Payments in Medicine: Part 1

In the 1980s and 90s, medical reps often turned up unannounced at hospitals with lunch, using the opportunity to present new drugs and reinforce prescribing habits. Free samples abounded to build brand familiarity; the favoured few were invited to sponsored events or conferences, with all expenses covered.

Ethical standards were near nonexistent, and with no real industry marketing regulations, pharma spent heavily on direct-to-doc marketing. In 1997, total marketing spending in the US was $17.7 billion, of which approximately $15.6 billion (88%) was spent directly on healthcare professionals.

Drug reps would drop by unannounced with a full catered lunch—sandwiches, chips, dessert—clinics ran on free lunches. Food was at the core of doctors’ decisions: Feed them, and they listened; lunch was the easiest way to get face time with a busy, leg-weary doctor.

One key issue to medical rep success was knowing your client: Reps kept files for each doc. What they liked, disliked; they knew everyone’s favourite food and coffee order. It wasn’t just about the drug; it was about friendship, routine and a route to bigger sales.

Then there were the peripherals: hospitals were awash with pens, notepads, calendars, and all sorts of branded items to promote drugs. Desks were covered with pharma logos; you couldn’t pick up a pen without a drug name on it. Although it may have seemed harmless, it was advertising to influence behaviours.

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By the 2000s, these open practices came under increasing scrutiny due to their detrimental effects on patient care and the growing criminality they fostered. As one example, in 2001, TAP Pharmaceutical faced serious charges related to healthcare crimes, including Medicare fraud and the illegal marketing of its prostate cancer drug, Lupron. The company agreed to pay an $875 million settlement.

“TAP employees attempted to influence doctors’ prescription decisions by offering kickbacks and bribes. These ranged from free samples and consulting services to expensive trips to golf and ski resorts, as well as so-called educational grants.”

New policies began limiting or banning gifts and meals to influence prescribing. In 2002, the US introduced the Pharmaceutical Research and Manufacturers of America (PhRMA), a voluntary code of conduct that prohibited entertainment, sports tickets, lavish meals, or personal gifts.

Reps could no longer pay for travel and accommodation for non-speaker doctors. Funding was limited to accredited educational events, and the cash had to go to the conference organiser, not the individual. After 2002, presentations had to be scientific and unbiased, eliminating promotional elements. Hospitals began restricting representatives’ access to patient areas, requiring authorisation for visits.

The code did allow modest meals during educational presentations and the use of educational materials. The emphasis was supposed to shift to interactions that were primarily educational, not for marketing.

The doctor’s party was coming to an end. The tone changed from perks and persuasion to compliance and transparency. The free-lunch era was wholly unprofessional, yet senior clinicians still see it as just how things were done.

The marketing juggernaut, however, continued. Marketing to medical professionals increased to $20.3 billion in 2016, but accounted for only 68% of total spending.

The most rapid change in spending was for direct-to-consumer advertising, which increased from $2.1 billion (12% of total spending) to $9.6 billion (32%).

By 2023, the average marketing budget spent by pharma on direct-to-health professionals had fallen below 50% of the total spend. The sands had shifted; although frontline doctors might no longer be the target, there were bigger fish to go after.

Direct-to-consumer advertising was about to take off, and as sales reps faced saturation, the use of Key opinion leaders expanded dramatically.

Up next - Part 2: Key Opinion Leaders: Moving up the food chain.

This post was written by two old geezers who have opinions. One of them used to frequent “drug dos” a famished houseman because of the scoff they offered. Hypoglycaemia is a terrible thing.