The unfolding federal probes into illicit marketing schemes by pharmaceutical companies and some medical devicemakers have yet to ensnare hospitals, but it's early days yet. Just as some physicians are on the hook for conspiring to defraud Medicare, Medicaid, health plans and patients, some hospitals and their executives may soon pay the piper for this unsavory activity.
Even if nobody in the hospital world pays a fine or goes to jail, this is a mess that must be cleaned up. Here's a quick solution: Hospital officials should voluntarily agree never to take anything of value that might leave them beholden to a vendor or its products at the expense of everyone else.
Yes, vendors underwrite clinical trials and put on needed educational programs, but everyone should understand the difference between those activities and the kind of relationships we have been hearing about. For instance, the ongoing investigation into TAP Pharmaceutical Products involves allegations that TAP bribed doctors and hospitals with cash, free medical equipment and other incentives to gain market share for its Lupron prostate cancer drug and Prevacid heartburn medication (See reporter Mark Taylor's coverage, May 17, p. 20). TAP is alleged to have sponsored contests at one hospital offering gift certificates to the doctor or nurse who converted the most patients within a five-week period to Lupron. The company in 2001 settled civil and criminal fraud and kickback charges, paying $884 million. Eleven TAP executives are currently on trial in Boston, facing criminal charges.
The other news that should quicken the pulses of some providers is that HHS fraud-fighters are ratcheting up probes of kickback schemes and other improper marketing deals between providers and medical devicemakers. Since last year, the inspector general's office has helped prosecutors reach settlements totaling more than $700 million from devicemakers, including Abbott Laboratories and Guidant Corp.
Even the little freebies commonly accepted by most doctors and clinics are wrong, because providers may be encouraged to prefer expensive brand-name drugs to cheaper generic equivalents that might also have fewer side effects. Consider the whistleblower suit filed by William LaCorte, a New Orleans internist, against drug giant Merck & Co. The Louisiana attorney general has joined this suit, which alleges that Merck persuaded hospitals to switch patients from a generic heartburn drug to Merck's Pepcid by charging just 10 cents per pill for Pepcid. LaCorte says hospitals billed patients and payers $20 per pill.
How much of this activity goes on is hard to know, but Vermont, the only state that requires drugmakers to report on how much they spend annually to market their products to providers, found that in that one tiny state major drugmakers spent nearly $2.5 million. That figure doesn't include the cash doled out for clinical trials, mass advertising, product discounts or even those free samples.
One can only imagine what the national figure would be, including the undisclosed spending. How much of the estimated $216 billion Americans spend on prescription drugs each year is the result not of medical necessity but of underhanded dealing is also unknown, but it's got to be significant at a time when rising health spending is front-page news.
The hospital industry's reaction to TAP and other scandals has been tepid at best. A spokeswoman for the American Hospital Association told this magazine that the association raised the issue in one of its publications in 2002, but "We haven't done any kind of formal guidance."
This issue hasn't been long on the radar screen for hospitals, but it may be time for that guidance.
What do you think?