Big bad pharma: an ethical analysis of physician-directed and consumer-directed marketing tactics.

• Author: Connors, Amanda L.
• Position: COMMENTS

1. INTRODUCTION

   "We try never to forget that medicine is for the people. It is not for the profits. The profits follow." (1) This noble mantra is long-forgotten in today's world of extreme pharmaceutical marketing tactics, which are frequently deceptive and supported by biased information. Pharmaceutical manufacturers often appear to forget their moral purpose and instead engage in the hard sell, stopping at nothing to reach their goals. If that means providing false of misleading data to physicians and consumers, then so be it. Pharmaceutical sales teams are a force to be reckoned with, comparable to an army prepared to enter a battle, equipped with powerful tools to take down anyone who stands in their way.

   Through distribution of free drug samples, skewed marketing materials, meals, and more, the industry engages in deception hidden by a veil of flattery and free gifts. (2) Although free sample distribution does present some benefits to patients, it is uncontrolled and accompanied by distorted data and gifts. (3) Physicians often stand to benefit a great deal from this symbiotic relationship with brand name pharmaceutical manufacturers ("big pharma"), and are unwilling to sacrifice the free gifts and luxurious trips for patients' best interest. Distribution of gifts by the pharmaceutical industry has formed a rift between what physicians are morally obligated to do and what physicians personally desire, creating a breach of fiduciary duty owed to patients. (4) Upon entering the medical profession, a physician agrees to always act in his or her patients' best interest. A physician who accepts bribes puts his own personal interests ahead of his patients' best interest. The medical profession remains one of the few professions trusted by the public. Thus, practices affecting the medical profession must be held to a stricter standard of behavior to maintain that trust.

   Big pharma's marketing efforts are not limited to physicians. In fact, a great deal of money and effort is spent every day completely bypassing physicians and appealing directly to consumers, through television, print, and internet advertisements. (5) These direct-to-consumer ("DTC") advertisements are frequently filled with covert, deceptive, and confusing messages. DTC ads are particularly dangerous, as lay persons are not trained with the medical know-how to discern fact from fiction.

   In its current form, the pharmaceutical industry is virtually free of regulation, aside from a few voluntary guidelines. (6) In addition to guidelines created by the American Medical Association ("AMA") and other professional groups, the industry has promulgated self-imposed guidelines with respect to both physician-directed and consumer-directed marketing. These guidelines, however, are all highly arbitrary, discretionary, and unenforceable. Although the United States Food and Drug Administration ("FDA") does impose limited parameters by which the industry must abide, the current regulations entrust an excessive level of power and discretion to manufacturers. Furthermore, despite the amending of previous Pharmaceutical Research and Manufacturers of America ("PhRMA") guidelines, it is unclear if the new regulations will be enough to protect patients. The current system appears to remain inefficient and dangerous to consumers.

   This paper argues that pharmaceutical manufacturers are exploiting both physicians and patients. The United States is in dire need of more stringent regulation with respect to brand name pharmaceutical company marketing. (7) The current recommended guidelines and relaxed FDA regulations are not sufficient. Regulation should be increased through the enactment of laws. Specifically, direct contact between pharmaceutical sales representatives and physicians should be minimized or eradicated entirely, and televised drug advertisements should be prohibited. In order to maintain an incentive for big pharma to continue investing in research and development, safeguards should be implemented, such as allowing manufacturers to mail samples to physicians and permitting printed drug advertisements directed toward consumers.

   Part II of this paper will discuss background information regarding: (1) the phases of drug development, with a focus on the marketing phase; (2) the profit margins of big pharma; (3) the history and current form of the FDA; and (4) the current guidelines regulating physician-directed marketing.

   Part III will discuss the ethical issues surrounding physician-directed marketing including: (1) the tricks of the trade, specifically with respect to how big pharma lands the sale; (2) the positive and negative impacts of free sample distribution; and (3) the impact of physician-directed gifts.

   Part IV will provide background on DTC advertising, along with the current U.S. standards for DTC advertisements. Part V will discuss the ethical issues and consequences of DTC ads, including: (1) the manufacture of disease by big pharma; (2) the "me-too drug" phenomena; and (3) the consequences of DTC advertising.

   Part VI will discuss the problems with the existing state of the law. Part VII will suggest methods for attacking these problems.

2. BACKGROUND

   1. Phases of Drug Development

      Pharmaceutical manufacturers generally undertake several phases during drug development, two of which are particularly relevant. The first phase, research and development, is the process of discovering and extensively testing new compounds. (8) Research and development can take years; very few newly discovered compounds make it through to FDA approval. (9) The second phase that is relevant for this paper is drug marketing, which has developed into a controversial topic in recent years with the advent of the "blockbuster drug." (10)

      "Blockbuster drugs are superior selling drugs whose" profits exceed all other drugs, ensuring continual profit streams for a pharmaceutical manufacturer. (11) Generally, annual sales of each individual blockbuster drug exceed one billion dollars. (12) Typically, the most aggressive pharmaceutical sales tactics are reserved for blockbuster drugs under patent protection. (13) After a patent monopoly expires on a product, a pharmaceutical manufacturer has no remaining incentive to market that product because generic manufacturers can quickly obtain approval to sell generic versions of the brand name drug. (14) Generic drugs send the market value of the once-patented drug plummeting. (15) In addition, generic versions are usually much less expensive and equally as effective as the brand name version. (16)

      Big pharma has recently come under attack, with many experts claiming that marketing costs substantially outweigh funds put into research and development. (17) Critics claim that this discrepancy compromises the ultimate duty of the drug manufacturer, which is to find cures to the world's most deadly diseases. (18) In 2001, nine out of nine leading pharmaceutical companies spent more money on marketing and advertising than on research and development, with eight out of nine spending two times as much on marketing and advertising. (19) On average, big pharma employs 81% more people in marketing and advertising than it does in research and development. (20)

   2. Profits by Big Pharma

      A lack of intrinsic limits on the pharmaceutical industry has led to high profits. (21) It is estimated that big pharma makes between "a 15 to 20 percent annual profit," (22) which is well above most industries in the U.S. (23) In the 1990s, the profit gap for big pharma was 15.1%, compared to 4.1% for other Fortune 500 companies. (24) Big pharma "ranked first in 2001 ... [for] return on revenues, return on assets, and return on shareholders' equity." (25) This hefty profit margin can be at least partially attributed to a free-market economy and deregulation of the pharmaceutical industry. (26)

      The U.S. holds the position of being "the most highly medicated [country] in the world," with over three billion prescriptions dispensed in 2002 alone. (27) "[P]rescription drugs ... account[] for approximately 9.4 percent of all health care expenditures in the United States.... [O]utpatient prescription drugs in retail outlets in the United States exceeded $154 billion in 2001." (28)

      High profit margins translate into high paying salaries for pharmaceutical executives. One report compiled a list of the top ten highest paid pharmaceutical executives in the industry for 2001. (29) Average annual compensation for the ten highest paid executives was over $23 million. (30) The former Bristol-Meyers Squibb Co. Chairman and CEO, C.A. Heimbold, Jr., earned $74.89 million in 2001. (31)

   3. FDA--Historical Roots and Current Form

      The pharmaceutical industry is primarily regulated by the FDA, which was constructed in the mid-nineteenth century (32) in order "to protect consumers from the dangers of fraudulent, impure, or mislabeled substances." (33) Given its "regulatory functions" in the passage of the Pure Food and Drugs Act, the FDA was the first formal agency in the U.S. with the sole responsibility of regulating the food and drug industry. (34) In 1938, the Federal Food, Drug and Cosmetic Act ("FDCA") (35) was passed in response to a "public outcry" for more stringent safety regulations on food and drugs throughout the U.S. (36) This Act required drug manufacturers to demonstrate drug safety prior to market sale. (37) This Act remains the foundation of the FDA to this day. (38)

      In 1962, the Kefauver-Harris Amendments were enacted, requiring drug manufacturers to demonstrate efficacy in addition to safety for each of a drug's intended uses. (39) The amendments were a reaction to the thalidomide disaster across Europe in the 1950s. (40) It also signaled a new era in the FDA, one in which broader control would be exercised over food and drug production. (41) In its current form, the FDCA also regulates drug advertising and labeling. (42)

      Throughout the 1980s, the FDA began to...