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US stock market daily report (December 17, 2013, Tuesday)
In a move for an industry battling scandals over sales practices, a pharmaceutical giant creates a challenge for peers to follow. Since the entire drug industry has been under fire in recent years for aggressive marketing tactics, the move by a drug giant may force other drug makers to follow their lead.
GlaxoSmithKline plc (GSK-NYSE), Britain's biggest drugmaker said on Tuesday, they will cease paying doctors for promoting its drugs and scrap prescription targets for its marketing staff. Additionally, GlaxoSmithKline said they would no longer issue payments to healthcare professionals for attending medical conferences beginning in 2016, as it tries to persuade critics it is addressing conflicts of interest that could put commercial interests ahead of the best outcome for patients. GlaxoSmithKline is reportedly making the move to also, improve transparency. In 2012, GlaxoSmithKline reached a record $3 billion settlement with the U.S. government over charges they provided misleading information on certain drugs. Andrew Witty, Chief Executive for GlaxoSmithKline said in a statement, "We recognize that we have an important role to play in providing doctors with information about our medicines, but this must be done clearly, transparently and without any perception of conflict of interest." Witty added that the actions by GlaxoSmithKline were designed to ensure that patients' interests always came first. The U.S. ‘Patient First' program bases pay for commercial staff on a mix of qualitative measures and the overall business performance, rather than the number of prescriptions generated. Big insurers and governments are the main drivers behind decisions on which drugs receive approval, based on cost-effectiveness, rather than determined by individual doctors.
Under U.S. healthcare law, drug makers are forced to disclose payments to doctors, in an effort for firms to clean up their marketing practices. Improper sales tactics is common among drug makers in the USA.
In Europe beginning in 2016, laws have been enacted requiring drug makers to make public the names of doctors they have paid. Richard Bergstrom, director general of the European Federation of Pharmaceutical Industries and Associations said, "This will undoubtedly change behavior and trigger a re-think of how some forms of continuing medical education are organized and funded,"
During a recent serious bribery investigation in China, police have accused GlaxoSmithKline of funneling nearly 3 billion Yuan ($494 million) to travel agencies to facilitate bribes, in order to boost the drug makers sale of drugs.
Prescribing habits by physicians had been secretive, until now, except by pharmaceuticals. In 2008, Forest Laboratories Inc. (FRX-NYSE) launched blood pressure drug Bystolic. Even though Bystolic did not prove to be more effective than competitors or generics, Forest flooded offices of health professionals with drug reps and hired doctors to persuade peers to choose it. During fiscal 2012 for Forest, sales of Bystolic nearly doubled to $348 million, from earlier two years.
In reference to when there is no evidence a drug is better than another, Dr. Bernard Lo, president of the Greenwall Foundation, a New York City nonprofit that funds bioethics research said, "You have to question: Why are doctors prescribing this? What your evidence suggests is that there is a financial incentive for doctors who receive payments from drug companies," for pitching their products.
Check to see if your health care professional received drug company money. http://projects.propublica.org/docdollars/
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