Rewarding doctors to prescribe drugs

As I mentioned in last week’s post, an investigation by the San Jose Mercury News found that big pharma pays extra bucks to physicians who prescribe psychiatric drugs to foster children. In fact, they’re paid more than double the amount paid to typical California physicians, helping to increase the use of psychiatric medication by foster kids. Reporters found that frequent prescribers are rewarded the most. For those doctors who wrote more than 75 prescriptions to foster children in 2013, the pharmaceutical companies paid them on average almost four times (or about $10,000 more) than the lower prescribers. (Again, the payments are ostensibly to compensate doctors for speeches or for participating in drug trials.) In California, from 2010 to 2013, almost 30 percent of all California doctors averaged about $10,000 apiece over that four-year period, while the foster care prescribers received about $25,000 each.

Companies also reward doctors for prescribing drugs by giving them a good deal on price. For example, in the 1990s, the maker of Lupron, which is a prostate cancer drug, lowered the wholesale cost of the drug to beat a competitor’s prices. Because oncologists buy their anti-cancer drugs at wholesale prices directly from the drug companies but get insurance reimbursements at 80 percent of the retail price, doctors make a profit from the drugs. In the Lupron case, when the competitor’s drug came on the market, the company inflated the average retail price of Lupron to $500 a dose. But because doctors were able to buy it for as little as $350 wholesale, they were able to keep the difference between what they paid and the reimbursement payment from Medicare, which was based on the $500 price.

In 2013, Insys Therapeutics paid a pain specialist $67,000 in speaking fees, travel, and meals, to promote a powerful addictive painkiller called Subsys—a drug that is approved only for cancer patients who are already taking opioid painkillers. Even though the drug is approved only for cancer patients, just 1 percent of prescriptions for this product are written by cancer specialists. To increase profits, sales reps were encouraged to call on physicians who see patients with a wide range of ailments—not just cancer. This is called off-label marketing. All in all, Insys paid doctors $2.8 million in the final five months of 2013.

Genentech manufactures two drugs for macular degeneration: one, Lucentis, is $2,000 a dose and the other, Avastin, is $50 a dose. According to a large government-sponsored clinical trial completed in 2011, the two drugs are nearly equivalent. So Genentech had to figure out a way to encourage doctors to prescribe and promote Lucentis. As you might predict by now, Genentech does this by rewarding the doctors with speaking engagements and other rewards. Half of the 20 doctors who received the most money from Genentech to promote Lucentis in 2013 were among the highest prescribers of the drug in 2012, billing for higher amounts of Lucentis than 75 percent of their peers. In the meantime, physicians convince themselves that the more expensive drug is better. In 2011 the Office of the Inspector General for the Department of Health and Human Services determined that if all patients being treated with Lucentis had instead been given Avastin, the federal government would have saved about $1.4 billion.

Next week: Manipulating research findings

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