Federal investigators study prescription incentive program
     Sunday, June 27, 2004
     Gardiner Harris
     THE NEW YORK TIMES

     The check for $10,000 arrived in the mail unsolicited.
     The doctor who received it from drug maker Schering-Plough said it was
made out to him personally in exchange for an attached "consulting"
agreement that required nothing more than his commitment to prescribe the
company's medicines.
     Two other physicians said in separate interviews that they, too, had
received such checks from Schering-Plough, one of the world's biggest drug
companies.
     "I threw mine away," said the first doctor, who spoke on the condition
of anonymity because of concern about being drawn into a federal inquiry.
     Those checks and others, some said to be for six-figure amounts, are
under investigation by federal prosecutors in Boston as part of a government
crackdown on the industry's marketing tactics.
     Just about every big global drug company - Bristol-Myers Squibb,
Johnson & Johnson and Wyeth - has disclosed in securities filings that it
has received a federal subpoena. Most of them are juggling subpoenas that
stem from several investigations.
     The details of Schering-Plough's tactics - gleaned from interviews
with 20 doctors, industry executives and people close to the investigation -
shed light on the shadowy system of financial lures that pharmaceutical
companies have used to persuade physicians to favor their drugs.
     Schering-Plough's tactics, these people said, included paying doctors
large sums to prescribe its drug for hepatitis C and to take part in
clinical trials that were little more than thinly disguised marketing
efforts that required little effort on the part of doctors.
     Doctors who demonstrated disloyalty by testing other company's drugs,
or even talking favorably about them, risked being barred from
Schering-Plough's money stream.
     Schering-Plough says the activities under investigation occurred
before its new chief executive, Fred Hassan, arrived in April 2003, and that
it has overhauled its marketing efforts to eliminate such inducements.
     At the heart of the various investigations into drug industry
marketing is the question of whether drug companies are persuading doctors,
often through payoffs, to prescribe drugs that patients don't need, shouldn'
t use or for which there might be cheaper alternatives.
     Also, investigators are trying to determine whether the companies are
manipulating prices to cheat the Medicaid and Medicare programs.
     Most of the big drug companies, meanwhile, also are grappling with
lawsuits filed by state attorneys general, industry whistle-blowers and
patient rights groups.
     In many ways, the investigations are a response to the evolution of
the pharmaceutical business, which during the last quarter-century has grown
from a small group of companies peddling a few antibiotics and anti-anxiety
remedies to a $400 billion behemoth that's among the most-profitable
industries on earth.
     Offering treatments for almost any affliction and facing competition
in which each percentage point of market share can represent tens of
millions of dollars, most drug makers now spend twice as much marketing
medicines as they do researching them.
     Their sales teams have changed from a scattering of semi-retired
pharmacists to armies of attractive young people who shower physicians with
attention, food and - until the drug industry recently agreed to end the
practice - expensive gifts, just to get two to three minutes to pitch their
wares.
     A code of conduct adopted in 1990 by the American Medical Association
suggests doctors should not accept any gift worth more than $100, but the
guidelines are widely ignored.