June 1, 2009

Ban on 'Gifts' to Doctors Unnecessary

There is a growing disconnect in the state's stance toward the pharmaceutical and biotech industry it's worked so hard to build. We love the struggling start-ups — the companies defined more by their spirit and promise than by their products — but treat the mature companies with approved medicines to market as pariahs.

We want pharmaceutical and biotech office buildings and laboratories, its high-paying jobs and certainly its lifesaving innovation, but when it comes time for companies to market their products we essentially say, "We don't trust you."

This disconnect is glaringly apparent in legislation that would ban "gifts" by pharmaceutical company sales representatives to health care providers. The bill's premise is that sales representatives boost sales of their companies' medicines with expensive gifts and that this practice is rampant and unregulated.

But this premise is myth, not reality. The battle over sales representative practices was fought and won by consumer groups and regulators a decade ago. The trips to Vegas, the expensive gifts, etc., were regulated out of existence long ago.

The federal Food and Drug Administration tightly regulates what sales representatives can say about their company's products. The federal Medicaid "anti-kickback" law prohibits sales representatives from making payments to physicians in return for the purchase, prescribing, endorsement or recommendation of a product reimbursed under a federal or state health care program.

In addition, The Pharmaceutical Research and Manufacturers of America has promulgated a strict code of conduct for sales representatives, which the vast majority of companies follow. And the American Medical Association has issued guidelines for doctors on the proper conduct of relationships with sales representatives.

We should not forget, as well, that a doctor's office is a doctor's office. Nothing requires a doctor to admit a sales representative. Doctors are perfectly free to refuse to see any particular or all sales representatives. And if a doctor wishes to see a sales representative, the encounter can occur under whatever conditions the doctor sets.

One condition doctors could require, but typically don't, is no sales rep meetings over a meal. As a practical matter, though, busy doctors will typically have sales representatives into their offices at lunch, and often the sales representatives will bring in (and pay for) the meal.

This is what the "gifts" legislation rests on: that for the price of a free sandwich, doctors with eight or more years of post-college training and immense professional liability would prescribe against their own, best professional judgment.

Proponents of the legislation say, "So what, even if the abuses today are nonexistent, even if the bill is redundant, how can additional regulation hurt?" Well, it's hurtful in the way all duplicative, redundant, unnecessary legislation is — it diverts creative effort away from productive work which, in the case of the pharmaceutical and biotech companies, is finding new cures and treatments for a host of diseases and conditions.

This super-sized regulatory burden would disproportionately hurt small start-up companies. The Pfizers and Mercks of the world, with armies of lawyers and staff to monitor federal law and the laws of 50 states, can add another person or two to figure out the subtle differences between a new Connecticut law, the laws of other states and federal law, draft compliance protocols and then monitor compliance.

Biotechs, on the other hand, have perhaps 40 employees and, if they're lucky, one product nearing FDA approval. Bear in mind, too, that most biotechs have no income — they have no products and therefore no sales — so all their revenue comes from private investors (take note, Connecticut: Private investors aren't writing checks these days). Thus, if Connecticut layers on a new regulatory scheme, biotechs will need to divert resources from scientific research and development to regulatory compliance.

This might be a good thing if there was a problem but, again, given the existing laws, regulations and codes of conduct already in place, this is legislation in search of a problem.

Paul R. Pescatello is president of Connecticut United for Research Excellence, a trade group for the state's bio-pharmaceutical and life science companies.