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Executive Summary

The Dec. 11-12 pharmaceutical promotion and marketing hearings before Sen. Kennedy's (D-Mass.) Committee on Labor & Human Resources were the "swan song" for the committee's chief investigator Walter Sheridan. At 65, Sheridan is leaving Capitol Hill and stepping down as a key aide to the Kennedy family after an affiliation of almost 30 years. In a tribute at the end of the Dec. 12 hearing, Kennedy noted that Sheridan was also the chief investigator in the "initial committee hearings on [pharmaceuticals] in the 1970s, and I have no doubt he'll come out of retirement in the year 2000 or whenever the industry steps out of line again." Sheridan's retirement was divulged at the last moment -- befitting his close-to-vest style for hearings. His departure may indicate a less inquisitory approach to the pharmaceutical industry by Kennedy in the future. Kennedy's description of the hearings as a "swan song" for Sheridan probably goes a long way toward explaining why Kennedy chose late 1990 to return to the pharmaceutical industry. Prior to the hearings, there was speculation on Capitol Hill that the investigations were being undertaken to position Kennedy to play a key role in any upcoming changes to the FD&C Act. From Kennedy's comments, it appears the hearings may have been designed much for Sheridan's benefit -- to let Sheridan take one last crack at an issue and industry of keen interest to him. Kennedy attributed the success of previous hearings to Sheridan's behind-the-scenes work. "There's a famous saying that there's no limit to what you can accomplish in this town if you're willing to give someone else the credit," Kennedy said. That may be the "secret" to how Sheridan has "accomplished so much." The senator recalled that his brother Robert Kennedy once said that "investigators are the backbone of the hearings, and without their work we'd have nothing." The chairman added that "those words are still true, and in all these years he's continued to make them true." Kennedy ended the hearing with: "Walter Sheridan, we'll miss you. Committee adjourned." Overall, the tone of the Dec. 11-12 hearings was subdued. Only a few times did Kennedy exhibit the tough, pressing style of his earlier inquiries into the drug industry. Kennedy did not convey the zeal or vigorous interest of a congressional figure staking out a field for a major investigatory effort or legislative thrust (see box for a transcript of one of the livelier exchanges of the hearings between Kennedy and PMA President Mossinghoff). In the 1970's, the Kennedy hearings built a platform for an ambitious legislative program: first a specific proposal to regulate pharmaceutical promotion and then an effort to revise the FD&C Act completely. Legislatively, the Kennedy investigations are most likely to come back in the form of refinements and additions to the FDA Emergency Bill ("debarment bill") proposed by Rep. Dingell in the just-ended Congress. That bill would have focused exclusively on the generic drug industry. The alleged abuses in promotional practices by the brandname companies highlighted by Kennedy could build Capitol Hill support to broaden the Dingell approach. Several witnesses suggested changes in FDA regulatory authority that could be incorporated in a new enforcement bill (see related stories, p. 9 and T&G section of this issue). The hearings also could feed the continuing debate over the extent of the HHS Inspector General's role in enforcing regulatory issues in the pharmaceutical area. The IG's role could be significantly more important with the greater attention being paid to drug prices in the state Medicaid programs (see story, p. 6). The relationship between the investigation of promotional practices and Medicaid payment was reinforced by a statement submitted by Sen. Pryor (D-Ark.) at the hearing. Maintaining that the taxpayer is being charged for promotional expenses through government purchases of drugs, Pryor said: "For years and years, we have been subsidizing excessive and perhaps unethical promotional activities by the drug companies. It is time this came to an end." Kennedy plans to raise the subject of promotional practices again with FDA Commissioner Kessler in hearings after the New Year. The issue will be raised as part of Kennedy's delayed confirmation/oversight review of Kessler's positions on a wide range of FDA topics. The background digging for the Dec. 11-12 hearings turned up examples and data on the rapidly expanding promotional efforts of the industry (see story, p. 13). However, they did not show up as theatrically in the hearing room as they did 17 years ago. Perhaps, the most effective showmanship of the first day was a sample Video News Release on the use of theophylline in pediatric asthma. A marketing expert witness (Eugene Secunda, Baruch College marketing professor) exhibited how news anchors can be inserted into a video release to make it look like the work of a local TV investigative team. Secunda acted out the part of an anchor prompting the prepackaged interviews. Two factors contributing to the different tone of the current hearings were PMA's eleventh hour adoption of the AMA guidelines on gifts and travel expenses and the credible and measured testimony of the lead-off witness, ex-Abbott public affairs exec, David Jones. By adopting the AMA guidelines at its Dec. 6 board meeting, PMA appeared to take some of the heat out of Kennedy's charges. The senator acknowledged the PMA guidelines in his opening and closing statements on the first day. In his opening statement, for example, Kennedy "commended" both PMA and AMA for their guidelines. Kennedy was obliged to take the tack of asking each witness what they thought of the guidelines. All but one witness said adoption of the new guidelines was a positive "first step," but many indicated that enforcement would be needed. When questioning PMA and AMA on Dec. 12, Kennedy focused on how the guidelines would be enforced, focusing on future actions instead of the previous alleged improprieties (see related story, p. 16). Health Research Group Director Sidney Wolfe, MD, said the guidelines represent "(a) progress in awareness and (b) acknowledgement, I think, reluctantly that things are as bad" as they are. "On the other hand," he continued, the associations have not indicated that "they are going to actively do a job with their enormous budgets...investigating possible instances of violating these ethical guidelines" nor that they are willing to expel members that violate them. He claimed PMA would have to expel virtually all of its members. The harshest critic of the guidelines was L. Frederick Fenster (clinical professor of medicine at the University of Washington). He contended the guidelines do not go far enough. They don't "really get at the basic philosophical and ethical conflicts that bother me." The advice that doctors should not accept gifts that constitute "obvious" ethical breaches or that would be embarrassing if publicly known is unsatisfactory, Fenster said. "Don't take pure cash, but it's okay to take a CME [continuing medical education] course, it's okay to take textbooks, it's okay to take minor things, just don't be too obvious -- that's what [the guidelines] say to me. If that's a first step, it's not very satisfactory." Arthur Zoloth, director of pharmacy and I.V. therapy at the Virginia Mason Medical Center in Seattle, noted that he is proposing a set of guidelines to the American Society of Hospital Pharmacists to mirror the AMA directives. "I applaud both the AMA and the PMA's recent stand on taking changes on how we can interact and work together," pharmacist Zoloth said. "I hope our profession does as well." Two ASHP committees have discussed the issues of gifts and symposia over the last year. In February, the Commission on Goals urged that pharmacy establish "standards with regard to this matter. Industry funding of professional programs in return for formulary inclusion was described as "unethical." Nicole Lurie, an assistant professor of medicine at the University of Minnesota, told Kennedy that she felt that the guidelines were "a nice first step. I guess my biggest concern is that there is no enforcement, no sanctions. I think it is probably blowing a lot of smoke in the face of an important problem." John Nelson, an obstetrician from Salt Lake City, said he "disagreed" with the smoke comment. The AMA policy received "considerable debate," Nelson testified. He noted more attention is necessary, "specifically what needs to be done to strengthen the house standards for medical schools." He suggested that these issues would be looked at in the future: "I think there will be action taken." KENNEDY AND MOSSINGHOFF SPAR ON DRUG COSTS AND PMA's ROLE Reconstructed from an unofficial transcript of the Dec. 12 hearing.] Referring to testimony by David Jones regarding Abbott's marketing of TRH for Lou Gehrig's disease, Kennedy questioned Mossinghoff as to whether he would "approve of a company marketing an extremely high cost and apparently ineffective drug product for a fatal disease if the company were able to produce the drug at a much lower cost." Mossinghoff replied that PMA does not get involved in pricing strategies by individual member companies. KENNEDY: "The sky's the limit?" MOSSINGHOFF: "No, I don't say that. I personally, and PMA institutionally does not get involved in any way in a company's decision on how to price a drug. It's off limits; it doesn't come up. If it were [to come up at meetings,] the general counsel would spill coffee in my lap and that would be the end of it." KENNEDY: "This is helpful, so we know what we can expect in terms of the PMA." The senator said that the committee heard "testimony from Mr. Jones where one major company was able to develop a product at much reduced cost and made a judgment" to continue sales at the previous price. The company made that decision, "according to his testimony, and that could be refuted or rebutted by the company itself, and we welcome that and leave the record open" for Abbott's response, Kennedy said. But Jones "made, I found, a very compelling case in that presentation, a very credible witness." Kennedy continued, "if that was the case, if it is happening in companies which are members of the PMA, your position is you're not taking" an interest. "No matter how much it's being ratcheted up to the public, in this area here we're not going to police ourselves evidently, we're not going to get into that...You, as the leader of that organization, are prepared to say here that as a matter of policy you're not going to indicate your sense of indignation or outrage, as the case might be?" MOSSINGHOFF: "I'm saying that we...cannot under the antitrust laws [address] decisions by individual companies on their prices." KENNEDY: "Are you asking for a waiver on that? As a former chairman of the Antitrust Committee [of the Senate Judiciary Committee], are you asking [me] for a waiver on that?" MOSSINGHOFF: "I'm not asking, I'm saying --" KENNEDY: "Would you like it?" MOSSINGHOFF: "I'm saying that under existing law --" KENNEDY: "Just tell me what you want. Do you want to "comment on Jones' testimony? MOSSINGHOFF: "I think those issues --" KENNEDY: "Do you want to do it?" MOSSINGHOFF: "No. I think those issues are so complex they involve the entire spectrum of corporate decisionmaking; corporate officers with fiduciary responsibilities to their stockholders, they have a lot of other obligations --" KENNEDY: "You've given us the answer: you don't want to do it."

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