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
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. …