S. 2526, An Act to Promote Cost Containment, Transparency and Efficiency in the Delivery of Quality Health Care
The Joint Committee on Health Care Financing
My name is Deirdre Cummings and I am the Legislative Director with the Massachusetts Public Interest Research Group. MASSPIRG is a non-profit, non-partisan consumer advocacy organization with over 50,000 members across the state. We are here today to strongly support measures to lower the cost of health care by lowering prescription drug costs, as reflected in S. 2526, An Act to Promote Cost Containment, Transparency and Efficiency in the Delivery of Health Care.
Lower Prescription Drug Costs
We all know prescription drug prices are high and getting higher all the time. In 2005, U.S. consumers spent $251.8 billion on prescription drugs, nearly $50 billion more than we paid in 2003. A 2004 report by Families USA showed drug costs increased at two or more times the rate of inflation from January 2003 and to January 2004 while the pharmaceutical industry continues to be the most profitable industry in the United States. Worse, uninsured consumers pay up to 6 times more for prescription drugs purchased from American pharmacies than they would pay for the same prescriptions at a Canadian pharmacy. While pharmaceutical companies are making record profits, Americans are struggling to pay for needed medical treatment and the cost of health care to employers and the government is soaring.
We know, too, that Americans pay much more for prescription drugs than citizens of other countries. That’s why so many seniors are buying their drugs from Canada.
We also know that some Americans pay more than others. For example, if you’re a veteran, you can get your prescription drugs for about one-half of what the typical uninsured resident in Massachusetts has to pay.
Massachusetts is not exempt from these cost increases. The high cost of RX drugs put consumers health at risk as well as risk for medical debt and bankruptcy as they struggle to pay insurance premiums, copays and coinsurance. Rising prescription drug costs also threaten the continued success of Massachusetts health reform and the financial stability of the state and employers that provide health care coverage.
Attached is a 2006 report, Paying the Price, The High Cost of Prescription Drugs for Uninsured Americans, which shows the rising cost of prescription drugs in Massachusetts and across the country as well as outlining some polices, including the ban on drug company gifts to medical provides, to stem the rising tide.
MASSPIRG is a member of the Massachusetts Prescription Reform Coalition who has presented detailed testimony – some of which is listed below - in support of section 7 and section 22 of S. 2526, An Act to Promote Cost Containment, Transparency and Efficiency in the Delivery of Quality Health Care, which seek to create an academic detailing program and ban the provision of gifts from pharmaceutical and medical device companies to physicians.
The Massachusetts Prescription Reform Coalition is a group of community organizations, local and national non-profit organizations, health care advocates, private insurers, health care providers, public payors and others committed to promoting evidence-based, unbiased prescribing and access to appropriate and affordable prescription drugs. Our work is guided by the following principles:
- Prescription drugs should be affordable for all patients and payors.
- Pharmaceutical marketing should be focused on getting the right drug to the right person.
- Prescribers and consumers should have access to evidence-based, unbiased information about prescription drugs.
- Decisions of whether to prescribe, what to prescribe and what drugs to cover should be based on timely, unbiased, evidence-based data and should be guided by the best interests of the patient. The process of making those decisions should be transparent.
- Relationships between pharmaceutical companies, prescribers and payors should be transparent and free from conflicts of interest.
- Prescription data should be protected from use in marketing.
S. 2526 seeks to promote prescription drug cost control, thereby ensuring access to prescription drugs, by curbing factors that artificially inflate the price of prescription drugs. The provisions related to prescription drugs in the bill would also improve quality of care by promoting evidence-based medicine.
Section 7 of S. 2526 seeks to ensure that prescribing decisions are based on unbiased evidence of the effectiveness and safety of a given drug. It directs the Department of Public Health to establish an “academic detailing” program through which medical professionals would provide evidence-based, balanced information about the effectiveness, safety and costs of prescription drugs to physicians and other prescribers in face-to-face visits. Currently, industry salespeople are the primary source of providers’ information about medications. The result is inflated industry influence on prescribing. Academic detailing is similar to pharmaceutical sales visits, except that the academic detailers do not promote a particular product. Academic detailing promotes evidence-based medicine by providing prescribers with unbiased data rather than promotional information.
The Massachusetts Prescription Reform Coalition strongly supports a state-sponsored academic detailing program. Academic detailing programs have been repeatedly shown to control costs and increase quality. As a result, an increasing number of states are implementing similar programs.
Academic detailing programs control costs by helping providers identify when less expensive but equally safe and effective drugs are available. As a result, these programs increase prescribing of appropriate lower-cost drugs, such as generics. Savings of $8.3 billion or 11% of total drug expenditures would result if adults appropriately substituted generics for brand names.[i] It is, therefore, not surprising that research shows that academic detailing programs more than pay for themselves with the amount of money they save the state in health care costs and have the potential to save nearly two dollars for every dollar spent to implement such programs. [ii]
By providing prescribers with unbiased evidence, these programs also assist providers in making safer and more appropriate prescribing decisions. A recent summary of evidence about educational programs aimed at improving patient care concluded that programs that include interactive techniques, like academic detailing, are the most effective means of improving physician practices and patient outcomes.[iii]
Section 22 of the bill takes another crucial step toward controlling health care costs by prohibiting pharmaceutical and medical device companies from giving gifts to physicians.
The pharmaceutical industry spends $29 billion annually to market their products, and over $7 billion annually marketing to physicians alone.[iv] A study published in the New England Journal of Medicine found that a staggering 94% of physicians receive meals and other payments from pharmaceutical companies.[v]
The Massachusetts Prescription Reform Coalition strongly supports a ban on gifts in order to eliminate the inappropriate influence pharmaceutical companies have on prescribing decisions and the resulting cost and quality implications. Excessive pharmaceutical marketing practices contribute directly to rising health care costs. The cost of marketing is passed along in the price of prescription drugs. Marketing also promotes prescribing of more expensive drugs in place of equally safe and effective lower cost drugs, which may be either other brand name drugs or generic drugs.
The provision of pharmaceutical gifts to providers also threatens quality of care. Studies published in the Journal of the American Medical Association show that physician prescribing is highly responsive to marketing.[vi] Gifts and financial incentives from pharmaceutical companies create conflicts of interests that interfere with the ability of health care providers to make prescribing decisions based only on the needs of their patient.
Recognizing the inappropriate influence of pharmaceutical gifts, Minnesota, Vermont, Maine, West Virginia and the District of Columbia have taken legislative action. In Massachusetts, Boston University School of Medicine/Boston Medical Center and UMass Memorial Health Care recently announced new conflict-of-interest policies that ban clinicians from accepting personal gifts and meals from pharmaceutical companies.
The Massachusetts Prescription Reform Coalition offers several suggestions to further strengthen the ban and ensure that its intended benefits are realized:
- Expand gift ban to apply to all health care providers. The bill currently prohibits gifts given to physicians and to health care facilities. Physicians are not the only health care providers that write prescriptions. Additionally, health care providers who cannot prescribe drugs, such as nurses, are also involved in decision-making around what medications to prescribe and are increasingly targeted by pharmaceutical detailers. To prevent the influence of gifts in all prescribing decisions, the ban on gifts should extend to all health care providers.
- Expand the definition of “pharmaceutical manufacturer agent” to include those marketing biologics. As it stands, the gift ban applies to those marketing prescription drugs and medical devices. Biotechnology companies also engage in aggressive marketing practices and should be included in the prohibition.
- Require compensation to be made pursuant to a contract for deliverables unrelated to marketing. The definition of gifts in S. 2526 excludes payments made when “consideration of equal or greater value is received.” Without greater protections, the industry could take advantage of this exclusion by paying providers for sham transactions or by employing providers in marketing efforts. We urge you to not only require that permissible compensation be in exchange for consideration of equal or greater value, but also to require that it be subject to a contract and be unrelated to marketing.
- Include a disclosure requirement. It is critical to include a disclosure requirement in tandem with a ban in order to ensure compliance with the ban. A disclosure requirement would also promote the transparency of the financial relationships between pharmaceutical companies and providers that are not considered “gifts” as defined by S. 2526. There is a strong public interest in having access to information about the continuing funds flow between industry and providers. We urge you to require pharmaceutical, medical device and biotechnology companies to disclose the payments they make (listed by individual provider and facility) to the Department of Public Health. Those reports should be public records. Any violations of the ban that become apparent as a result of the disclosure should be reported to Attorney General for enforcement.
Thank you for your commitment to reducing our escalating health care costs. We look forward to working with you to improve our health care system.
[i] Powell, D.R., An Effective Way to Increase Generic Utilization. Benefits and Compensation Digest, 2006.
[ii] Avorn JA, Soumerai SB. Improving drug-therapy decisions through educational outreach: a randomized controlled trial of academically based “detailing”. New Eng J Med 1983; 308: 1457-1463; Soumerai, S. B., & Avorn, J. (1986). Economic and policy analysis of university-based drug "detailing". Medical Care, 24(4), 313-331.
[iii] Bloom. Effects of continuing medical education on improving physician clinical care and patient health: a review of systematic reviews. Int J Technol Assess Health Care 2005;21(3):380-5.
[iv] Donohue, J., Cevasco, M., Rosenthal, M. A Decade of Direct-to-Consumer Advertising of Prescription Drugs. New England Journal of Medicine. 2007; 357: 673-681.
[v] Campbell, E. G., et al. A National Survey of Physician-Industry Relationships. NEJM. April 26, 2007;356(17):1742-1750.
[vi] Wazana, A. Physicians and the Pharmaceutical Industry: Is a Gift Ever Just a Gift? JAMA. 2000;283(3):373-380.