As full disclosure nears, doctors’ pay for drug talks plummets

As transparency increases and blockbuster drugs lose patent protection, drug companies have dramatically scaled back payments to doctors for promotional talks. This fall, all drug and medical device companies in the US will be required to report payments to doctors

Some of the US’ largest pharmaceutical companies have slashed payments to health professionals for promotional speeches amid heightened public scrutiny of such spending, a new ProPublica analysis shows.

Eli Lilly and Co.’s payments to speakers dropped by 55 percent, from $47.9 million in 2011 to $21.6 million in 2012.

Pfizer’s speaking payments fell 62 percent over the same period, from nearly $22 million to $8.3 million.

And Novartis, the largest U.S. drug maker as measured by 2012 sales, spent 40 percent less on speakers that year than it did between October 2010 and September 2011, reducing payments from $24.8 million to $14.8 million.

The sharp declines coincide with increased attention from regulators, academic institutions and the public to pharmaceutical company marketing practices. A number of companies have settled federal whistleblower lawsuits in recent years that accused them of improperly marketing their drugs.

In addition, the Physician Payment Sunshine Act, a part of the 2010 health reform law, will soon require all pharmaceutical and medical device companies to publicly report payments to physicians. The first disclosures required under the act are expected in September and will cover the period of August to December 2013.

Within the industry, some companies are reevaluating the role of physician speakers in their marketing repertoire. GlaxoSmithKline announced in December that it would stop paying doctors to speak on behalf of its drugs. Its speaking tab plummeted from $24 million in 2011 to $9.3 million in 2012.

Not all companies have cut speaker payments: Johnson and Johnson increased such spending by 17 percent from 2011 to 2012; AstraZeneca’s payments stayed about flat in 2012 after a steep decline the previous year.

ProPublica has been tracking publicly reported payments by drug companies since 2010 as part of its Dollars for Docs project. Users can search for their doctors to see if they have received compensation from the 15 companies that make such information available online.  (We’ve just updated our application to include payments made through the end of 2012, totaling $2.5 billion. Forest Labs, which only began reporting in 2012, reported speaking payments of $40 million, more than any other company in Dollars for Docs.)

Some companies in the database said their declines have less to do with the Sunshine Act and more to do with the loss of patent protection for key products. Lilly, for example, began facing generic competition to its blockbuster antipsychotic Zyprexa in late 2011. Its antidepressant Cymbalta lost its patent at the end of 2013.

“The value of educational programs tends to be higher when we’re launching a new medicine or we have new clinical data/new indication,” Lilly spokesman J. Scott MacGregor said in an email, adding that the drop in speaking payments also reflects the increased use of web conferencing.

Pfizer’s patent on Lipitor, its top-selling cholesterol drug, expired in 2011.

“Like any other company, our business practices must adapt to the changing nature of our product portfolio, based in part on products going off patent and new products being introduced into the market,” company spokesman Dean Mastrojohn said in an email.


Novartis’ patent for its breast cancer drug Femara expired in 2011, its hypertension drug Diovan in 2012 and its cancer drug Zometa in 2013. In a statement, Novartis said that speaking payments dropped in 2012, in part, because of a shift from big blockbuster drugs that many doctors prescribe toward specialty products prescribed by fewer physicians. Resources were also shifted “to support potential future product launches.”

The industry’s increased emphasis on expensive specialty medications for such conditions as multiple sclerosis or Hepatitis C, has been striking, said Aaron Kesselheim, an assistant professor of medicine at Harvard Medical School. A piece in the New England Journal of Medicine last week noted that half of the 139 drugs approved by the Food and Drug Administration since 2009 were for rare diseases and cancers.

 “It’s possible the number of physicians they need to support sales of these items is less, leading to lower payments overall,” Kesselheim said.

In some cases, companies maintained or made smaller cuts to other forms of physician compensation while pulling back dramatically on speaking payments.  Pfizer’s spending on consultants dropped 9 percent from 2011 to 2012, far less than its payments to speakers. The company’s spending on research stayed essentially the same.

Lilly increased spending on physician researchers by more than 20 percent, while reducing payments to consultants by more than two-thirds.

Many bioethicists and leaders of major academic medical centers frown upon physicians delivering promotional talks for drug companies, saying they turn doctors into sales representatives rather than leaders in research and patient care.

Officials with the Pharmaceutical Research and Manufacturers of America, the industry trade group, dispute this characterization. They said they are working with their member companies to prepare for the Sunshine Act and have created a campaign to promote the value of drug company-doctor collaborations.

“Companies will make their own independent decisions about how to engage professionals,” said Kendra Martello, PhRMA’s deputy vice president of strategic operations.

Scott Liebman, an attorney who advises pharmaceutical companies on the Sunshine Act, said it’s too early to know how much the law’s requirements are affecting company practices, in part because it’s so new. The fact that some companies are cutting back on speaking while preserving their spending on research and consulting suggests that other business forces could be at play, he added.

“It’s very hard to pinpoint exactly why that’s happening,” Liebman said. “I think there’s a lot of potential answers to that. I just don’t know which is the right one.”




R Balakrishnan

3 years ago

A very senior friend of mine, in the pharma industry- says that the position of the 'medical' reps should be done away with- Pharma cos can use the net and the doctors should be made to give annual exams to see that they are up to date with latest developments- New drugs can be sent in the form of mailers to doctors- This could reduce drug prices by thirty percent at least

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It is often said that ‘what goes around comes around’. Success is often ephemeral and one can never take it for granted. If success goes to your head and  encourages you to treat people (read employees) badly, then retribution will not lag. A private university in Bengaluru, having a sprawling campus, started attracting students with a high-flying marketing campaign and aggressive promotion. For some time, their ploy worked. Students from the north and east flocked to this university and paid through their nose to enrol in the various programmes. The proof of the pudding lies in the eating.

When these students graduated, there were not many jobs for them as per their expectations. Investment in education can’t be compared to investment in a business that returns on investment will start flowing soon after. It was a different matter that the quality of the students enrolled by this university was nothing great as the only eligibility criteria for getting admission was a bagful of cash. Once students pay astronomical sums as fees, they start behaving like customers. Any faculty, who was strict with them, was given a poor performance rating and, within no time, the university started sacking faculty members. As they were good paymasters, the faculty got attracted to the university just like bees get attracted to flowers. But soon the cat was out of the bag. Students were ruling the roost and dictating terms.

A former colleague of mine who had shifted base to Bengaluru got an opportunity to teach in this university as a visiting faculty. His son had got a job in  Mindtree Ltd and the family shifted based from Mumbai to Bengaluru.  But his experience was anything but satisfactory.
He said, “Mind-blowing infrastructure and pathetic quality of students—students who are not interested in learning anything, yet they have so much dominant power.” Soon enough, his contract was terminated.

This incident happened two years ago when the university was glowing and beaming with heavy rush from students for all their programmes. Two years down the line, the university is struggling to attract students and is doing aggressive marketing to attract students. In the past two years, the university blindly chucked out many faculty members simply  on the basis of performance rating of students. But now, with a slump in the job market, many of their students are unable to get jobs. This has reflected poorly on the university’s credentials!
Chandraprabha Venkatagiri, Mumbai, by email  

“Smart Money” column by R Balakrishnan is always interesting and educative. The current column (Moneylife, 20 February 2014) on 'Intelligent Capital Allocation' was no exception and it aptly gives examples of L&T and ITC, where the managements are wasting capital in some segments of the business. The most important management act is the efficient allocation of capital. This probably is the reason why conglomerates hardly find place in the list of long-term wealth creators. Warren Buffett has also emphasised this aspect of the managements and has even recommended a book The Outsiders, which I find has not been reviewed by you in your Book Review section so far. Of late, I find you have shifted your focus from reviewing books mainly relating to stocks and investments to those on other subjects. Please re-work your focus as I feel that there are many books on these subjects which need to be reviewed for the benefit of your subscribers.
Krishan K Aggarwal, by email  

Heartiest Greetings to Moneylife Foundation on its entering the fourth year of activities related to financial literacy. May Moneylife Foundation grow not just bigger, or older, but better and better and be a source of valuable information. It should transform the lives of not just your readers, but also all those who follow the newsletters, publications, and functions. It should help them to assimilate the great ideas on matters concerning our economy, finances, and it should be instrumental in shaping their thinking, which would assist in overall better appreciation of the finer nuances of clean governance.
I have become a new member and the Moneylife issue dated 20 February 2014 was very impressive. Having spent a great deal of my career in the capital markets space, I must say that the coverage of various topics, was indeed, ideal. It is doing justice to the issue’s headline ‘Are You a Smart Investor’. I am already eagerly looking forward to the next Moneylife issue.
SK Nataraj, by email

Well said, Moneylife. I couldn’t agree more to what has been commented by the Moneylife reader about the article “Are you a smart investor?” For the uninitiated, I would recommend reading the excellent book, Rich Dad Poor Dad by Robert Kiyosaki.
And hats off, to all my friends at Moneylife! Now that we are  premium members at Moneylife, let us congratulate ourselves for taking the first step towards financial literacy and responsibility.

Yes, we have a long way to go. The article from Moneylife couldn’t have been better. I have a suggestion to Moneylife to share insights on how investors from various international markets behave, when it comes to applying conventional wisdom in investing. Also, what is it that sets successful investors apart from the ‘smart’ investors!
Rajesh Premani, by email

Celebrity endorsements have always been a contentious issue in marketing consumer goods as well as services. Major celebrity endorsements have always centred on selling FMCG (fast moving consumer goods) products. One finds it so difficult to recollect famous faces endorsing a service. Amitabh Bachchan has endorsed the services of ICICI Bank, Hema Malini has endorsed Bank of Rajasthan and Juhi Chawla has endorsed Dena Bank. But we have never seen any famous face endorsing Pizza Hut or Dominos pizza or McDonalds or Café Coffee day.

Be that as it may, Mr Bachchan recently proclaiming that he decided to stop endorsing Pepsi, after a girl told him to do so, is in poor taste. After earning millions of rupees from the endorsement, is it fair that he now de-endorses it? At best, he should have remained silent. If his logic is that he wants to be socially responsible, then he should also stop endorsing products like Maggi Noodles. Noodles have vanaspati (hydrogenated fat) that is not good for health. Does Mr Bachchan know about it?

Organisations also pour lot of money in the drain when they hire a celebrity for endorsing a product which is not doing well in the market. No celebrity can guarantee increased sale of a sub-standard product. At the end, what matters is that the quality of the product/service must be good and the product/service must be reasonably priced. Consumers are far more intelligent. They know that when Sachin Tendulkar endorses a brand of pen or MS Dhoni endorses a brand of chappals or Virat Kohli endorses ear-buds, it goes from the consumers’ pocket.

TTK Prestige, the south-based maker of home appliances, has used Abhishek Bachchan and Aishwarya Rai for selling their products. Barely a few days later, Aishwarya confessed that she has never entered a kitchen and doesn’t know cooking at all. The company was taken aback as the entire advertisement falls on the face. Going by what Mr Bachchan says, unless you have a personal experience with a brand, how can you endorse it? When will these organisations learn?
G Venkatesh, by email

This is with regard to “Is the blood you donate, going down the drain?” by Vinita Deshmukh. Thanks Vinita, for highlighting the sad state of our blood banks that are simply wasting an extremely perishable life saving commodity. There is nothing to prevent the authorities from setting up a simple saving mechanism of proper refrigeration and storage and putting out in the public domain (possibly, similar to the Red Cross Blood Bank web site). The information should include the type and quantity of blood available at least on a weekly basis. The wastage can possibly be minimised by issuing out blood on first-in-first basis to other hospitals and banks. The donations shouldn't go in vain.
Nagesh Kini

This is with regard to “Regulators should intervene only in case of grave violation says Chidambaram.” The position taken by the finance minister in his observation: "I reiterate, we must bring self-regulation, we must enforce compliance, need to heed to board of directors and shareholders and only in exceptional cases should (the) regulator intervene to punish gross grave cases of proven criminality," is quite intriguing. This amounts to asking regulators to 'go slow' or ignore violations. As I said in my earlier comment, self-regulation is conspicuous by its absence in India.
MG Warrier

This is with regard to “Should India keep off shale oil & gas?” by AK Ramdas. Very true! It is better to be forewarned than to repent later.
Nalin Patel

This is with regard to “Japan: Is the correction temporary or something more serious?” by William Gamble. This is a very informative article, especially, given the sea of confusing information on the Internet about Japan! It appears that Japan finally got out of deflation, but the bigger issue is: At what cost? There must be lessons here for other nations contemplating monetary experiments.
Abhijit Gosavi


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