Drug Companies Face Backlash from New Foes ; Consumer Groups and Others Criticize Firms on Ethics and Marketing, but Industry Sees Itself as an Unfair Target

Article excerpt

In a private room at Smith and Wollensky, one of New York's top steakhouses, about 30 doctors slice into juicy sirloins as $400 bottles of wine are passed around. An expert in their field is there to talk about a specific ailment and the drug treatment he finds the most effective.

The stated purpose of the meeting is medical education. But it's being paid for - including the expert's speaking fee - by the pharmaceutical company that happens to manufacture the drug treatment being touted as the best. "That kind of thing is common," says one doctor who was at the recent event but asked not to be named. "It happens all of the time."

But it may not for long. Such "educational" dinners are just one of the marketing practices now under scrutiny as part of a larger assault on the nation's pharmaceutical companies. As drug costs escalate, several unlikely coalitions of consumer groups, corporations, state governments, and labor unions have joined together to challenge the once seemingly invincible industry.

They charge that some of the drug companies' business practices are misleading, unethical, and in some cases outright illegal. As a result, they believe it is contributing to the rise in drug prices, which is busting state Medicaid budgets and driving up the cost of insurance for average Americans.

The industry says it's being unfairly targeted in this anticorporate climate. It also warns that the current series of assaults will only undermine its ability to bring new cutting-edge drugs to the market, which will hurt consumers in the long term.

Still, the pharmaceutical industry is finding that a combination of lawsuits and grass-roots calls for change has challenged the dominance of lobbyists' once-powerful purse strings on Capitol Hill. The tide, say some health-policy activists, appears to be turning against them. "There's a backlash afoot in the country, and it's not just the angry activists," says Bradley Cameron of Business for Affordable Medicine. "It's the governors, the corporations, the labor unions, and the insurance companies."

Moves in Congress

The House recently took a turn weighing in. Lawmakers held a hearing on a bill that would close loopholes in a law that federal officials say major drug manufacturers are using to keep lower- cost, generic drugs off the market. Then, it was the Bush administration's turn. It issued a warning two weeks ago that many of the drug companies' longstanding marketing practices - including the lavish dinners, as well as the practice of offering doctors trips and tickets to Broadway shows and sporting events - could violate federal antifraud and kickback laws.

The Office of the Inspector General of Health and Human Services, which issued the guidance, was particularly concerned with drug companies hiring doctors and other healthcare professionals as "consultants." It also questioned the incentives given to insurance- benefit managers in hopes of persuading them to cover a particular brand-name drug. The primary concern is that these practices are prompting doctors to switch patients to new, more-expensive drugs that may not be any more effective than older ones.

The Pharmaceutical Manufacturers of America (PhRMA), which represents the brand-name drug companies, defends its practices and says that it put out a new set of guidelines for its sales representatives last summer. …