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SEN. KENNEDY INVESTIGATING PHARMACEUTICAL MARKETING PRACTICES AGAIN; "PAYOLA II" HEARINGS POSSIBLE THIS AUTUMN: 1974 VERSION WAS BAD DAY FOR INDUSTRY

Executive Summary

Sen. Kennedy's (D-Mass.) Labor & Human Resources Committee staff is doing the early spadework in preparation for possible hearings on drug industry marketing practices. The hearings -- if they develop -- could be scheduled within the next two months. The staff's initial inquiry is focusing on company-sponsored symposia and conferences. The senator indicated the subject of his investigation in an Aug. 11 letter to drug companies. Kennedy asked, "if your company sponsored symposia or conferences, would you specify": the "number, location and subject matter of each" symposium or conference; the "number and profession of persons attending" and whether the invitation included spouses; and whether the firm paid for travel expenses, hotel, food or entertainment for attendees. The letter seeks data from 1988. Pharmaceutical marketing practices were the subject of one of Kennedy's most provocative and headline-generating hearings on the drug business in the mid-1970s. His criticism of drug marketing practices reached a highwater mark in mid-March 1974 with a two-day hearing with eight top industry execs on drug industry marketing incentives which Kennedy labeled as "payola." Among the current industry leaders who were at the witness table fifteen years ago are Pfizer's Gerald Laubach, Roche's Irwin Lerner, and Merrell Dow's James Buzard (in a previous position with Searle). Kennedy's Aug. 11 request for marketing information begins with a classic understatement: "You may recall that the Senate Health Subcommittee held hearings in 1974 concerning the advertising, marketing and promotional practices of the pharmaceutical industry and their possible effects on the prescribing practices of physicians." Noting that it has "been sometime" since his investigation of the industry, Kennedy proceeded to ask for an update on information on symposia, honoraria, gifts and samples. The letter pointsout that Kennedy asked for marketing practice information two times later in the 1970's. Those requestsdid not lead directly to hearings, but his staff was still actively investigating the drug field at the time [EDITORS' NOTE: See box on page 5 for a text of the Kennedy letter]. * The opening salvo in Kennedy's declaration of renewed interest in pharmaceutical marketing comes at a potentially dangerous time for the drug industry -- at the confluence of a number of unrelated events and trends: * The portrayal of FDA as a weak and ineffective regulator by the generic drug investigations under the sponsorship of House Energy & Commerce Chairman Dingell (D-Mich.); * A wider interest in drug pricing in preparation for the Medicare outpatient drug program; * A developing record of alleged scientific misconduct in the area of clinical development research; * The rapid buildup of drug detail forces; and * The proliferation of appeals to consumers, directly through ads and indirectly through talk-shows, celebrity endorsements and press-releases. The upcoming prospect of the government as the major buyer of prescription medicines under the Medicare outpatient drug program creates a politically palatable backdrop for an investigation of marketing practices. Sen. Pryor's (D-Ark.) Committee on Aging has been attempting to carve out a niche in drug pricing with the start-up of a recent series of hearings directly on pricing practices. The first Pryor hearing was held on July 18. A followup hearing is planned for this fall, but Pryor has been having difficulty eliciting responses to his written price inquiries to companies. Kennedy's experience in the 1970's indicated that it may be easier to criticize drug prices indirectly by trying to show marketing abuses than by going after price information. While the image of FDA as an inefficient regulator is being created by revelations from the regulation of generic drugs, the general public may not discriminate between segments of the industry in its view of FDA's reliability. Recent headlines -- spurred by the mass media agenda setters at The Washington Post and The New York Times -- put FDA's credibility as a regulatory agency at an ebb point. The agency is beginning to appear the "slow-moving target that bleeds profusely" as it was described by agency insiders during the last decade. The industry cannot rely on the image of a tough FDA to fall back on. In addition to the agency's current problems with the generic industry, it has been slow to respond to the recognized problem of biased symposia. FDA has been working on a guidance on company-sponsored symposia since early this year. In April, FDA Advertising and Labeling Director Ken Feather disclosed the agency's regulatory interest in the topic and told a conference on company-sponsored medical education and public relations that FDA "might be issuing" an informal guideline on appropriate company involvement in sponsoring medical education forums and symposia. That guidance is still in the formative stages. An internal FDA meeting is scheduled for Aug. 23 to discuss a preliminary draft of the guidance and to determine whether informal guidelines make the are the best approach for a response. The agency's current plan is to present the guidance in draft form at a Food & Drug Law Institute meeting Oct. 3-4 in order to get some feedback from the industry. Feather is also scheduled to be the featured speaker for an Oct. 26 teleconference, sponsored by East Norwalk, Conn.-based Logical Communications, on public relations activities, medical symposia, and direct-to-consumer ads. Some preliminary investigative work on the symposia subject has also been done by the government operations subcommittee in the House chaired by Rep. Weiss. Those hearings have focused primarily on allegations of scientific fraud and the misstatement of test results in research supported by the National Institutes of Health. However, there have been several questions raised by that committee about the nature of honoraria for symposia attendance ("The Pink Sheet" May 8, T&G-11). The paid spokesperson, from recognized medical experts to ex-Yankee star Mickey Mantle, was tested as good TV by the PBS Frontline news magazine series earlier this year in March ("The Pink Sheet" April 3, T&G-2). On the program, FDA's Feather was quoted in an interview as saying that the agency thinks that celebrity endorsements are "a way of getting around our regulations to some extent." The Ciba-Geigy Voltaren launch was the peg for the TV expose. Feather also characterized the drug marketing climate as "a rather cut-throat world out there." The build-up of detail forces and the intense battles between a handful of competitors in several markets, such as H[2] antagonists, ACE inhibitors and calcium channel blockers, may look to the Kennedy staff like a fertile field for re-investigation. The two-page Kennedy letter asks for detailed information on a range of marketing practices and requests that the data be sent to committee Staff Director and General Counsel Nick Littlefield by Oct. 1. SEN. KENNEDY's DRUG MARKETING PRACTICES INQUIRY [Reproduced below is the text of Sen. Kennedy's Aug. 11 letter to pharmaceutical company executives.] You may recall that the Senate Health Subcommittee held hearings beginning in 1974 concerning the advertising, marketing and promotional practices of the pharmaceutical industry and their possible effects on the prescribing practices of physicians. At that time, I wrote to your company, as well as a number of other companies, asking for information about such practices. As a follow up, I again requested updates of the same information in 1976 and 1979. The data provided in response to the updating requests reflected significant modification of such practices. The Labor and Human Resources Committee has a continuing interest in these matters. Since it has been some time since the last updating of such information, it would be helpful to the Committee if you would provide the following information for the year 1988. 1. If your company sponsored symposia or conferences, would you specify: a. the number, location and subject matter of each symposium or conference, b. the number and profession of persons attending each and whether the invitations included spouses, c. whether the company paid for 1) travel expenses, 2) hotel accommodations, 3) food and refreshments or entertainment of those attending, and if so, the type and cost of such expenses, and d. whether the company paid honoraria or other payments to those attending, and if so the amounts of such honoraria or payments, e. whether the speaker or speakers at such symposia or conferences were paid honoraria and/or expenses and if so, the amounts of such payments. If such speakers had also conducted clinical trials of a product discussed at the meeting please so indicate. 2. If any gifts were given directly or indirectly by your company or its representatives to students of medical or pharmacy schools, interns, residents, physicians, pharmacists or nurses, please specify the types, number and cost of such gifts, and the conditions under which or criteria whereby such gifts were given. 3. If reminder items were given by your company or its representatives to students of medical or pharmacy schools, interns, residents, physicians, pharmacists or nurses, please specify the types, number and cost of such reminder items, 4. If your company or its representatives dispensed samples of your products, please specify the number dispensed for each product, and the method of delivery. Please reply directly to Nick Littlefield, Staff Director and Chief Counsel to the Committee, Room 428, Dirksen Office Building by October 1, 1989. I am very grateful for your continuing cooperation and assistance.
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