2006, No.7

  Viola Korczak
» Ethics -- the practical realities
» Sustainability 3.0 -- The Innovation Imperative
··Codes, codes and more codes
··Pharmaceuticals ... again
··Whistle-blowing in the wind...
··Ratings vs. Responsibilities
  Viola Korczak

The Pharmaceutical Industry's Code of Conduct is not working

GB: Viola, thank you for speaking with us. Roche have been accused of entertaining doctors rather lavishly – more lavishly than the code of conduct would allow. Do you have any comments about that particular incident?

The problems in the pharamceutical industry


VK: Well, I’ll begin at the start by saying a little bit about the Medicines Australia Code of Conduct just to give you some perspective. The Code of Conduct has actually been around since around 1960 and it’s been updated every three years or so; the ACCC has just approved version 15. Medicines Australia is the peak body of the pharmaceutical industry in Australia and it regulates pharmaceutical advertising. Medicines Australia has a monitoring committee which evaluates any claims about breaches that are brought before it. We at the Australian Consumers’ Association believe that this code is ineffective for several reasons. The fines that are imposed on companies found to be in breach are quite low: the maximum fine that can be levied against a company is $200,000, but we found in the last Medicines Australia annual report that none of the fines were over $150,000 and that most of them were around the $25,000 mark which is really a drop in the ocean for an industry as big as this one. The pharmaceutical industry is the third largest exporter of manufactured goods in the country and the fines simply do not deter repeat breaches. We see the same companies breach the Code time and again.

For example, we made a complaint about a product that Bayer was advertising, called Levitra, for erectile dysfunction. Bayer produced ads of bananas, one pointing down and the other one pointing up – they were quite tacky actually – and they advertised these in medical journals, in newspapers, anywhere they could, offering a money-back guarantee for the drug. General Practitioners were sent a script with a money-back voucher so when the patient was prescribed the medication, they were also given the voucher. In effect, this is direct consumer advertising in all but name, so we made a complaint to Medicines Australia and, even though Bayer was found to be in breach of the Code, it was not fined. The company had to remove all the ads, issue a corrective letter to all health professionals who received the information and also publish a corrective advertisement in the health professional journals where the ad appeared. However, the complaint took six weeks to process and Bayer continued to run the ads during that time and was not fined. Bayer is a repeat offender – and it is likely to do it again because the sanctions are simply too low.

GB: So, if the Code of Conduct or self-regulatory system is not functioning, what would the Australian Consumers’ Association like to see in its place?

VK: Ideally, legislation enforced by the appropriate regulator. Failing that, we would want the industry to develop an effective code of conduct that meets certain policy objectives established by legislation. So, we would argue for higher sanctions, more effective monitoring and so forth.

GB: Could you explain some more about direct consumer advertising?

VK: While it is legal in the US and in New Zealand, it is prohibited in Australia and most other OECD countries. However, companies get around the prohibition in various ways. For example, by running campaigns that look like educational awareness-raising campaigns which in fact promote a particular drug. Just to give you an example, there was a recent advertising campaign for a drug called Xenical. They had a picture of a person who was overweight and the message was, “Go ask your doctor”. Although the ads could not name the drug, they used the colours of the drug and so forth on the advertising, so when the patient approached their doctor they would ask about it and be directed to this drug.

We think that the current situation has a number of serious problems. (These can be found on our web site.)

  1. Ineffective monitoring. For example, with the Bayer advertisement example I mentioned earlier, that situation really should have been picked up by the monitoring committee, but it was not.

  2. Lacking transparency. Little is known about the training that pharmaceutical representatives have to undertake. I’ve tried to obtain some information but have been unsuccessful. Also we don’t know very much about how much the companies are spending on educational activities and how often.

  3. Ineffective sanctions, which I’ve already spoken about.

  4. Direct advertising to consumers. Companies do this in a number of ways.

  • by masquerading advertising as an education campaign, such as the Xenical “Ask your doctor” campaign;

  • through media stories which are presented as medical breakthroughs. An article in the current issue of the BMJ outlines one example of how that happens;

  • by sponsoring high profile support groups. Again, the BMJ article gives a good example, but a further example would be the “Healthy Weight Task Force” which was sponsored by Roche;

  • by subsidising academics to provide their expert opinions about particular drugs or by sponsoring prizes for journals’ awards.

Generally speaking, the pharmaceutical industry spends twice as much on marketing as it does on research and development and the way that they go about it is obviously quite successful in targeting doctors and consumers and will continue to do so because it increases their bottom line.

Another issue is the lack of regulation of pharmaceutical representatives. There was an article in the New York Times a couple of months ago about how pharmaceutical companies in the US employed cheer leaders to act as pharmaceutical representatives to visit doctors because they found that if the representative is more attractive they are more likely to have more influence with the GP and their prescribing patterns. How long it will be before this happens in Australia.

The lack of evidence to support the many advertising claims is another issue as is advertising in software. “Medical Director” is one of the more commonly used software packages used by GPs. In this package a lot of ads pop up and this is a concern because (a) the doctor is bombarded with all these ads and (b) the consumer can see the screen. When we have raised our concerns about these two issues, with the Federal Treasurer but his principal response was that it does not have any effect. The companies’ attitude is that even if the consumer can see the screen it has no effect, besides it makes the software cheaper. If this form of marketing did not work, they would not be spending money on it, so obviously it is a way of influencing doctors’ prescribing patterns.

Towards some solutions


GB: The Roche case was also a case of an educational campaign, correct? Can the Code distinguish between what is an educational event and what is a product promotion event?

VK: The ACCC has moved to make the difference more transparent. They have approved the new Code but on the condition that Medicines Australia implement a new mechanism whereby companies have to report every six months how much they spent on these educational campaigns and provide some information about it. That is a step in the right direction but definitely more needs to be done. Medicines Australia has opposed this suggested mechanism, so it remains to be seen as to whether it will actually be implemented or not.

We would like to see more independent drug detailers, rather than drug sales representatives. The National Prescribing Service, for example, has a program with about 150 detailers which is very few people in comparison with the over 3,000 pharmaceutical representatives. Independent detailers trained by the National Prescribing Service provide independent information about drugs and conditions whereas the pharmaceutical representatives tend to focus on the drug product(s) of the sponsor that hires them, so obviously the information they offer may not be all that reliable.

GB: There’s a conflict of interest?

VK: Yes, definitely.

GB: How would independent drug detailers be nominated and paid?

VK: It all comes down to funding. The savings that the Government could make on the PBS as a result of more stringent regulations on pharmaceutical advertising could be used to fund the NPS to train more independent drug detailers.

GB: There have been some suggestions in other sectors that the cost of regulation should be administered by the market place, as it were. Companies would have to pay for a private licensed body to regulate them. For example, Bayer and every pharmaceutical company would have to pay someone to provide the appropriate monitoring and regulation of what they do and that it would come out of their purse rather than the public purse. Do you think such a system would work in the pharmaceutical industry?

VK: If it was completely independent, yes we would support that. At the moment we find that pharmaceutical advertising with its self-regulatory system is not very effective because it is very much determined by the industry itself. It does not cost the Government anything directly but it does cost the public indirectly because, for example, if people are taking drugs that they don’t need because they have been heavily advertised, then there may be long-term health implications and, if they use the public system, they’ll be using public resources. Another way that Government spending on pharmaceuticals can be improved is by reducing that extra market for drug products so that people are no longer taking drugs that they do not need.

GB: Is this related to charges of manufactured diseases, that drug companies promote the description of conditions that are really not diseases in order to increase sales?

VK: Exactly. For example, menopause has become medicalised. It is not a condition, but a part of life that all women at one point experience. Something similar has happened with female sexual dysfunction. A study in the US found that 46% of women suffer from this condition but then later it was discovered that there were some conflicts of interest in that research. A number of such cases have been well detailed in the British Medical Journal (BMJ).

GB: Returning to the avenues for improvement, you mentioned independent drug detailers. Is Medicines Australia the appropriate body to put these improvements in place?

VK: No, we do not think so. We would prefer an independent regulator adequately mandated by legislation.

GB: Who should work out, objectively speaking, what is educational and what is product promotion? Is there a way of distinguishing between those two things objectively?

VK: I think there is. The Colleges could definitely play a part here.

GB: In the context of the alleged lavish meals, the Code of Conduct says that hospitality at such event should be modest, there is no clear-cut criterion about what is modest and what lavish.

VK: No, there isn’t. It’s better for the industry that it remains ambiguous. The Code has improved over the last few years, but it simply has not gone far enough because pharmaceutical companies are still reaching doctors and consumers in inappropriate ways. The President of the AMA initially commented about that case, saying, “I have dealings with the pharmaceutical industry and I don’t have a problem with it”, but it took him two or three weeks and he did a total about-face and now he’s saying that doctors should in fact limit their interaction with the pharmaceutical industry.

Studies have shown that doctors who do have dealings with the industry are influenced by them. The Royal Australian College of Physicians has a guideline which sets out ethical behaviour in this context, stipulating how doctors should limit their interaction, what is acceptable and what isn’t. So, it’s obviously a concern.

GB: You have already indicated that drug companies spend more on advertising than they do on research and development as well as the issue of lack of independence of research projects funded by them. How could we go about better regulating this without restraining their freedom about what they do with their money?

VK: I think disclosure is the key. If a company funds a research project, it should be clearly stated for all to know. It should not be something that others have to dig around to find out. I think that would definitely improve the image of the industry as well, introducing such a transparent mechanism would have positive impacts for both the researchers and the company.


GB: So, you’re not against companies funding research?

VK: In a perfect world research should be funded in a completely independent and transparent way. In reality, there is still a role for industry but it must be done in an ethical way, particularly for transparency in funding and declaration of interest in particular lines of research.

GB: Is there an argument for something like a specific taxation regime for pharmaceutical companies to raise money that can be directed into research through the Government.

VK: I think it’s definitely an idea worth exploring further.

GB: Thank you very much Viola.

VK: Thank you.

Viola Korczak is the Policy Officer, Health at the Australian Consumers' Association.



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