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Healthcare Business News

Other drugmakers likely to follow GlaxoSmithKline in halting doc payments

By Jaimy Lee
Posted: December 17, 2013 - 3:15 pm ET

Partly in response to new physician payment disclosure rules, more drugmakers are likely to follow GlaxoSmithKline's decision to stop paying doctors for promoting its products at speaking engagements and for attending medical conferences.

The company announced Tuesday that it will stop making direct payments to healthcare providers for speaking engagements and attendance at medical conferences by the start of 2016. It also plans to roll out a new compensation system for every sales employee worldwide who works directly with doctors and other healthcare professionals who prescribe medications.

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“We're seeing that companies are generally curbing the more aggressive marketing tactics that they considered business as usual in the past,” said Dr. Daniel Carlat, director of the Pew Charitable Trusts' prescription project. “The big shift that we're going to see is a reevaluation in how marketing dollars are going to be spent.”

The moves come amid increasing scrutiny of the role of money in prescribing decisions. Under the Sunshine Act provision of the Patient Protection and Affordable Care Act effective in August this year, drugmakers and medical device companies are required to report payments and gifts valued at $10 or more to physicians and medical schools.

“The Sunshine Act is a critical part of the story because the fees paid to docs in order to market drugs is embarrassing to everyone involved—the company, the doctor and the hospital that employs that doctor,” Carlat said.

So-called speakers' bureaus, where physicians are paid to promote a company's product, as well as gifts and free meals are generally considered to be some of the most unethical practices between drug companies and doctors.

At least 44 academic medical centers have restricted industry-funded speaking relationships, according to an annual scorecard released by the American Medical Student Association. Only four medical schools had done so in 2008.

GlaxoSmithKline's announcement prompted reaction from U.S. Rep. Elijah Cummings (D-Md.), who urged other drug companies to follow suit. “For companies that choose not to stop these practices, they should be aware that Congress will scrutinize their actions very closely through the ACA's new reporting requirements,” Cummings said.

The Sunshine Act, which is now referred to as the Open Payments program by the CMS, is not the only driving force behind changes in the industry's marketing tactics.

GlaxoSmithKline is compelled to change the way it pays its sales force under a corporate integrity agreement entered with HHS' Inspector General's Office as part of a $3 billion agreement to resolve civil and criminal liability for a range of allegations, including illegal promotion of Paxil and Wellbutrin.

The new compensation framework, the company said this week, rewards sales representatives according to a “blend of qualitative measures and the overall performance of their business, rather than the number of prescriptions generated.” It's based on a program launched in the U.S. in 2011.

GlaxoSmithKline, meanwhile, has come under fire in recent months in China, where police accused its executives of paying bribes to help the company gain a greater foothold in that emerging market.

In a statement issued Tuesday, CEO Andrew Witty said the changes are part of a broader initiative at the U.K.-based company to evaluate whether its business practices “are responding to the needs of patients and meeting the wider expectations of society.”

Follow Jaimy Lee on Twitter: @MHjlee

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