The federal prosecution of top executives from companies such as Enron, WorldCom, and Adelphia Communications has shone a spotlight onto what seem to be systemic problems of investor fraud. Despite oversight by corporate boards and the Securities and Exchange Commission, it seems to have taken the media glare of perp walks to begin to correct the problems and restore public trust.
Fraud and trust have become an issue–albeit a less public one, so far–with another set of business relationships: those between doctors and drug companies. Late last month, the New England Journal of Medicine launched an effort to change the nature of those interactions. A series of articles in the prestigious journal’s October 28 issue critique drug makers and doctors alike–and call for stronger outside regulation, including, in some cases, prosecution.
Like public companies, physicians and pharmaceutical firms have traditionally self-regulated their interactions–mainly with vague and unenforced ethical guidelines. Most times, little perceived harm came from pharmaceutical makers giving gifts to doctors, or paying for their travel or meals. But such inducements contribute to the rapidly increasing cost of medical care. The drug industry spends between $8,000 and $15,000 per physician each year to market its products. The National Institutes of Health Care Management Research and Educational Foundation (a Washington-based nonprofit) found that retail spending on prescriptions more than doubled between 1995 and 2000, growing from $64.7 billion to $132 billion. Around 25 percent of this increase–nearly $17 billion over five years–was attributed to a shift to the prescribing of expensive drugs that often offer only incremental improvement over existing drugs, many of which are about to lose patent protection and face cheaper generic competition. Doctors studying their colleagues have concluded that physician-drug company interactions, small and large, legal and illegal, are contributing to the increases.
In the past few years, federal prosecutors have begun to focus on the problem, using anti-fraud laws to go after interactions that may be harmful to patients. Some cases of fraud are pretty forthright, as when doctors charge Medicare for unnecessary procedures or drugs and receive kickbacks from the companies that provide them. One example vigorously pursued by federal prosecutors involved the prostate cancer drug Lupron. TAP Pharmaceuticals, the drug’s maker, encouraged urologists to bill Medicare the wholesale price for Lupron while the doctors received the drugs free or at discounted prices. U.S. Attorneys filed charges under both the criminal anti-kickback statute passed in 1972 to protect Medicare and Medicaid from fraud and the False Claims Act, which imposes civil penalties on people or companies who knowingly submit fraudulent claims for payment to the federal government. In 2001, the company settled the case, paying $290 million in criminal fines and $585 million in civil penalties. Several doctors involved faced criminal prosecution as well; at least one was convicted and sentenced to one year of probation and fined $20,000.
In other instances, though, “fraud” can be difficult to define. Most doctors will, if asked, confess to having gone to a “drug dinner.” Over a meal at a trendy restaurant, a group of doctors listens to an expert, often a medical school professor, lecture about clinical trials of a new drug or a study comparing the effectiveness of two different drugs. Often, papers published in medical journals on the same topic are handed out. The dinners are presented as a sort of medical education, informing doctors about new drugs. “There’s no blatant endorsement by the faculty,” says one surgeon-in-training who has been to many dinners, lunches, and departmental functions sponsored by pharmaceutical companies. “It’s usually as neutral as they can get, given the material”–namely, slides prepared by the sponsor, about studies performed by the sponsor.
Yet the entire evening, top to bottom, is an ad. The doctors trade their time for sumptuous cuisine, paid for by the sponsoring drug company. Worse, the medical papers that are distributed may be suspect. In a practice receiving increasing ethical scrutiny by professional associations of both physicians and medical writers, doctors may lend their names–again, in exchange for money–to papers based on data and literature searches performed by the drug companies. The papers are sometimes ghostwritten by medical communications companies–outfits that in some cases are subsidiaries of public-relations firms that also create drug advertising.