Pharmaceutical Companies and Doctors

According to the Pharmaceutical Research and Manufacturers Association (PhRMA), the U.S. conducts the majority of the world’s research and development in pharmaceuticals, employing over 3.4 million jobs in the United States in 2012 (The Pharmaceutical and Biotech Industries). Of these jobs, 72,000 were as pharmaceutical company representatives. The representative’s job is to inform doctors of the newest drugs on the market; doctors are the target audience for promoting their drug, not civilians, because doctors prescribe these drugs and thus are the primary factor of demand The Pharmaceutical industry spent $27 billion on drug promotion in 2012, with just $3 billion of the marketing going to ad campaigns for the consumer; the remaining $24 billion was spent on advertising was directed at doctors (Persuading the Prescribers). Some of this advertising comes from giving free samples for doctors to give to patients. This may seem innocent, but it proves fruitful for companies when their drug works for their patient, who then has to start paying for the drug once the sample runs out (Spiegel).

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http://www.skainfo.com/health_care_market_reports/2012_promotional_spending.pdf

The methods of influencing doctors have changed since 2002’s PhRMA Code on Interactions with Healthcare Professionals. Rather than free sporting events and fancy meals, doctors are currently asked to be event speakers with the title “Thought Leader”. This catchy title is flattering for the doctor, who simply has to stick to a script and describe the company’s product while getting paid a lot of money to do so (Spiegel). According to a recent anthropological study, a pharmaceutical representative said he would give a doctor $1500 to speak at an event. Afterward, the representative would see the doctor who spoke, not the attending doctors, prescribe an additional $100,000 to $200,000 worth of prescriptions of that company’s drug. In general, the increase in prescriptions are not noticed by the doctor; they believe that they remain working in the patient’s best interests, uninfluenced by their own talk. But the pharmaceutical company still gets an increase in amount of doctor prescriptions, and so continues this practice as it is seen as a good investment (Spiegel).

Photo credit: http://www.drugwatch.com/how-big-pharma-influences-doctors.php
Photo credit: http://www.drugwatch.com/how-big-pharma-influences-doctors.php

The huge influence pharmaceutical companies hold over doctors has both moral and economic implications. The influence becomes problematic when the doctor begins prescribing unnecessary amounts of drugs to the patient, as happens in the United States due largely to these tactics by pharmaceutical companies. The average person in the United States spends $1000 per year on pharmaceuticals; this is 40% more than the next highest spender, Canada. This is partly due to higher drug costs in the US; prices for brand-name, patented drugs are twice as expensive as those in the UK and Australia. This is largely due to government regulation in other countries such as the use of price ceilings to regulate the price of medicines and by setting limits to how much they will reimburse. Because there is no such regulation in the US, prices can be easily raised as doctors write an increasing amount of prescriptions for patients (Paris). This is not always necessary, however, because as the quantity demanded by the doctors continues to increase. The growing influence of pharmaceutical companies on the amount of prescriptions a doctor writes causes the price and the quantity demanded to shift up and to the right on the (below) curve, thus increasing revenue.

Photo credit: https://economicobjectorvism.files.wordpress.com/2007/07/oil_graph_1.jpg
Photo credit:https://economicobjectorvism.files.wordpress.com/2007/07/oil_graph_1.jpg

To better understand the relationship, there is now a website by the Centers for Medicare and Medicaid Services (CMS) https://openpaymentsdata.cms.gov, which details the amount of money every doctor has received in the past two years from pharmaceutical companies. This includes the amount of money paid to them for being “Thought Leaders” as well as how much money was spent on the doctors in the form of informal lunches and dinners. You can search some doctors by name or city. Some doctors are not registered because they have not received any money. One doctor in Boston received $128,815.83 worth of food, travel expenses, and financial money for being a “Thought Leader” for Boehringer Ingelheim Pharmaceuticals, Inc., E.R. Squibb and Sons, L.L.C., Janssen Pharmaceuticals Inc., Pfizer Inc., and more (Zusman). It is up to you to decide if this is ethical and consider the various implications of such payments from pharmaceutical companies, but in the meantime, I encourage you to searchhttps://openpaymentsdata.cms.gov if only to search by pharmaceutical company name and see how many transactions and how much money they have paid to doctors over the past year.

 

Works Cited 

Paris, Valerie. “Why Do Americans Spend so Much on Pharmaceuticals?” PBS. PBS, 7 Feb. 2014. Web. 18 Feb. 2015. <http://www.pbs.org/newshour/updates/americans-spend-much-pharmaceuticals/&gt;.

“Persuading the Prescribers: Pharmaceutical Industry Marketing and Its Influence on Physicians and Patients.” Persuading the Prescribers: Pharmaceutical Industry Marketing and Its Influence on Physicians and Patients – Pew Charitable Trusts. Pew Charitable Trusts, n.d. Web. 17 Feb. 2015. <http://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2013/11/11/persuading-the-prescribers-pharmaceutical-industry-marketing-and-its-influence-on-physicians-and-patients>.

“The Pharmaceutical and Biotech Industries in the United States.”Select USA. Web. 17 Feb. 2015.http://selectusa.commerce.gov/industry-snapshots/pharmaceutical-and-biotech-industries-united-states

Spiegel, Alix. “How To Win Doctors And Influence Prescriptions.”NPR. NPR, 21 Oct. 2010. Web. 18 Feb. 2015. <http://www.npr.org/templates/story/story.php?storyId=130730104&gt;.

Zusman, Randall Mark. “Summary Information – General Payments.” Open Payments. CMS, n.d. Web. 18 Feb. 2015. <https%3A%2F%2Fopenpaymentsdata.cms.gov%2Fphysician%2F253421>.

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One thought on “Pharmaceutical Companies and Doctors

  1. taylorqjohnson says:

    It is interesting how there is a disconnect between demand for pharmaceuticals (by doctors) and the actual consumers of the pharmaceuticals (the patients). I wonder if this type of disconnect in demand is present in any other markets.

    Like

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