Money

Doctors prescribe cheaper drugs when hospitals limit pharma-rep visits

When doctors get wined and dined and gifted by pharma reps, they end up prescribing more-expensive drugs more often than generics.

The key finding comes from a study recently published in Journal of the American Medical Association that underscores the impact that marketing efforts can have on boosting usage of expensive medicines.

As drug costs continue to be a significant driver of overall healthcare inflation, policymakers are increasingly focused on finding ways to control them. Besides the routine payments pharma companies make to doctors, which can influence their prescribing practices, company reps often market high-profile, brand-name drugs directly to doctors using small perks like free meals and medical textbooks. According to a fact sheet from the Pew Charitable Trusts, drug companies spent $15 billion on face-to-face promotions with doctors in 2012, the last year the organization released the numbers. This practice is known within the pharmaceutical industry as “detailing.”

The long-standing detailing practice has prompted growing concerns about conflicts of interest, with some hospitals associated with academic centers in the U.S. imposing restrictions on pharmaceutical industry sales visits within the past several years. For example, in April 2010, Tufts University School of Medicine prohibited pharmaceutical representatives from dropping in without an appointment or providing meals to physicians.

The imposition of those new rules created a natural experiment for economists to scrutinize to better understand how those marketing practices may influence what drugs doctors prescribe. The study, published in the May issue of the AMA journal, examined how rules prohibiting some drug marketing practices at academic hospitals in five states between 2006 and 2012 affected how physicians prescribed drugs.

The researchers examined over 16 million prescriptions written between January 2006 and June 2012 by over 2,000 physicians at these hospitals, as well as almost 25,000 physicians who were unaffected by the rules.

Before the policies blocking detailing took effect, the average “detailed” drug — that is, a drug marketed directly to doctors by pharmaceutical sales representative — in the study had a 19.3 percent market share. But after these visits were restricted, the researchers found that the average market share of these same drugs declined by 8.7 percentage points. Non-detailed drugs — 95 percent of which were generics — experienced an increase in market share of 5.6 percent.

“The fact that the restrictions on detailing reduced prescribing of detailed drugs does very much support the idea that the detailing itself has an impact on the physicians’ prescribing,” said George Loewenstein, a Carnegie Mellon professor of economics and psychology and a co-author of the study.

While pharmaceutical companies argue that these visits help inform doctors about new drugs and their benefits, Loewenstein believes that money can be put to better use.

“If they could all reduce their marketing, then there might be some extra funding to support research and development, so it’s quite possible that everyone would gain,” he said.

The study doesn’t address whether such sales practices are a large contributor to drug-price inflation in the U.S. Drug prices are projected to grow 6.3 percent a year between 2016 and 2025, according to government figures.

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