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You are here: Home / Economics / Free Markets Solve Everything / A Modicum of Corporate Responsibility

A Modicum of Corporate Responsibility

by John Cole|  December 16, 20138:20 pm| 24 Comments

This post is in: Free Markets Solve Everything, Fuck The Middle-Class, Fuck The Poor, World's Best Healthcare (If You Can Afford It), Outrage

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This is welcome news:

The British drug maker GlaxoSmithKline will no longer pay doctors to promote its products and will stop tying compensation of sales representatives to the number of prescriptions doctors write, its chief executive said Monday, effectively ending two common industry practices that critics have long assailed as troublesome conflicts of interest.

The announcement appears to be a first for a major drug company — although others may be considering similar moves — and comes at a particularly sensitive time for Glaxo. It is the subject of a bribery investigation in China, where authorities contend the company funneled illegal payments to doctors and government officials in an effort to boost drug sales.

Of course it required serious criminal issues to force them to do the right thing, but hopefully this will not happen in a vacuum. There was a great piece about this racket the other day in the Washington Post:

The two drugs have been declared equivalently miraculous. Tested side by side in six major trials, both prevent blindness in a common old-age affliction. Biologically, they are cousins. They’re even made by the same company.

But one holds a clear price advantage.

Avastin costs about $50 per injection.

Lucentis costs about $2,000 per injection.

Doctors choose the more expensive drug more than half a million times every year, a choice that costs the Medicare program, the largest single customer, an extra $1 billion or more annually.

Spending that much may make little sense for a country burdened by ever-rising health bills, but as is often the case in American health care, there is a certain economic logic: Doctors and drugmakers profit when more-costly treatments are adopted.

Genentech, a division of the Roche Group, makes both products but reaps far more profit when it sells the more expensive drug. Although Lucentis is about 40 times as expensive as Avastin to buy, the cost of producing the two drugs is similar, according to scientists familiar with the drugs and the industry.

Doctors, meanwhile, may benefit when they choose the more expensive drug. Under Medicare repayment rules for drugs given by physicians, they are reimbursed for the average price of the drug plus 6 percent. That means a drug with a higher price may be easier to sell to doctors than a cheaper one. In addition, Genentech offers rebates to doctors who use large volumes of the more expensive drug.

It’s as criminal as all the doctors out there who also own MRI clinics and what not and are always referring their well-insured patients there for expensive tests.

At any rate, this is why we need regulators.

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Reader Interactions

24Comments

  1. 1.

    Soonergrunt

    December 16, 2013 at 8:26 pm

    In the brief time I worked as a surgical technician in a civilian hospital after getting out of the Army, every single time we did a gall bladder removal on a patient with good insurance, we’d do an x-ray of the common bile duct with radiopaque dye just to make sure that the common bile duct wasn’t blocked.
    We rarely, if ever, did that on the charity cases or Soonercare (medicaid) cases. Apparently poor people don’t get CBD blockages.

  2. 2.

    Just Some Fuckhead, Thought Leader

    December 16, 2013 at 8:30 pm

    Fuckers just burnt me for some steroid eye drops – a tiny vial barely one inch high, $192! Cha-ching!

  3. 3.

    khead

    December 16, 2013 at 8:40 pm

    This post is why there is no way in hell I could’ve ever gone into pharmaceutical sales.

  4. 4.

    StringOnAStick

    December 16, 2013 at 8:45 pm

    I’ll bet there are more than a few people who are currently strongly considering getting out of pharmaceutical sales….. I wonder where GSK expects their sales force to make up the difference? We can all wait with bated breath for an investigative journo to break that story.

  5. 5.

    Mnemosyne

    December 16, 2013 at 8:49 pm

    My friend’s sister used to be in pharmaceutical sales for Pfizer (I think in the psychiatric division). She got out relatively quickly because she has a conscience, but man did she get some nice perks (conferences in Hawaii, rooms at the Ritz Carlton, etc.)

  6. 6.

    trollhattan

    December 16, 2013 at 8:52 pm

    University I attended has a school of pharmacy, so many of my friends were pharm majors and most went on to get their PharmD degree. It’s very rigorous and all the pharm graduates have FAR more pharmacology than MDs have. Yet, they’re aimed towards working behind a counter (spill, fill and bill), going into corporate retail or becoming what was once called “detail man” for the pharmacy firms–the folks who hand out Mont Blanc pens and golf passes to doctors.

    They’re criminally underutilized for what they’re trained to do–which is to consult to doctors BEFORE the scrip is written, as they’re the technical experts. Don’t know whether the career path has improved in the last decade or two.

  7. 7.

    prufrock

    December 16, 2013 at 9:02 pm

    @khead: I’ve known some pharmaceutical sales reps. All of the ones who made it a long term career were selfish assholes.

    All of them.

  8. 8.

    raven

    December 16, 2013 at 9:06 pm

    @Soonergrunt: I had shingles in my eye years ago and, as a result, my eye exams are covered by BCBS. I went for my checkup today and they ran am “optic nerve scan” just to make sure I didn’t have any issues. I KNOW that’s not something everyone gets.

  9. 9.

    Villago Delenda Est

    December 16, 2013 at 9:08 pm

    “Corporate Responsibility”

    An oxymoron up there with military intelligence.

    The example cited is utterly obscene. People profiting off the suffering of others.

  10. 10.

    patrick II

    December 16, 2013 at 9:19 pm

    I have a nerve damaged leg from an inappropriage operation performed by a doctor who had a secret contract with SmithCline. The guy was getting $200 for each device sold. This is a little late for me.

  11. 11.

    Ruckus

    December 16, 2013 at 9:27 pm

    @prufrock:
    Some of the one’s who didn’t stay long term were assholes as well. It’s a good gig as long as you have no conscience whatsoever, and like perks that you didn’t earn. All those conferences in HI and the bahamas that docs go to? Someone has to put them on, give the talks, drink with them play golf etc.

  12. 12.

    jonas

    December 16, 2013 at 9:49 pm

    Cousin of mine works in pharmaceutical sales. Makes absolutely ill money, I’m sure well into six figures a year after perks/bonuses — wife gets to stay at home with the kids, big suburban McMansion, nice vacations, couple of sweet cars, etc.

  13. 13.

    Howard Beale IV

    December 16, 2013 at 9:50 pm

    Psychiatric drugs are the biggest moneymakers, the most abused and the biggest source of fraud perpetrated against the government. Even worse-many of these when they go off-patent wind up costing the same as when they were patent-protected (I’m looking at you, Pfizer/Teva (Venalfaxine ER) and AstraZeneca/Apotex (Quetiapine))

    This blog is a must-read. Also, Too.

    How ironic that back a generation ago the biggest cost item in pharma’s balance sheets were R&D (especially since they were prohibited fron direct-to-consumer advertising)-now it’s marketing.

  14. 14.

    JasonF

    December 16, 2013 at 10:11 pm

    I saw a thread on the Avastin/Lucentis situation on Reddit the other day. The top comment was from an eye doctor who said the problem is that Lucentis is compounded by the manufacturer and Avastin is compounded by local compounding pharmacies. Compounding pharmacies are not tightly regulated — remember the meningitis outbreak from a few months ago? That was tied to shoddy practices at a compounding pharmacy. So doctors are basically unwilling to risk their patients’ eyes and health to save them a few thousand dollars.

    That’s not to let Genentech off the hook — it sells both drugs and therefore has little incentive to lower the price of Lucentis or increase the safety around Avastin — nor the doctors, but it’s not as simple as “what puts the most money in my pocket.”

  15. 15.

    JoyfulA

    December 16, 2013 at 10:26 pm

    @Howard Beale IV: I wondered why Cymbalta is so expensive. (My use is off-label because of side effects from generic Neurontin.) I learned why while I was in a med waiting room: The daytime TV show had a zillion Cymbalta commercials.

    So I order from India.

  16. 16.

    Just Some Fuckhead, Thought Leader

    December 16, 2013 at 11:20 pm

    @JasonF: Even if one was to buy that horseshit, that doesn’t explain why one is $50 and the other is $2000.

  17. 17.

    Howard Beale IV

    December 16, 2013 at 11:31 pm

    @JoyfulA: The Neuronitn replacement from Pfizer cost them billions in FDA fines.

    Your lucky your Indian orders aren’t impounded. Then again, considering how well the FDA has (not) been monitoring the foreign manufacturers of pharmaceuticals makes me even all the more jaundiced wrt Big Pharma.

    The real sad part? Its that some drugs are actually harmful and really don’t work, yet Big Pharma withholds Phase IV studies showing that their drugs don’t do squat-and that your doctor may be on the take.

  18. 18.

    goblue72

    December 16, 2013 at 11:34 pm

    Scratch your average doctor, and you’ll find a dyed in the wool winger Republican. The AMA is essentially a lobby shop for greedy a-holes looking for an angle to get them the moolah for an additional vacation home – or a new trophy wife.

    Obama was smart enough to know that in order to dramatically expand access to healthcare, he wasn’t going to be able to wage a war on all political fronts. Its why he cut all those deals with the healthcare industry – the healthcare industry completely torpedoed Clinton’s healthcare reform in 1993 and the administration didn’t want a repeat of that fiasco. (something the single payer firebaggers conveniently forget)

    So we got dramatically expanded coverage without much in the way of deep cost control. (which is basically the Massachusetts model – guaranteed issued, community rating, individual mandate, buyer subsidies) – a state which for the past few years has now been working on the cost side of the equation now that they have near universal coverage – Capitation: The Revenge, is in full force in the land of the bean and the cod – being fought tooth and nail by the big hospital/physicians networks.

    Our team picked its poison – we chose social equity first over cost control – that’s how we roll. But to maintain social equity, we’re going to have to go after those a-holes (Big Pharma, the AMA, etc) in order to keep costs from consuming the victory.

    Next time around, next time around. I hear there’s a former U.S. Senator / Secretary of State with experience in healthcare reform while fighting the weasels. She lost the first round with them, hopefully she’ll be willing for round two. Maybe she’ll run for President.

  19. 19.

    Howard Beale IV

    December 16, 2013 at 11:35 pm

    @Just Some Fuckhead, Thought Leader: Can you say kickbacks?

  20. 20.

    Howard Beale IV

    December 16, 2013 at 11:44 pm

    @goblue72:

    next time around. I hear there’s a former U.S. Senator / Secretary of State with experience in healthcare reform while fighting the weasels. She lost the first round with them, hopefully she’ll be willing for round two. Maybe she’ll run for President.

    Heaven help us if that comes to fruition-and the last thing we need is another fucking political dynasty a la Bush.

    Slick Willie passed the seeds that led to the Great Recession, and we’re still not out of the woods from that debacle-and Obama bet his political capital on an industry that is as bad (if not worse) as the financial industry.

    Don’t believe me? First, price out an EKG. Then price out a hip replacement. Let us know if they come in within 20% from the lowest to the highest.

  21. 21.

    Howard Beale IV

    December 17, 2013 at 12:03 am

    @trollhattan: It hasn’t, for the simple reason is they’ve been compartmentalized and if they’re behind the counter of a Walgreens/CVS/RiteAid, the software does all of the pharmacists work with regards to drug interactions.

  22. 22.

    FlyingToaster

    December 17, 2013 at 12:19 am

    @Howard Beale IV: Not entirely true. My pharmacy’s software caught a possible contraindication and the lead pharmacist called me. I called and checked with my PCP, and then had the pharmacist call and speak with her directly.

    When I did go to pick up the scrip, the pharmacist insisted on a consultation before giving it to me (to note the symptoms if things went wrong); again two months later when the dosage was increased. She’d read the literature forwarded by my PCP so she understood why we were going this route, and wanted to check what my previous reactions to a distantly related drug had been, and to confirm that I was informed enough to recognize any early symptoms.

    The system can work if everyone down the line — doctor, pharmacist, patient — just does their jobs.

  23. 23.

    Howard Beale IV

    December 17, 2013 at 12:34 am

    @FlyingToaster The fact that the pharmacy’s software caught the issue proves my point.

  24. 24.

    Ilya

    December 17, 2013 at 10:14 am

    @trollhattan: I see pharmacists claim this a lot on the Internet (never heard it in person, because by and large we don’t see them in hospitals in person). Here’s what they don’t tell you: average MD gets four years of medical school, average PharmD gets four years of pharmacy school. MD has one semester of pharmacology, Pharm D has six. Therefore, PharmD knows more pharmacology, right??? Except the MD then goes on to residency. So, a cardiologist has done 4 years of medical school, 3 years of internal medicine residency (where he prescribes drugs every single day), then 3 years of cardiology fellowship (where he prescribes just cardiology drugs every single day), then prescribes cardiology drugs for the rest of his life. Who do you think knows more about cardiology meds, the pharmacist or a cardiologist?

    Regarding Lucentis vs Avastin, this is a long-running debate in medicine, and there are strong points for each. I’m not an ophthalmologist (nor do I do oncology), so I don’t work with either medication. Let’s just say that a study finding two drugs have similar efficacy doesn’t mean that the two work equally well for EVERY SINGLE PATIENT. It means that if you have a 1000 patients randomized to one and a 1000 to the other, on average each group has similar improvement. To figure out who benefits from what is the reason we have doctors, and not just a computer dispensing meds.

    Finally, as someone who actually sees patients, I can tell you that if I told my patients “I have two meds to offer you, both are fully covered by insurance: one of them is $50, and the other is $2000. They work the same as far as I know. Which would you rather get?” – 99% of my insured patients would opt for the $2000, the same way people buy the more expensive bottle of wine because it’s better. This is one reason why a lot of doctors don’t discuss costs, because it can bias the patient towards one path or another for non-medical reasons.

    I think liberals would be more successful in recruiting doctors, dentists, pharmacists, nurses, and other healthcare professionals to the cause if they didn’t view every case of increasing health care costs as “ZOMG the doctors are stealing all our money”. I didn’t go through 10 years of post-college school and training for a low six-figure salary to be treated like a vampire.

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