POLICYbrief Goldwater Institute No. 12-03 I March 27, 2012

A Pound of Cure: How Academic Detailing Could Limit Access to Pharmaceuticals by Byron Schlomach, Ph.D., director of the Goldwater Institute’s Center for Economic Prosperity

INTRODUCTION Pharmaceutical sales are coming under criticism based on what appear to be legitimate but rare abuses of pharmaceutical salespeople promising more from a drug than they should and doctors allowing themselves to be pressured into prescribing. Unfortunately, these isolated incidents are being held up as evidence of the need for vast new government intrusion and regulation of the pharmaceutical industry’s marketing practices. While certainly well intentioned, these efforts are likely to negatively affect doctors and patients.

Of particular concern is the new policy of government funding academics to travel to doctors’ offices to encourage the use of generics and other less expensive medications. This policy is part of the comparative effectiveness research mandated by the Obama Administration’s health care law. These efforts are often intended to contradict the advertising and marketing – the free speech – of pharmaceutical representatives whose speech is already regulated by the Food and Drug Administration. The policy also has potential to line the pockets of academics with public money, part of which is contributed by pharmaceutical companies and would leave those companies in the untenable position of paying for what amounts to marketing their competitors’ products. Finally, this program risks preventing patients from benefiting from the latest pharmaceutical technology.

The federal health reform law, through its comparative effectiveness mandate, threatens to push everyone into a cheaper but potentially less effective generic drug regime. GOLDWATER INSTITUTE I policy brief

Drug Detailing and Its Critics

“Drug detailing” is the term used to describe the practice of pharmaceutical companies sending representatives to doctors’ offices to give doctors information about the company’s latest drugs. The obvious objective is to persuade doctors to prescribe the drugs. It’s an expensive – and some might say aggressive – form of marketing. Drug detailers visit doctors and provide information on the latest drug research, hand out samples and other trinkets, and often pay for lunch or dinner meetings. According to the Congressional Budget Office (CBO), almost 60 percent of the $20.5 billion spent on drug promotion, $12 billion, was spent on detailing.1

Some consider detailing by drug companies to be an unnecessarily expensive – and possibly even damaging – practice. They cite anecdotal evidence that doctors change their prescribing behavior as a result of expensive meals, gifts of merchandise, and personal relationships with drug company representatives.2 CBO numbers indicate that drug companies more than doubled their spending on detailing, even when adjusted for inflation, from 1989 to 2008.3 This evidence alone convinces some that doctors must alter their behavior or drug companies would not spend so much on direct face-time marketing.

There is academic research to show that, indeed, doctors alter their prescribing habits to favor drugs the detailers offer.4 The assumption is that doctors are altering their prescription practices for the benefit of drug companies instead of for the good of their patients. In this view, expensive lunches, free samples, and other gifts essentially bribe physicians into prescribing expensive and inappropriate drugs.5

This view is not unlike that of John Kenneth Galbraith, who saw advertising as a means by which individuals are manipulated by savvy corporations into buying things they do not really need.6 Such a view considers advertising and marketing as inherently deceptive and even immoral, and something to be counteracted, if necessary, by government power. Consumers Union, for example, advocates requiring drug companies to disclose how much they spend marketing their drugs to physicians, presumably as part of an effort to eventually place restrictions on such activity.7

Consumers Union and others reflect a static view of costs and markets that economists generally reject. Instead, marketing plays a key role in ensuring life- saving drugs come to market because profits can only be generated through sales, which can, in turn, only be generated through knowledge. Profits fund research that results in the development of new and improved drugs. Efforts to generate profits are also efforts to fund innovation, which saves lives when it comes to drugs.

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Academic Detailing As a Counter to Drug Detailing

“Academic detailing” describes a government policy of sending academics or others to physicians’ offices and conferences to present objective information about drugs. The concept is that disinterested medical professionals rather than representatives from drug companies, perhaps from universities and governmental institutions, will provide information on best practices in the use of various drugs. The emphasis would be on prescribing proven drug therapies that have histories of being safe and that are often available in generic forms, with an eye toward minimizing costs and maximizing patient welfare.8

A paper published in 1986, when drug companies’ detailing expenditures were much lower than today, indicated that significant savings could be achieved in Medicaid when physicians were visited for less than half an hour and counseled on what the paper termed “optimal” prescribing. The paper claimed such activity could see as much as a 3-to-1 benefit/cost ratio.9

Academic detailing has now become a major emphasis of the federal government as part of its comparative effectiveness research and treatment emphasis mandated by the new health care law.10 States such as Maine, Idaho, and Pennsylvania have enacted laws and policies to implement academic detailing at the state level as well.11 Maine imposes a fee on pharmaceutical companies in order to fund its academic detailing efforts.12

Academic detailing, which has occurred to some degree for 30 years, is viewed by some as a necessary corrective to pharmaceutical companies’ influence on physicians. Taxpayer resources appear to be poised to fund “truth tellers” armed with the latest objective scientific evidence to push back against the overwhelming resources of unscrupulous pharmaceutical companies.13 This does not, however, tell the full story.

While academic detailing is sold as objective and evidence-based, it is important to understand that pharmaceutical companies can make the same claim. Prescription drugs are subjected to extensive trials that last for years. Each new drug must pass the rigors of the FDA’s approval process, which is long and scientific.14

Still, every prescription requires judgment. Two drugs made for the same purpose may exhibit different levels of effectiveness in an individual even if the clinical evidence, based on sampling and statistics, say they are of equivalent effectiveness. Nobody really knows why such differences exist, but this is part of the art of medicine that physicians practice. Academic detailing attempts to substitute the judgment of a few physicians who are active in government for that of actively practicing physicians working directly with patients.

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This top-down, technocratic approach to medicine that is reflected in many other aspects of President Obama’s health care legislation as well. And it puts pharmaceutical companies, which are already heavily regulated in what they can and cannot say about their products, in the position of unwillingly funding the marketing of competing generics and alternatives.

Drug Detailing Benefits Patients

An advantage of drug detailing is that pharmaceutical representatives give out samples. Doctors can then use the samples to determine patients’ initial reactions. If someone discusses the cost of drugs with a doctor, the probability of receiving samples increases markedly, so samples can serve to lower costs for patients even compared to generics for which no samples are available. Poor patients can occasionally get full prescription courses for free.15 However, the research appears to show that, in general, higher-income patients effectively serve as doctors’ experimental population since they are generally more likely to get samples.16 This often leads to prescriptions for the new and relatively expensive drugs, which are paid for by those who are relatively able to afford them.17

Consciously or not, doctors adjust their prescribing and sample-giving behavior according to what they know about patients’ financial resources. They are able to determine for themselves, as they are taught to do, a new drug’s strengths and weaknesses, even using it in ways not yet fully approved by the FDA when research is available to support such use. If a patient has more limited means, doctors give samples or they prescribe generics. Patients with greater resources also receive samples, but rarely avoid scrip and often end up paying for expensive new prescription drugs. In other words, those with higher incomes pay for newly developed drugs. In behaving this way, doctors make sure new drugs continue to be developed at the same time long-existing drugs continue to be used.

This is where drug detailing shines. To get new drugs to market, pharmaceutical companies must expend an enormous amount of resources. A recent accounting shows that over a 15-year period, pharmaceuticals spent between $4 billion and $11 billion on research and development for each new drug brought to market.18 These costs have to be recovered. That means drugs have to be sold. Without marketing, knowledge of new drugs would be less widespread and patients may go without a new drug that is, to use an old phrase, just what the doctor ordered.

Economists have long known that advertising and marketing in general have a positive effect for consumers. Various professions have had their right to advertise restricted with such regulations justified on the basis that some might make excessive claims that would harm consumers. The actual effect was to drive up the price of these services. After all, why would anyone make an effort to undercut

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the competition if they cannot tell anyone about the lower prices? A well-known economics study looked at the price of eyeglasses, which could not be advertised in some jurisdictions. Jurisdictions that allowed advertising saw lower prices than those that did not.19 The evidence is that marketing increases competition and drives down costs, which benefits patients.

Doctors are also quite sophisticated when it comes to drug detailing. They know that drug company representatives sometimes make exaggerated claims or minimize potential side effects.20 If academic detailing ultimately discourages pharmaceutical companies from detailing doctors at all, as seems to be the intent of those who advocate academic detailing, the overall amount of information about drugs will be reduced. And like most consumers, doctors and patients want more information, not less.21

Academic detailing undermines the ability of doctors to discover for themselves and their patients the best drug therapies to use by insisting that drugs only be used in ways academic detailers consider effective. It undermines their ability, however imperfectly, to allocate the cost of new drug development to those who can best afford it.

Academic detailing is practically designed to destroy the profitability of new drugs by discouraging their promotion and will, therefore, hurt new drug development. This is, in fact, the greatest risk of comparative effectiveness efforts. Intentionally or not, these policies discourage research and development of life- saving pharmaceuticals.

The great promise that President Obama and his advisors made when promoting their health care package was that it would “bend the cost curve” and control rising medical costs. Many such efforts come with a different cost, however, in that they throttle innovation that could benefit patients and their caregivers. Academic detailing is a perfect example of this.

The practice also subjects pharmaceutical companies – already heavily regulated – to what amounts to the funding of competitors’ marketing, as academic detailers counter the companies’ claims at taxpayer expense.

Recommendations

States Should Not Fund Academic Detailing

Although academic detailing sounds good, it is not an appropriate use of taxpayer resources, and risks lining the pockets of an academic with its own

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agenda.22 Physicians already have access to objective sources of information regarding drugs such as the Physicians Drug Reference and the FDA.23 Moreover, there is no restriction on private citizens informing physicians and encouraging them to use established, older drugs.

Of particular concern are schemes that specifically charge pharmaceutical companies to fund academic detailing efforts. This practice brings up questions of what constitutes legal limits on speech and whether it is legal to require entities to fund speech that is calculated to undermine their own.

Encourage Doctors to Report Fraudulent Claims

Academic detailing advocates have a point regarding the documented evidence that some drug company representatives make exaggerated claims. On the other hand, drugs not initially approved for some uses are later approved for an entirely different purpose by the FDA, and the FDA is notoriously slow in getting new drugs to market. Nevertheless, it is reasonable that state attorneys general should designate a staff expert to investigate complaints from doctors who believe a drug representative might have stepped out of line.

The same should be true for academic detailers. If academic detailing advocates are going to claim that theirs constitutes a more objective conduit regarding pharmaceutical information, then they must live up to at least the same standards as drug detailers. There are standards established by the FDA and referenced by Maine’s academic detailing law.24 Given the very real risks that the health care reform law will drive up government costs, academic detailers must not be allowed to bias their messaging toward cheaper drugs just because it might lower costs to government. As was said in a recent article regarding academic detailing, “Whether you are a fan of academic detailing or not, the bottom line is that federal and state governments are driving and funding the effort. And it is clear that they are tasked with reducing the cost of health care, even if it is not necessarily in the best interest of the patients.”25

Encourage Patient Interaction with Pharmacists

One possible reform to counter the alleged drawbacks of drug detailing would be to require scrip forms to include a disclaimer that a patient may consult with a pharmacist to determine a substitute, but only in further consultation with the doctor. This would encourage patients to ask about less expensive substitutes and converse with their pharmacist regarding interactions and other issues.

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Conclusion

Academic detailing represents an effort to contradict the speech of drug companies, often at the expense of the drug companies themselves. In so doing, if it is instituted widely as public policy, it is likely to discourage the development of new drugs and the use of existing drugs for other researched purposes. While no one should be prohibited from expressing their opinions to a ready audience, academic detailing should not be publicly funded, in no small part due to free speech issues.

At the same time, despite strict FDA rules governing what can be said about a drug, abuses occasionally occur. Doctors generally know when drug representatives are stepping over the line and should be encouraged to report such abuses. Finally, patients should be encouraged to discuss prescriptions with pharmacists, especially to discover if low-cost alternatives to prescribed drugs exist.

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NOTES 1 Congressional Budget Office, “Promotional Spending for Prescription Drugs” (December 2, 2009), 2, http://www.cbo.gov/ftpdocs/105xx/doc10522/12-02-DrugPromo_Brief.pdf. The CBO notes that promotional expenses it cites do not include the value of free samples, estimated in 2005 to have a market value of over $18 billion. 2 Elliott, Carl, “The Drug Pushers,” Atlantic Magazine (April 2006),http://www.theatlantic. com/magazine/archive/2006/04/the-drug-pushers/4714/. 3 CBO, “Promotional Spending,” 3. Applying the Consumer Price Index to approximate figures from the chart, this fact becomes evident. 4 Steinman, Michael A., G. Michael Harper, Mary-Margaret Chren, C. Seth Landefeld, Lisa A. Bero, “Characteristics and Impact of Drug Detailing for Gabapentin,” PLoS Medicine (April 2007), http://www.plosmedicine.org/article/info:doi/10.1371/journal.pmed.0040134. 5 Elliott, “Drug Pushers” (April 2006). 6 Phillips-Fein, Kim, “Countervailing Powers: On John Kenneth Galbraith,” The Nation (May 30, 2011), http://www.thenation.com/article/160602/countervailing-powers-john-kenneth- galbraith. 7 Consumers Union, “Requiring Drug Companies to Disclose Marketing Expenditures to Physicians” (January 27, 2005), http://www.consumersunion.org/campaigns/learn_ more/001813indiv.html. 8 See the website for the National Resource Center for Academic Detailing at http://www. narcad.org/about/. This organization is funded by the Agency for Healthcare Research and Quality, an agency of the U.S. Department of Health and Human Services. 9 Soumerai, Stephen B., ScD, and Jerry Avorn, MD, “Economic and Policy Analysis of University-Based Drug ‘Detailing,’” Medical Care, 24 (April 1986), 313, http://www.jstor.org/ pss/3764455. 10 Agency for Healthcare Research and Quality, “About the Academic Detailing Project,” http://www.effectivehealthcare.ahrq.gov/index.cfm/who-is-involved-in-the-effective-health-care- program1/about-the-academic-detailing-project/. 11 Maine Department of Health and Human Services, “Prescription Drug Academic Detailing Program Calendar Year 2009,” http://www.maine.gov/dhhs/reports/prescription_drug_academic.pdf. Idaho Department of Health and Welfare, “Academic Detailing,” http://www.healthandwelfare. idaho.gov/Medical/PrescriptionDrugs/AcademicDetailing/tabid/208/Default.aspx Guadagnino, Christopher, PhD, “Pa. Launches Academic Drug Detailing,” Physician’s News Digest (December 2005), http://www.physiciansnews.com/spotlight/1205.html. 12 Maine Dept. of HHS, “Prescription Drug Academic Detailing,” 9. 13 For an example of how drug detailing is viewed by some, see Elliott, “Drug Pushers” (April 2006). 14 U.S. Food and Drug Administration, “The FDA’s Drug Review Process: Ensuring Drugs Are Safe and Effective,”http://www.fda.gov/drugs/resourcesforyou/consumers/ucm143534.htm . 15 West, Michael, “Realities of Drug Ads in Free EHR, EMR,” The Happy EMR Doctor (September 20, 2011), http://www.happyemrdoctor.com/tag/drug-detailing/. 16 Gellad, Walid F., Haiden A. Huskamp, Angela Li, Yuting Zhang, Dana Gelb Safran, Julie M. Donohue, “Use of Prescription Drug Samples and Patient Assistance Programs, and the Role of Doctor-Patient Communication,” Journal of General Internal Medicine, 26 (December 2011), 1458-1464, http://www.rwjf.org/humancapital/product.jsp?id=73755.

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17 “An Unexpected Cost of Using Free Drug Samples,” U.S. News & World Report (September 5, 2008), http://health.usnews.com/health-news/blogs/on-health-and-money/2008/09/05/an- unexpected-cost-of-using-free-drug-samples. 18 McArdle, Megan, “New Drugs Cost Even More Than You Think,” The Atlantic (February 10, 2012), http://www.theatlantic.com/health/archive/2012/02/new-drugs-cost-even-more-than- you-think/252936/. 19 Benham, Lee, “The Effect of Advertising on the Price of Eyeglasses,” Journal of Law & Economics (October 1972), http://www.jstor.org/pss/724797. 20 West, Michael, “Realities of Drug Ads in Free EHR, EMR,” The Happy EMR Doctor (September 20, 2011), http://www.happyemrdoctor.com/tag/drug-detailing/. 21 “New ISR Research Shows Some Prescribers Want More – Not Less – Drug Detailing,” Press Release, ISR Research, (January 11, 2012), http://www.businesswire.com/news/ home/20120111005995/en/ISR-Research-Shows-Prescribers---%E2%80%93-Drug. 22 Greene, Jay P., Administrative Bloat at American Universities: The Real Reason for High Costs in Higher Education, (Phoenix: Goldwater Institute Policy Report no. 239, August 17, 2010), http://goldwaterinstitute.org/sites/default/files/Administrative%20Bloat.pdf. 23 See http://www.pdr.net/ and http://www.fda.gov/Drugs/ GuidanceComplianceRegulatoryInformation/Guidances/default.htm. 24 See Maine Revised Statutes, Chapter 22, subsection 2685(3), http://www.mainelegislature. org/legis/statutes/22/title22sec2685.html. 25 England, Cheryl, “The Devil Is in the (Academic) Details,” Southern California Physician (October, 2011), 22.

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