are more cost-effective? After all, don't doctors have a moral obligation to make sure that Americans get the most cost-effective treatment they can, regardless of what that might do to their own personal incomes?

Think the AMA would let that pass?

I presume that we're talking mostly about new uses for off-label drugs, since the pharmas already have to prove efficacy of patent candidates to both the patent office and the FDA. In which case, why is that some special responsibility of the pharmaceutical companies? Because those bastards, having dared to produce new drugs, ought to pay for the privilege? It strikes me rather like Superfund -- why should GE pay to clean up sites it didn't produce merely because it is a "big business"?

Posted by: Jane Galt on July 28, 2002 08:56 PM



Great - now we are getting to the issues! Please check my long post ( Doing the right efficacy studies) today for a more complete presentation of this idea.

I'm concerned about the entire FDA process. Drug companies have minimum requirements to meet. They meet them, but we do not gain as much medical knowledge as we (physicians and patients) need.

While I do care about the economics of the industry, I wonder how we should respond to an industry with remarkable patent protections. As a physician I worry about patient care, their ability to pay for medications, and what is the best medication to prescribe in a circumstance.

If we truly had a free market I would be happier. We have a regulated market, therefore I want to change the regulations.

Posted by: db on July 28, 2002 09:19 PM






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