PhRMA Executive Committee Approves Voluntary Code Curtailing Use of Incentives in Sales Pitches

The executive committee of the Pharmaceutical Research and Manufacturers of America on April 18 unanimously approved voluntary guidelines for drug companies that will restrict many "controversial" sales practices that target doctors, the Wall Street Journal reports. The guidelines, which will take effect July 1, will place restrictions on meals that drug industry sales representatives may purchase for doctors and will limit the price of gifts to doctors to less than $100. In addition, the guidelines will prohibit the purchase of "entertainment for its own sake" -- such as tickets to sports events and films or golf outings -- as gifts for doctors. The guidelines also will ban "token consulting arrangements that commonly disguise financial inducements to lure doctors to meetings," the Journal reports. PhRMA has not established "enforcement mechanisms" to ensure that members adhere to the guidelines, but the Journal reports that "participating companies are expected to be vigilant in monitoring their competitors." According to the Journal, PhRMA approved the guidelines to help end an "entertainment arms race" in the drug industry that has "embarrassed some companies and caused sales budgets to balloon." PhRMA also hopes the move will "save face for the industry" and "stave off" federal regulation. A dozen large drug companies -- including Pfizer Inc., GlaxoSmithKline PLC and Bristol-Myers Squibb Co. -- have agreed to the guidelines, but the Journal reports that "it remains to be seen if the ... code will hold" (Hensley, Wall Street Journal, 4/19).

Ad Agencies Defend Industry on DTC
In related news, the Wall Street Journal on April 19 reports on advertising agencies that are preparing campaigns to defend the pharmaceutical industry against recent criticisms of direct-to-consumer advertising. For example, the health care ad agency CommonHealth will run an ad in drug industry trade magazines that reads, "Cutting-edge industries make easy targets. ... The profits. The pipelines. The high cost of drugs and [direct-to-consumer advertising]. ... It seems everybody has a knife to throw at the health care industry." Consumer advocates blame direct-to-consumer ads for increased prescription drug prices; some lawmakers have called for more regulation of the ads. According to the pharmaceutical industry and advertising agencies, however, DTC ads raise awareness about diseases and encourage patients to talk with their doctors, which can improve public health. "There's been an increased drum beat to rein in consumer advertising of medicines. ... But what most people don't realize is that this is the most highly regulated form of advertising in this country," Dan Jaffe, executive vice president of the Association of National Advertisers, said. The Journal reports that advertising agencies have a financial incentive to defend DTC ads. Drug companies spent $2.8 billion on DTC ads in 2001, an 8% increase over 2000, at a time when many other industries reduced their advertising budgets, according to Nielsen Media Research (O'Connell, Wall Street Journal, 4/19).