The pharmaceutical industry, confronting sluggish growth, low prestige and the prospect of more-aggressive government oversight, is moving on several fronts to burnish its image and align itself rhetorically with the health reform goals of President-elect Barack Obama and the Democratic Congress.
Conceding that it has long been viewed as Republican-dominated, the industry's lobbying arm plans to spend tens of millions of dollars on an advertising blitz promoting Obama-style health coverage for every American. The first spot — sponsored by the drug lobby, consumer and labor groups, and health providers — will be unveiled today.
Beginning this month, drug companies also will voluntarily submit to a host of marketing restrictions in an attempt to preempt stricter regulations that lawmakers in both parties are pursuing.
"We had better self-police and stop doing the things that cause so much criticism, or we're going to get legislated and regulated by government," said W.J. "Billy" Tauzin, the Republican former congressman who runs the Pharmaceutical Research and Manufacturers of America (PhRMA), a trade association. The changes, he said in an interview, are an effort to move away from the industry's "slash-and-burn kind of policy" in response to previous regulatory and legislative efforts.
Even before Obama's victory, the drug lobby took a dramatic political turn: In 2008, for the first time in 18 years, industry contributions to Democrats were on par with money given to Republicans, according to an analysis by the Center for Responsive Politics, a watchdog group.
"PhRMA had been isolated into a one-party camp," Tauzin said. "We're trying to reposition as less of a partisan player."
The maneuvering comes at a time of great stress for America's drugmakers, which have not been enthusiastic proponents of past health-care reform efforts. After double-digit growth throughout the 1990s and much of this decade, the pharmaceutical industry is expected to grow less than 2 percent in 2009, according to the independent research firm IMS Health. Analysts say it will be difficult to improve on that in the next few years, given the weak economy and a dwindling supply of new blockbuster medications coming to market.
Strains in drug lobby?
Equally worrisome to many in the business is the arrival of a Democratic president who, in tandem with a Democratic-controlled Congress, is expected to add muscle to the Food and Drug Administration and press for an overhaul of the U.S. health system.
Some individual companies are moving independently, suggesting strains in the once-unified drug lobby. In mid-December, Merck announced that it was joining a coalition in support of broad health-care reform, including controversial measures to compare the performance and price of medications.
"We understand clearly that we are entering this debate at a time when the pharmaceutical industry's standing is low," Kenneth Frazier, president of Merck's Global Human Health unit, said in a speech. "We face a choice of acting from a place of fear of the potential harms that could occur to us in reform or acting on the hope of what reform could mean to our industry."
On the immediate horizon are two proposed regulatory changes that would dramatically alter how the industry markets its products.
Lavish industry spending
Sen. Charles E. Grassley (R-Iowa) intends to refile a bill requiring drug and biotech companies to report to the federal government all gifts or payments to physicians for research, speeches, travel, consulting or anything else. Companies failing to report would face financial penalties. The bill is in response to lavish industry spending, which critics maintain creates conflicts of interest for doctors.
Rep. Henry A. Waxman (D-Calif.), the incoming chairman of the Energy and Commerce Committee, supports legislation giving the FDA power to selectively ban direct-to-consumer advertising in the initial years a medication is on the market.
"It is in these first few years of a drug's life that drug companies often aggressively market their products," Waxman said in a recent speech. "This increases the number of consumers exposed to safety risks of new products, long before those risks are truly understood."
The drug industry supported a watered-down version of the Grassley bill and has opposed giving the FDA power over ads directed at patients. Instead, PhRMA members have adopted a voluntary marketing code.
As of the start of this year, about 40 companies agreed to stop distributing notepads, pens, T-shirts, soap dispensers, napkins and other tchotchkes festooned with product logos. Drugmakers describe the gifts as "reminder items" for doctors and nurses who may forget what cholesterol pill or diabetes medication they want to prescribe. But many consumers suspect that the goodies, as well as more extravagant gifts such as travel and meals, lead to medical decisions that have less to do with sound science than with clever marketing.
The voluntary code, which encourages but does not require companies to hire an independent auditor to monitor their compliance, also sets new restrictions on buying meals for physicians. Fancy restaurant dinners are out unless they include a substantive presentation from a medical expert. Food deliveries to a physician's office are still acceptable, as are some meals at conferences.
In 2005, the industry spent more than $6.8 billion on the goodies, meals and other office visits, according to a report in the New England Journal of Medicine.
Patient advocacy groups say the voluntary changes will fall short of altering the cozy relationship between doctors and pharmaceutical companies.
"I'm not sure it actually changes the number of meals the industry is providing all that much," said Allan Coukell, policy director of the Prescription Project, a Boston-based nonprofit that often finds itself pitted against drugmakers.
In March, drug companies will also begin following stricter advertising policies. Actors posing as doctors, as well as celebrity endorsers such as artificial-heart inventor Robert Jarvik, will be identified accurately in commercials. Suggestive ads for products such as the impotence drugs Viagra and Cialis will be pulled from day time slots when children are likely to be watching. And ads will contain information on programs designed to help patients understand and afford the medications.
"You're seeing a greater trend toward transparency and openness among pharmaceutical companies to let people know how we do business and what services are available," said AstraZeneca spokesman Tony Jewell. AstraZeneca's spots conclude with a plug for the company's prescription savings program, information that Jewell says helps patients.
Tauzin defended direct advertising as a means to not only educate patients about treatments but also alert them to illnesses they may not realize they have. Even so, he recognized the "perception problem" of the ads, a problem he characterized as "you're smoking in bed and the house is on fire."
In a speech last month, Roche Pharmaceuticals chief executive William Burns hinted that the Swiss company may go further than the PhRMA guidelines.
"Direct-to-consumer promotion was the single worst decision for the industry," he said. "When industry says, 'We're spending all the money on [research and development],' but actually it's spending it on DTC advertising to preserve margins, it doesn't get much credibility."
Grassley and consumer watchdog groups say they are far more troubled by sizable industry payments to doctors for activities often labeled as consulting, research or continuing medical education. In addition, they note that the PhRMA guidelines have no enforcement mechanism.
"People are less apt to violate a federal law than a code of ethics of its own profession," Grassley said. He also said companies making biotech drugs, including a number of very expensive new treatments for cancer and other diseases, should not be exempt. So far, the trade group BIO — the Biotechnology Industry Organization — has refused to adopt even the PhRMA code.
The industry's voluntary efforts are "a start, not an end," Grassley said in an interview. "You can't say it's a substitute for what I'm trying to do."