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Executive Summary

Wyeth-Ayerst's Inderal LA frequent prescriber (free airline tickets) program is being investigated by the HHS Inspector General as a potential violation of anti-kickback laws, Health Research Group Director Sidney Wolfe, MD, declared in testimony at the Dec. 11 opening session of Sen. Kennedy's (D-Mass.) hearings on drug promotion. In his prepared testimony, Wolfe noted that Massachusetts has previously challenged the Inderal LA promotional for offering free airline tickets to doctors who prescribed the long-acting version of propranolol to 50 new patients. Wyeth-Ayerst ran the promotion in 1986-1987 as the Patient Profile Program. Noting that the program "was not limited to Massachusetts," Wolfe contended that "it may also be in violation of federal law as well." Wyeth-Ayerst signed a $195,000 settlement agreement with the Massachusetts attorney general in the middle of 1989. The promotion was discontinued at the end of 1987. The Wyeth-Ayerst agreement with Massachusetts did not constitute an admission of guilt by the company to the state's allegations that the incentives represented illegal kickbacks. "Richard Kusserow, the Inspector General of the Federal Department of Health and Human Services (HHS) has confirmed," Wolfe told the Kennedy committee, "that his office has launched an active investigation into the matter for possible criminal or civil penalties." The reference to the Inderal LA campaign at the Dec. 11 Kennedy hearings is the second time the Wyeth-Ayerst promotion has been spotlighted on Capitol Hill. The program was criticized in 1987 at a Senate Judiciary/Antitrust Subcommittee review of alleged anti-generic ad campaigns. The disclosure of the IG's nascent interest in the arena of pharmaceutical promotions is one of the most significant and potentially long-lasting developments from the two-day Kennedy hearings. It indicates the possible entry of a forceful and skilled investigatory arm into the policing of promotional activities and points out a legislative outlet for the Kennedy hearings. The IG's office has established a formidable reputation in the FDA area from its work on the generic drug investigations and from its ongoing authority to enforce the sampling provisions of the 1987 Prescription Drug Marketing Act ("drug diversion act"). The majority of the IG's work, however, lies outside the drug industry and involves the investigation of Medicare and Medicaid fraud by providers and the oversight of HHS internal controls. The IG's office has a staff of 1,400 auditors, inspectors and program analysts. The extent of its enforcement activities is large: over $5 bil. in fines, restitutions and recoveries were levied in one year. Rep. Dingell (D-Mich.) continues to champion further powers for the IG in enforcing criminal violations of the FD&C Act ("The Pink Sheet" Nov. 19, T&G-3). Pharmaceutical promotional practices are a recent addition to the IG agenda. The IG's original workplan for fiscal 1991, for example, did not include the subject, but the publicity surrounding the Medicaid rebate plan (and the prospect of more government involvement in pricing) may be stimulating the IG's closer attention. Public Citizen's Health Research Group is attempting to stoke the IG's interest by providing Kusserow's office with leads on alleged illegal drug promotions. Wolfe, for example, told the Kennedy hearing that his group has recently submitted information on a Roche Rocephin "grant-in-aid" program to the IG for review. Primarily a hospital product, Rocephin could be attractive to the IG because payment for the product is often covered under in-patient care (Medicare). Wolfe maintained that the IG "has informed me that the ongoing investigation of these pharmaceutical incentive programs now includes the Roche Rocephin program." The Roche "grant-in-aid" program, as described by Wolfe at the hearing, offered $1,200 to doctors agreeing to provide information on 20 Rocephin patients. Roche described the program as a "clinical study" in a letter attached to Wolfe's testimony. The company asked for information on age, diagnosis, dose and duration of therapy, culture, antibiotic sensitivity and outcome of treatment. In response to Wolfe's criticism of the Rocephin grant program, Roche said that "the funds provided for these trials are intended to defray a portion of the study costs which may include the acquisition of medication, payment for the services of a nurse research assistant, or to help defray the costs of a patients medical stay." Results of the Rocephin post-marketing work, Roche maintained, "have been submitted for publication in medical journals, and in all cases are reported to Roche to assist in broadening our base of knowledge about the use and effects of our medications." The firm said that the dosage information on Rocephin is important because of its once-daily regimen: "most physicians are accustomed to dosing injectable antibiotics as often as three to six times daily." HRG was informed about the Roche program by an internist in Florida as part of an informal reporting service run by the consumer advocacy organization in early 1990. HRG calls the whistle-blower system the "Doctor-Bribing Hotline." "It is important to note," Wolfe testified, that the Roche study "and the letter were not from the medical research department of the company, but from the Director of 'Medical Marketing Professional Services.'" Wolfe estimated that the$1,200 grant represents a compensation rate of $900 per hour for collecting the data. The treatment of 20 patients with Rocephin would generate about $11,400 for Roche, Wolfe contended. Rocephin is the leading hospital antibiotic in the U.S. IG investigations and the application of anti-kickback provisions to drug marketing programs could supplement FDA's enforcement of labeling and promotion controls, Wolfe contended. "As long as any of the patients for whose care the bribe or kickback is offered (or received) are Medicaid or Medicare recipients," Wolfe explained, "these activities violate section 1128B of the federal anti-kickback statute." Penalties for violating the kickback provisions, Wolfe observed, include exclusion from federally funded programs and prosecution for criminal penalties by the Justice Department. HRG urges "passage of new laws including the addition of civil penalties for the HHS Inspector General on kickbacks and for the FDA in prosecuting certain types of advertising and promotional violations," Wolfe said in written testimony. During a Q&A exchange with Sen. Hatch (R-Utah), Wolfe acknowledged that the kickback provisions have not been used often in drug marketing cases. "The problem is that these laws [federal and state] have rarely been enforced," Wolfe said. "At best," he said, the laws are "in their infancy." He noted that 36 states have anti-kickback statutes of their own. The IG's authority should be extended to permit the levying of civil penalties, Wolfe said. "We certainly would advocate civil penalties which the Inspector General's office does not have the authority to impose on doctors or drug companies," Wolfe told Hatch. The IG "now has to go [to] criminal [prosecution] and it is very difficult, even though there appear to be violations, to muster up the resources, including the Justice Department to criminally prosecute some of these people," Wolfe said. HRG's call for more authority for the IG and for more direct enforcement powers in cases of drug marketing violations may indicate the eventual importance of the Kennedy hearings. While they do not appear likely to lead to separate promotion legislation (as was Kennedy's approach in the 1970s), they could contribute to the effort started by Rep. Dingell to enact an emergency enforcement bill. Two of the key issues to watch if Kennedy tries to attach regulation of promotional activities to the Dingell bill will be (1) the role of the IG vis-a-vis FDA in the area of policing promotions and (2) whether the IG, the FDA or both get additional authority to impose civil penalties for infractions. New FDA Commissioner Kessler already has gone on the record in correspondence with Capitol Hill that FDA's current enforcement tools in the regulation of drug advertising and promotion may be inappropriate. Without specifically citing the types of powers that FDA might need, Kessler told Kennedy's staff in late October that recalls and seizures appear to be inappropriate weapons to use in advertising and promotion cases ("The Pink Sheet" Nov. 5, p. 2). The IG has been involved in at least one drug promotion case in the past: a Connaught vaccine campaign. The company's VIP (Very Important Purchaser) plan was criticized by the IG in a May 1989 letter which compared the earned bonus points to "the supermarket green stamp programs of the past" ("The Pink Sheet" May 22, 1989, T&G-13). Wolfe noted that the Justice Department declined to pursue the IG's complaint. The HRG director maintained that Connaught met with the Justice Department and assured them that no Medicaid patients were involved. "On this basis alone," Wolfe said, Justice decided that "there was no violation of law." The IG, Wolfe declared, "has told us that they stand by the May 9, 1989 letter to the company." Connaught informed the IG earlier this year (by a letter dated June 25) that it would not offer bonus gifts as part of the program. "We have decided," Connaught wrote to the IG on June 25, "to remove from the VIP program all award options other than discounts for volume purchases. In other words, we will no longer offer as a part of our VIP Program any type of computers, computer software, video cassette players, video monitors or medical education programs." Among the other alleged marketing abuses cited at the Kennedy hearing by Wolfe was a $100 reimbursement offer from Sandoz for physicians to read a copy of a medical journal reprint. The article was the lead item from a June 1990 supplement to the British Journal of Dermatology, containing a "consensus report" on the use of cyclosporin A (Sandimmune) for psoriasis, an unapproved indication in the U.S. The Sandoz letter, Wolfe maintained, "violates the FDA's regulations prohibiting promotion of drugs for unapproved uses." HRG forwarded the letter to the FDA drug advertising group, Wolfe said. He characterized the $100 payment for reading the article as "a bribe." During Q&A, Hatch questioned Wolfe persistently on his use of the term "bribes" and his accusation that drug promotion practices are "white-coated white collar crime." Hatch ended his questioning by declaring: "I don't think you have cited anywhere near enough evidence to make that kind of sweeping denouncement." In relation to the Sandimmune letter, Hatch maintained that to call a payment to answer questions a "bribe" is "stretching it." He added that the approach "may be something to criticize." He toned down Wolfe's rhetoric by calling it the advocate's "own innovative way" of bringing an issue to the committee's attention. However, Hatch acknowledged that some of the practices that Wolfe cited may not "be appropriate." Hatch said: "People like you do the industry a great favor by pointing out these difficulties and these problems."

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