Saturday, February 13, 2010

Fifty Years Ago- Drug Companies under Examination

An article in LIFE magazine from February 15, 1960- exactly fifty years ago- highlights the Senate Subcommittee on Anti-trust and Monopoly hearings on prescription drug prices. Democratic Senator Kefaver from Tennessee, who had investigated organized crime in 1950, now began an examination of possible price fixing by major drug companies. To read the entire article please click HERE.
In 1958, the score of companies which dominated the (pharmaceutical) industry averaged 25% profit on sales before taxes, more than twice as high as the average for industry in general. The reason for such profits has now come into sharp focus. Unlike other major industries, this one has the advantage of selling to captive consumers- sick people who cannot shop around but must buy what the doctor orders.
Additionally the Kefaver committee investigated other questionable practices, such as saturation promotion of new drugs to physicians.
The average doctor is deluged with sales talk, either through direct mail or visit from drug firm representatives known as detail men. In a single day, a doctor may collect $40 worth of free drug samples. To promote a new drug, a company may spend half a million dollars to hit almost every doctor in the land with a barrage of letters, brochures and personal calls.
Kefaver had specific objections to this particular practice.
19604Such saturation promotion not only adds to the cost of a company's prescription drugs. It also persuades many doctors to prescribe- and many patients to want- new drugs simply because they are new, not because they are necessarily better than something old or cheap.
Industry representatives countered that promotion of new drugs was necessary as a means of "post-graduate education" and doctors found the detail men helpful. Other doctors felt that it led to a corruption of professional and medical ethics. In the LIFE article, according to Dr. Louis Lasagna, an Associate Professor of Medicine and Pharmacology at John Hopkins, " (The new products) are introduced because they are profitable, not because they have a medical advantage over the products of preceding years."
This investigation would lead to legislation that would eventually be passed into law in 1962 as the Kefauver-Harris Drug Control Act. This bill, which Kefauver dubbed his "finest achievement" in consumer protection, imposed controls on the pharmaceutical industry that required that drug companies disclose to doctors the side-effects of their products, allow their products to be sold as generic drugs after having held the patent on them for a certain period of time, and be able to prove on demand that their products were, in fact, effective and safe.
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